Document:

<PAGE>

                                                                     Exhibit 4.1

                                                                  EXECUTION COPY

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.
                                   Depositor,

                            PHH MORTGAGE CORPORATION
                                    Servicer,

                                       and

                             WELLS FARGO BANK, N.A.
                                     Trustee

                                   ----------

                         POOLING AND SERVICING AGREEMENT

                          Dated as of February 1, 2006

                                   ----------

            MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1
                       MORTGAGE PASS-THROUGH CERTIFICATES

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                 <C>                                                     <C>
ARTICLE I.          DEFINITIONS..........................................     4
   Section 1.01.    Definitions..........................................     4
   Section 1.02.    Calculations Respecting Mortgage Loans...............    32

ARTICLE II.         DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES.......    33
   Section 2.01.    Creation and Declaration of Trust Fund; Conveyance
                    of Mortgage Loans....................................    33
   Section 2.02.    Acceptance of Trust Fund by Trustee; Review of
                    Documentation for Trust Fund.........................    36
   Section 2.03.    Representations and Warranties of the Depositor
                    and the Servicer.....................................    38
   Section 2.04.    Discovery of Breach; Repurchase or Substitution
                    of Mortgage Loans....................................    42
   Section 2.05.    Grant Clause.........................................    45

ARTICLE III.        THE CERTIFICATES.....................................    46
   Section 3.01.    The Certificates.....................................    46
   Section 3.02.    Registration.........................................    47
   Section 3.03.    Transfer and Exchange of Certificates................    47
   Section 3.04.    Cancellation of Certificates.........................    50
   Section 3.05.    Replacement of Certificates..........................    50
   Section 3.06.    Persons Deemed Owners................................    51
   Section 3.07.    Temporary Certificates...............................    51
   Section 3.08.    Appointment of Paying Agent..........................    52
   Section 3.09.    Book-Entry Certificates..............................    52

ARTICLE IV.         ADMINISTRATION OF THE TRUST FUND.....................    53
   Section 4.01.    Custodial Accounts; Distribution Account.............    53
   Section 4.02.    Reports to Trustee and Certificateholders............    54

ARTICLE V.          DISTRIBUTIONS TO HOLDERS OF CERTIFICATES.............    57
   Section 5.01.    Distributions Generally..............................    57
   Section 5.02.    Distributions from the Distribution Account..........    57
   Section 5.03.    Allocation of Losses.................................    60
   Section 5.04.    Advances.............................................    61

ARTICLE VI.         CONCERNING THE TRUSTEE; EVENTS OF DEFAULT............    61
   Section 6.01.    Duties of Trustee....................................    61
   Section 6.02.    Certain Matters Affecting the Trustee................    63
</TABLE>

                                        i

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                 <C>                                                     <C>
   Section 6.03.    Trustee Not Liable for Certificates..................    65
   Section 6.04.    Trustee May Own Certificates.........................    65
   Section 6.05.    Eligibility Requirements for Trustee.................    65
   Section 6.06.    Resignation and Removal of Trustee...................    65
   Section 6.07.    Successor Trustee....................................    66
   Section 6.08.    Merger or Consolidation of Trustee...................    67
   Section 6.09.    Appointment of Co-Trustee, Separate Trustee
                    or Custodian.........................................    67
   Section 6.10.    Authenticating Agents................................    68
   Section 6.11.    Indemnification of Trustee...........................    69
   Section 6.12.    Fees and Expenses of the Trustee.....................    70
   Section 6.13.    Collection of Monies.................................    70
   Section 6.14.    Events of Default; Trustee To Act; Appointment
                    of Successor.........................................    70
   Section 6.15.    Additional Remedies of Trustee Upon Event
                    of Default...........................................    72
   Section 6.16.    Waiver of Defaults...................................    72
   Section 6.17.    Notification to Holders..............................    72
   Section 6.18.    Directions by Certificateholders and Duties of
                    Trustee During Event of Default......................    73
   Section 6.19.    Preparation of Tax Returns and Other Reports.........    73

ARTICLE VII.        PURCHASE OF MORTGAGE LOANS AND TERMINATION OF
                    THE TRUST FUND.......................................    74
   Section 7.01.    Purchase of Mortgage Loans; Termination of Trust Fund
                    Upon Purchase or Liquidation of All Mortgage Loans...    74
   Section 7.02.    Procedure Upon Termination of Trust Fund.............    74
   Section 7.03.    Additional Trust Fund Termination Requirements.......    75

ARTICLE VIII.       RIGHTS OF CERTIFICATEHOLDERS.........................    76
   Section 8.01.    Limitation on Rights of Holders......................    76
   Section 8.02.    Access to List of Holders............................    77
   Section 8.03.    Acts of Holders of Certificates......................    77

ARTICLE IX.         ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS...    78
   Section 9.01.    Servicer to Act as Servicer..........................    78
   Section 9.02.    Title, Management and Disposition of REO Property....    79
</TABLE>

                                       ii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                 <C>                                                     <C>
   Section 9.03.    Trustee and Depositor's Right to Examine
                    Servicer Records.....................................     80
   Section 9.04.    Legal Proceedings Involving the Servicer and/or
                    the Mortgage Loans...................................     81
   Section 9.05.    Material Changes.....................................     81
   Section 9.06.    Servicer Shall Provide Information as Reasonably
                    Required.............................................     82
   Section 9.07.    Servicer Not to Resign...............................     82
   Section 9.08.    Custodial Accounts and Escrow Accounts...............     82
   Section 9.09.    Assumption Processing................................     83
   Section 9.10.    Books and Records....................................     83
   Section 9.11.    Annual Statement as to Compliance....................     83
   Section 9.12.    [Reserved.]..........................................     84
   Section 9.13.    Reports on Assessment of Compliance and Attestation..     84
   Section 9.14.    Servicing Compensation...............................     86
   Section 9.15.    Indemnification......................................     86
   Section 9.16.    Non Solicitation.....................................     87
   Section 9.17.    Successor to the Servicer............................     87
   Section 9.18.    Statements to the Trustee............................     88
   Section 9.19.    Merger or Consolidation of the Servicer..............     88
   Section 9.20.    Limitation on Liability of the Servicer..............     88
   Section 9.21.    Periodic Filings.....................................     89
   Section 9.22.    Maintenance of Hazard Insurance and Errors and
                    Omissions and Fidelity Coverage......................     94

ARTICLE X.          REMIC ADMINISTRATION.................................     95
   Section 10.01.   REMIC Administration.................................     95
   Section 10.02.   Prohibited Transactions and Activities...............     97
   Section 10.03.   Indemnification with Respect to Prohibited
                    Transactions or Loss of REMIC Status.................     97
   Section 10.04.   REO Property.........................................     97

ARTICLE XI.         MISCELLANEOUS PROVISIONS.............................     98
   Section 11.01.   Binding Nature of Agreement; Assignment..............     98
   Section 11.02.   Entire Agreement.....................................     98
   Section 11.03.   Amendment............................................     98
   Section 11.04.   Voting Rights........................................    100
</TABLE>

                                       iii

<PAGE>

                                TABLE OF CONTENTS
                                   (continued)

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                 <C>                                                     <C>
   Section 11.05.   Provision of Information.............................    100
   Section 11.06.   Governing Law........................................    100
   Section 11.07.   Notices..............................................    100
   Section 11.08.   Severability of Provisions...........................    101
   Section 11.09.   Indulgences; No Waivers..............................    101
   Section 11.10.   Headings Not To Affect Interpretation................    101
   Section 11.11.   Benefits of Agreement................................    101
   Section 11.12.   Special Notices to the Rating Agencies...............    101
   Section 11.13.   [RESERVED]...........................................    102
   Section 11.14.   Counterparts.........................................    102
   Section 11.15.   No Petitions.........................................    102
   Section 11.16.   Compliance with Regulation AB........................    103
</TABLE>

                                       iv

<PAGE>

EXHIBITS

<TABLE>
<S>           <C>
Exhibit A     Form of Certificates
Exhibit B     Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit C     Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit D-1   Standard Layout for Monthly Remittance Advice
Exhibit D-2   Standard Layout for Monthly Defaulted Loan Report
Exhibit E     Mortgage Loan Sale and Assignment Agreement
Exhibit F     List of Limited Purpose Surety Bonds
Exhibit G     Form of Rule 144A Transfer Certificate
Exhibit H     Form of Purchaser's Letter for Institutional Accredited Investor
Exhibit I     Form of ERISA Transfer Affidavit
Exhibit J     Form of Letter of Representations with the Depository Trust Company
Exhibit K     Form of Initial Certification
Exhibit L     Form of Final Certification
Exhibit M     List of Servicing Officers
Exhibit N     Request for Release
Exhibit O     [Reserved]
Exhibit P     [Reserved]
Exhibit Q     Form of Trustee Back-up Certification
Exhibit R     Form of Officer's Certificate of Servicer
Exhibit S-1   Form of Assessment of Compliance
Exhibit S-2   Servicing Criteria to be Addressed in Assessment of Compliance
Exhibit T     Form of Sarbanes-Oxley Certification
Exhibit U     Additional Disclosure Notification
Exhibit V     Form of Officer's Certificate of [Servicer][Trustee]
Exhibit W     Items for Form 8-K
Exhibit X     Items for Form 10-D
Exhibit Y     Items for Form 10-K
Schedule A    Mortgage Loan Schedule
</TABLE>

                                        v
<PAGE>

     This POOLING AND SERVICING AGREEMENT, dated as of February 1, 2006 (the
"Agreement"), by and among MERRILL LYNCH MORTGAGE INVESTORS, INC., a Delaware
corporation, as depositor (the "Depositor"), PHH MORTGAGE CORPORATION, a New
Jersey corporation, as servicer (the "Servicer") and WELLS FARGO BANK, N.A., as
Trustee (the "Trustee"), and acknowledged by MERRILL LYNCH MORTGAGE LENDING,
INC. a Delaware corporation, as sponsor (the "Sponsor"), for purposes of Section
2.04.

                              PRELIMINARY STATEMENT

     The Depositor has acquired the Mortgage Loans from the Sponsor and at the
Closing Date is the owner of the Mortgage Loans and the other property being
conveyed by the Depositor to the Trustee hereunder for inclusion in the Trust
Fund. On the Closing Date, the Depositor will acquire the Certificates from the
Trustee as consideration for the Depositor's transfer to the Trust Fund of the
Mortgage Loans and the other property constituting the Trust Fund. The Depositor
has duly authorized the execution and delivery of this Agreement to provide for
the conveyance to the Trustee of the Mortgage Loans and the other property
constituting the Trust Fund. All covenants and agreements made by the Sponsor in
the Mortgage Loan Sale and Assignment Agreement and in this Agreement and all
covenants and agreements made by the Depositor, the Servicer and the Trustee
herein with respect to the Mortgage Loans and the other property constituting
the Trust Fund are for the benefit of the Holders from time to time of the
Certificates. The Depositor, the Servicer and the Trustee are entering into this
Agreement, and the Trustee is accepting the Trust Fund created hereby, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged.

     As provided herein, the Trustee shall elect that the Trust Fund be treated
for federal income tax purposes as comprising two real estate mortgage
investment conduits (each a "REMIC" or, in the alternative, "REMIC 1" and the
"Upper Tier REMIC," respectively) in a tiered structure. The Certificates, other
than the Class A-R Certificate, shall represent ownership of regular interests
in the Upper Tier REMIC. The Class A-R Certificate represents the sole class of
residual interest in each of REMIC 1 and the Upper Tier REMIC.

     The Upper Tier REMIC shall hold as its assets the several classes of
uncertificated REMIC 1 Regular Interests. REMIC 1 shall hold as its assets the
property of the Trust Fund other than the REMIC 1 Interests.

     Each Upper Tier REMIC Regular Interest is hereby designated as a regular
interest in the Upper Tier REMIC for purposes of the REMIC Provisions. Each
REMIC 1 Regular Interest is hereby designated as a regular interest in REMIC 1
for purposes of the REMIC Provisions.

     The Class LT1-R Interest is hereby designated as the sole class of residual
interest in REMIC 1 for purposes of the REMIC Provisions. The Class A-R
Certificate, other than the portion thereof representing the right to receive
payments in respect of the Class LT1-R Interest is hereby designated as the sole
class of residual interest in the Upper Tier REMIC for purposes of the REMIC
provisions and will also represent the Class LT1-R Interest.

THE REMIC 1 INTERESTS

     The following table sets forth (or describes) the class designation,
interest rate, initial principal amount, and related pool of Mortgage Loans for
each class of REMIC 1 Interests:

                                       1

<PAGE>

<TABLE>
<CAPTION>
                                        Interest   Related Mortgage Pool
Class Designation    Principal Amount     Rate            or Pools
-----------------   -----------------   --------   ---------------------
<S>                 <C>                 <C>        <C>
LT11A               $     27,943.8421      (2)       Pool 1
LT11B               $    798,313.8421      (3)       Pool 1
LT12A               $    138,864.8681      (2)       Pool 2
LT12B               $  3,967,304.8681      (4)       Pool 2
LT1Z                $471,629,443.5996      (2)       Pool 1 and Pool 2
LT1-R                      (1)             (1)       N/A
</TABLE>

----------
(1)  The Class LT1-R Interest represents the sole class of residual interest in
     REMIC 1 and has neither a principal amount nor an interest rate. The Class
     LT1-R Interest shall be represented by the Class A-R Certificate.

(2)  The Class LT11A Interest, the Class LT12A Interest, and the Class LT1Z
     Interest shall have an interest rate for each Distribution Date (and the
     related Accrual Period) equal to the Net WAC.

(3)  The Class LT11B Interest shall have an interest rate for any Distribution
     Date (and the related Accrual Period) equal to the Pool 1 Net WAC.

(4)  The Class LT12B Interest shall have an interest rate for any Distribution
     Date (and the related Accrual Period) equal to the Pool 2 Net WAC.

     On each Distribution Date, the Trustee shall first pay or charge as an
expense of REMIC 1 all expenses of the Issuing Entity for such Distribution
Date.

     Principal distributions shall be deemed to be made on the REMIC 1 Interests
first, so as to keep the uncertificated principal balance of each REMIC 1
Interest ending with the designation "A" equal to 1% of the excess of (x) the
aggregate Principal Balance of the Mortgage Loans in the related Mortgage Pool
over (y) the aggregate class principal amounts of the Certificates in the
Certificate Group related to such Mortgage Pool (except that if 1% of any such
excess is greater than the principal amount of the corresponding REMIC 1
Interest ending with the designation "A", the least amount of principal shall be
distributed to such REMIC 1 Interests such that the REMIC 1 Subordinate Balance
Ratio is maintained); second, to each REMIC 1 Interest ending with the
designation "B" so as to keep the uncertificated principal balance of each such
REMIC 1 Interest equal to 1% of the aggregate Principal Balance of the Mortgage
Loans in the related Mortgage Pool and finally, all remaining principal amounts
shall be distributed in respect of the Class LT1Z Interest. Realized Losses with
respect to principal shall be allocated among the REMIC 1 Interests first, so as
to keep the uncertificated principal balance of each REMIC 1 Interest ending
with the designation "A" equal to 1% of the excess of (x) the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool over (y)
the aggregate class principal amounts of the Certificates in the Certificate
Group related to such Mortgage Pool (except that if 1% of any such excess is
greater than the principal amount of the corresponding REMIC 1 Interest ending
with the designation "A", the least amount of losses shall be allocated to such
REMIC 1 Interests such that the REMIC 1 Subordinate Balance Ratio is
maintained); second, to each REMIC 1 Interest ending with the designation "B" so
as to keep the uncertificated principal balance of each such REMIC 1 Interest
equal to 1% of the aggregate Principal Balance of the Mortgage Loans in the
related Mortgage Pool and finally, all remaining Realized Losses with respect to
principal shall be distributed in respect of the Class LT1Z Interest.

                                       2

<PAGE>

     If on any Distribution Date the Certificate Principal Amount of any Class
of Certificates is increased pursuant to the penultimate sentence of the
definition of "Certificate Principal Amount", then there shall be an equivalent
aggregate increase in the principal amounts of the REMIC 1 Regular Interests,
with such increase allocated (before the making of distributions and the
allocation of losses on the REMIC 1 Regular Interests on such Distribution Date)
among the REMIC 1 Regular Interests as follows: (i) first, to each REMIC 1
Interest ending with the designation "B" so as to keep the uncertificated
principal balance of each such REMIC 1 Interest equal to 1% of the aggregate
Principal Balance of the Mortgage Loans in the related Mortgage Pool, (ii)
second, to each REMIC 1 Regular Interest ending with the designation "A", so
that the uncertificated principal balance of each REMIC 1 Regular Interest
ending with the designation "A" is as close as possible to (but does not exceed)
1% of the excess of (x) the aggregate Principal Balance of the Mortgage Loans in
related Mortgage Pool over (y) the aggregate class principal balance of the
Certificates in the Certificate Group related to such Mortgage Pool; provided,
however, that (a) the REMIC 1 Subordinate Balance Ratio is maintained and (b)
amounts allocated to any REMIC 1 Regular Interest pursuant to this clause (ii)
shall not exceed the amount of any previous realized losses allocated to such
REMIC 1 Regular Interest not previously offset by distributions or increases in
the principal amount of such REMIC 1 Regular Interest and (iii) finally, all
remaining amounts to the Class LT1Z Interest.

     All computations with respect to the REMIC 1 Interests shall be computed to
eight decimal places.

THE CERTIFICATES

     The following table sets forth (or describes) the Class designation,
Certificate Interest Rate, initial Class Principal Amount, and minimum
denomination for each Class of Certificates comprising interests in the Trust
Fund created hereunder.

<TABLE>
<CAPTION>
                 Related Class or
               Classes of interests
    Class        in the Upper Tier     Certificate      Initial Class     Minimum Denominations
 Designation           REMIC          Interest Rate   Principal Amount   or Percentage Interest
------------   --------------------   -------------   ----------------   ----------------------
<S>            <C>                    <C>             <C>                <C>
 Class I-A          Class I-A              (1)          $ 77,036,900          $ 25,000.00
Class II-A-1       Class II-A-1            (2)          $369,444,000          $ 25,000.00
Class II-A-2       Class II-A-2            (2)          $ 13,400,000          $ 25,000.00
 Class A-R          Class A-R              (3)          $        100                  100%
 Class M-1          Class M-1              (4)          $  7,626,000          $ 25,000.00
 Class M-2          Class M-2              (4)          $  3,336,000          $ 25,000.00
 Class M-3          Class M-3              (4)          $  1,906,000          $ 25,000.00
 Class B-1          Class B-1              (4)          $  1,668,000          $100,000.00
 Class B-2          Class B-2              (4)          $  1,191,000          $100,000.00
 Class B-3          Class B-3              (4)          $    953,871          $100,000.00
</TABLE>

(1)  The Certificate Interest Rate with respect to any Distribution Date (and
     the related Accrual Period) for the

                                       3

<PAGE>

     Class I-A Certificates will be the Pool 1 Net WAC.

(2)  The Certificate Interest Rate with respect to any Distribution Date (and
     the related Accrual Period) for the Class II-A-1 and Class II-A-2
     Certificates will be the Pool 2 Net WAC.

(3)  The Certificate Interest Rate with respect to any Distribution Date (and
     the related Accrual Period) for the Class A-R Certificate will equal the
     Pool 1 Net WAC.

(4)  The Certificate Interest Rates with respect to any Distribution Date (and
     the related Accrual Period) for the Class M-1, Class M-2, Class M-3, Class
     B-1, Class B-2 and Class B-3 Certificates will be equal to the Subordinate
     Net WAC.

     As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $476,561,871.02.

     In consideration of the mutual agreements herein contained, the Depositor,
the Servicer and the Trustee hereby agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

     Section 1.01 Definitions.

     The following words and phrases, unless the context otherwise requires,
shall have the following meanings:

     Accepted Servicing Practices: The Servicer's normal servicing practices,
which will conform to the mortgage servicing practices of prudent mortgage
lending institutions which service for their own account mortgage loans of the
same type as the Mortgage Loans in the jurisdictions in which the related
Mortgaged Properties are located.

     Accountant: A Person engaged in the practice of accounting who (except when
this Agreement provides that an Accountant must be Independent) may be employed
by or affiliated with the Depositor or an Affiliate of the Depositor.

     Accountant's Attestation: As defined in Section 9.13.

     Accrual Period: With respect to any Distribution Date, the calendar month
immediately preceding the month in which the related Distribution Date occurs.
Interest shall accrue on all Classes of Certificates and on all Lower Tier REMIC
Interests on the basis of a 360-day year consisting of twelve 30-day months.

     Additional Collateral: With respect to any Additional Collateral Mortgage
Loan, the meaning assigned thereto in the Mortgage Loan Sale and Assignment
Agreement.

     Additional Collateral Mortgage Loan: Each Mortgage Loan identified as such
in the Mortgage Loan Schedule.

     Additional Form 10-D Disclosure: As defined in Section 9.21.

                                       4
<PAGE>

     Adjustment Date: As to any Mortgage Loan, the date on which the related
Mortgage Rate adjusts in accordance with the terms of the related Mortgage Note.

     Advance: With respect to a Mortgage Loan, the payments required to be made
by the Trustee solely in its capacity as successor servicer or by the Servicer
with respect to any Distribution Date pursuant to this Agreement, the amount of
any such payment being equal to the aggregate of the payments of principal and
interest (net of the applicable Servicing Fee and net of any net income in the
case of any REO Property) on the Mortgage Loans that were due on the related Due
Date and not received as of the close of business on the related Determination
Date, less the aggregate amount of any such delinquent payment that either the
Trustee or the Servicer has determined would constitute Nonrecoverable Advances
if advanced.

     Adverse REMIC Event: As defined in Section 10.01(f) hereof.

     Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "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.

     Aggregate Senior Percentage: As to any Distribution Date, the percentage
equivalent of a fraction, the numerator of which is the aggregate of the Class
Principal Amounts of the Class I-A, Class II-A-1, Class II-A-2 and Class A-R
Certificates and the denominator of which is the Aggregate Stated Principal
Balance, but in no event greater than 100%.

     Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances for all Mortgage Loans (and when such
term is used with respect to a particular Mortgage Pool, the aggregate of the
Stated Principal Balances of the Mortgage Loans in such Mortgage Pool) which
were outstanding on the Due Date in the month preceding the month of such
Distribution Date.

     Aggregate Subordinate Percentage: As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.

     Aggregate Voting Interests: The aggregate of the Voting Interests of all
the Certificates under this Agreement.

     Agreement: This Pooling and Servicing Agreement and all amendments and
supplements hereto.

     Allocable Share: With respect to each Class of Subordinate Certificates and
any Distribution Date, the percentage equivalent of a fraction, the numerator of
which is the Class Principal Amount of such Class and the denominator of which
is the aggregate of the Class Principal Amounts of each Class of Subordinate
Certificates.

     Ancillary Fees: With respect to any Mortgage Loan, (i) all late charges,
(ii) all fees payable pursuant to PHH's "Speed Pay" program, (iii) all
returned-item charges (e.g. insufficient funds charges) and (iv) modification or
conversion fees.

                                       5

<PAGE>

     Applicable Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Subordination
Percentages of such Class and the aggregate Class Subordination Percentage of
all other Classes of Subordinate Certificates having higher numerical Class
designations than such Class.

     Apportioned Principal Balance: As to any Distribution Date and each Class
of Subordinate Certificates and any Mortgage Pool, the Class Principal Amount
thereof multiplied by a fraction, the numerator of which is the applicable Pool
Subordinate Amount (i.e., the Pool 1 Subordinate Amount or the Pool 2
Subordinate Amount, as the case may require), and the denominator of which is
the sum of such Pool Subordinate Amounts on such date.

     Appraised Value: With respect to any Mortgage Loan, the Appraised Value of
the related Mortgaged Property shall be: (i) with respect to a Mortgage Loan
other than a Refinancing Mortgage Loan, the lesser of (a) the value of the
Mortgaged Property based upon the appraisal made at the time of the origination
of such Mortgage Loan and (b) the sales price of the Mortgaged Property at the
time of the origination of such Mortgage Loan; and (ii) with respect to a
Refinancing Mortgage Loan, the value of the Mortgaged Property based upon the
appraisal made at the time of the origination of such Refinancing Mortgage Loan.

     Assessment of Compliance: As defined in Section 9.13.

     Assignment of Mortgage: An assignment of the Mortgage, notice of transfer
or equivalent instrument, in recordable form, sufficient under the laws of the
jurisdiction wherein the related Mortgaged Property is located to reflect the
sale of the Mortgage to the Trustee, which assignment, notice of transfer or
equivalent instrument may be in the form of one or more blanket assignments
covering the Mortgage Loans secured by Mortgaged Properties located in the same
jurisdiction, if permitted by law; provided, however, that the Trustee shall not
be responsible for determining whether any such assignment is in recordable
form.

     Authenticating Agent: The Trustee or any authenticating agent appointed by
the Trustee pursuant to Section 6.10 until any successor authenticating agent
for the Certificates is named, and thereafter "Authenticating Agent" shall mean
any such successor.

     Authorized Officer: Any Person who may execute an Officer's Certificate on
behalf of the Depositor.

     Available Distribution Amount: With respect to any Distribution Date and
each Mortgage Pool, the total amount of all cash received by the Trustee on the
Mortgage Loans in such Mortgage Pool from the Servicer or otherwise through the
Distribution Account Deposit Date for deposit into the Distribution Account in
respect of such Distribution Date, including (1) all scheduled installments of
interest (net of the Servicing Fee) and principal collected on the related
Mortgage Loans and due during the Due Period related to such Distribution Date,
together with any Advances in respect thereof, (2) all Insurance Proceeds,
Liquidation Proceeds, Subsequent Recoveries and the proceeds of any Additional
Collateral from the related Mortgage Loans, in each case for such Distribution
Date, (3) all partial or full Principal Prepayments, together with any accrued
interest thereon, identified as having been received from the related Mortgage
Loans during the related Prepayment Period, (4) any amounts received from the
Servicer in respect of Prepayment Interest Shortfalls with respect to the
related Mortgage Loans; and (5) the aggregate Purchase Price of all Defective
Mortgage Loans and Converted Mortgage Loans (if any) in such Mortgage Pool
purchased from the Trust Fund during the related Prepayment Period, minus:

                                       6

<PAGE>

     (A) all related fees, charges and amounts payable or reimbursable to the
Trustee under this Agreement, to the extent that, if paid by the Trust Fund,
such fees, charges or other amounts would constitute "unanticipated expenses"
(within the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)) of any
of the REMICs provided for herein and up to an aggregate maximum amount equal to
$300,000 annually; provided, such annual aggregate maximum amount shall exclude
(i) any Servicing Transfer Costs, or amounts reimbursable to the Servicer under
this Agreement and (ii) any costs, damages or expenses incurred by the Trustee
in connection with any "high cost" home loans or any predatory or abusive
lending laws, which amounts shall in no case be subject to any such limitation;

     (B) in the case of (2), (3), (4) and (5) above, any related unreimbursed
expenses incurred by the Servicer in connection with a liquidation or
foreclosure and any unreimbursed Advances or Servicing Advances due to the
Servicer (or, pursuant to Section 5.04, the Trustee);

     (C) any related unreimbursed Nonrecoverable Advances due to the Servicer
(or, pursuant to Section 5.04, the Trustee); and

     (D) in the case of (1) through (4) above, any related amounts collected
which are determined to be attributable to a subsequent Due Period or Prepayment
Period.

     Bankruptcy: As to any Person, the making of an assignment for the benefit
of creditors, the filing of a voluntary petition in bankruptcy, adjudication as
a bankrupt or insolvent, the entry of an order for relief in a bankruptcy or
insolvency proceeding, the seeking of reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief, or seeking, consenting
to or acquiescing in the appointment of a trustee, receiver or liquidator,
dissolution, or termination, as the case may be, of such Person pursuant to the
provisions of either the Bankruptcy Code or any other similar state laws.

     Bankruptcy Code: The United States Bankruptcy Code of 1986, as amended.

     BBA: The British Banker's Association.

     Book-Entry Certificates: Beneficial interests in Certificates designated as
"Book-Entry Certificates" in this Agreement, ownership and transfers of which
shall be evidenced or made through book entries by a Clearing Agency as
described in Section 3.09; provided, that after the occurrence of a Book-Entry
Termination whereupon book-entry registration and transfer are no longer
permitted and Definitive Certificates are to be issued to Certificate Owners,
such Book-Entry Certificates shall no longer be "Book-Entry Certificates." As of
the Closing Date, the following Classes of Certificates constitute Book-Entry
Certificates: Class I-A, Class II-A, Class M-1, Class M-2, Class M-3, Class B-1,
Class B-2 and Class B-3.

     Book-Entry Termination: The occurrence of any of the following events: (i)
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities with respect to the Book Entry Certificates, and the Depositor
is unable to locate a qualified successor; or (ii) the Depositor at its option
advises the Trustee and the Certificate Registrar in writing that it elects to
terminate the book-entry system through the Clearing Agency.

     Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which banking institutions in New York, New York or, if other than New York,
any city in which the Corporate Trust Office of the Trustee is located, or the
States of Maryland or Minnesota, are authorized or obligated by law or executive
order to be closed.

                                       7

<PAGE>

     Certificate: Any one of the certificates signed by the Trustee and
authenticated by the Authenticating Agent in substantially the forms attached
hereto as Exhibit A.

     Certificate Group: Each of the Group 1 Certificates and the Group 2
Certificates.

     Certificate Interest Rate: With respect to each Class of Certificates and
any Distribution Date, the applicable per annum rate described in the
Preliminary Statement hereto.

     Certificate Owner: With respect to a Book-Entry Certificate, the Person who
is the owner of such Book-Entry Certificate, as reflected on the books of the
Clearing Agency, or on the books of a Person maintaining an account with such
Clearing Agency (directly or as an indirect participant, in accordance with the
rules of such Clearing Agency).

     Certificate Principal Amount: With respect to any Certificate, at the time
of determination, the maximum specified dollar amount of principal to which the
Holder thereof is then entitled hereunder, such amount being equal to the
initial principal amount set forth on the face of such Certificate, less (i) the
amount of all principal distributions previously made with respect to such
Certificate; (ii) all Realized Losses allocated to such Certificate; and (iii)
in the case of a Subordinate Certificate, any Subordinate Certificate Writedown
Amount allocated to such Certificates. Notwithstanding the foregoing, on any
Distribution Date relating to a Due Period in which a Subsequent Recovery has
been received by the Servicer, the Certificate Principal Amount of any Class of
Certificates then outstanding for which any Realized Loss or any Subordinate
Certificate Writedown Amount has been applied will be increased, in order of
seniority, by an amount equal to the lesser of (i) the amount such Class of
Certificates has been written down in respect of Realized Losses or Subordinate
Certificate Writedown Amounts, to the extent not previously offset by increases
in Certificate Principal Amount pursuant to this sentence and (ii) the total of
any Subsequent Recovery distributed on such date to the Certificateholders
(reduced (x) by the amount of the increase in the Certificate Principal Amount
of any more senior Class of Certificates pursuant to this sentence on such
Distribution Date and (y) to reflect a proportionate amount of the increase in
the Certificate Principal Amount of any pari passu Class of Certificates on such
Distribution Date pursuant to this sentence). For purposes of Article V hereof,
unless specifically provided to the contrary, Certificate Principal Amounts
shall be determined as of the close of business of the immediately preceding
Distribution Date, after giving effect to all distributions made on such date.

     Certificate Register and Certificate Registrar: The register maintained and
the registrar appointed pursuant to Section 3.02.

     Certificateholder: The meaning provided in the definition of "Holder."

     Civil Relief Act: The Servicemembers Civil Relief Act.

     Class: Collectively, Certificates bearing the same class designation. In
the case of the REMIC 1 and the Upper Tier REMIC, the term "Class" refers to all
REMIC Interests having the same alphanumeric designation.

     Class A Certificates: Any Class I-A, Class II-A-1, Class II-A-2 or Class
A-R Certificate.

     Class A-R Certificate: The Class A-R Certificate executed by the Trustee,
and authenticated and delivered by the Authenticating Agent, substantially in
the form annexed hereto

                                       8

<PAGE>

as Exhibit A, and evidencing the ownership of the Class LT1-R Interest and the
residual interest in the Upper Tier REMIC.

     Class Principal Amount: With respect to each Class of Certificates the
aggregate of the Certificate Principal Amounts of all Certificates of such Class
at the date of determination.

     Class Subordination Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such Distribution
Date by the sum of the Class Principal Amounts of all Classes of Certificates
immediately prior to such Distribution Date.

     Clearing Agency: An organization registered as a "clearing agency" pursuant
to Section 17A of the Securities Exchange Act of 1934, as amended. As of the
Closing Date, the Clearing Agency shall be The Depository Trust Company.

     Clearing Agency Participant: A broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.

     Closing Date: February 28, 2006.

     Code: The Internal Revenue Code of 1986, as amended, and as it may be
further amended from time to time, any successor statutes thereto, and
applicable U.S. Department of Treasury regulations issued pursuant thereto in
temporary or final form.

     Commission: Securities and Exchange Commission.

     Compensating Interest Payment: As to any Distribution Date, the lesser of
(1) the Servicing Fee for such date and (2) any Prepayment Interest Shortfall
for such date.

     Cooperative Corporation: The entity that holds title (fee or an acceptable
leasehold estate) to the real property and improvements constituting the
Cooperative Property and which governs the Cooperative Property, which
Cooperative Corporation must qualify as a Cooperative Housing Corporation under
Section 216 of the Code.

     Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and a
Proprietary Lease.

     Cooperative Property: The real property and improvements owned by the
Cooperative Corporation, that includes the allocation of individual dwelling
units to the holders of the shares of the Cooperative Corporation.

     Cooperative Shares: Shares issued by a Cooperative Corporation.

     Corporate Trust Office: With respect to the presentment of Certificates for
registration of transfer, exchange or final payment, Wells Fargo Bank, N.A.,
Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479, Attention:
Corporate Trust Services - MLMI Series MLCC 2006-1 and for all other purposes,
Wells Fargo Bank, N.A., 9062 Old Annapolis Road, Columbia, Maryland 21045,
Attention: Corporate Trust Services - MLMI Series MLCC 2006-1, or such other
address as the Trustee may designate from time to time by notice to the
Certificateholders.

                                       9

<PAGE>

     Corresponding Classes of Certificates: With respect to each Lower Tier
REMIC Interest, the Class or Classes of Certificates appearing opposite such
Lower Tier REMIC Interest as described in the Preliminary Statement hereto.

     Credit Support Depletion Date: The first Distribution Date, if any, on
which the aggregate Certificate Principal Amounts of the Subordinate
Certificates have been reduced to zero.

     Current Interest: With respect to each Class of Certificates on each
Distribution Date, the aggregate amount of interest accrued at the applicable
Certificate Interest Rate during the related Accrual Period on the Class
Principal Amount of such Class.

     Custodial Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the Fannie Mae Servicing Guide which
shall be entitled "Wells Fargo Bank, N.A., in trust for the registered holders
for Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates." The Custodial Account shall be an Eligible Account.

     Cut-off Date: February 1, 2006.

     Cut-off Date Balance: With respect to the Mortgage Loans in the Trust Fund
on the Closing Date, the Aggregate Stated Principal Balance as of the Cut-off
Date.

     Debt Service Reduction: With respect to any Mortgage Loan, a reduction by a
court of competent jurisdiction in a proceeding under the Bankruptcy Code in the
Scheduled Payment for such Mortgage Loan which became final and non-appealable,
except such a reduction resulting from a Deficient Valuation or any reduction
that results in a permanent forgiveness of principal.

     Defective Mortgage Loan: As defined in Section 2.04(a).

     Deficiency Amount: As defined in Section 5.03(b)(ii).

     Deficient Valuation: With respect to any Mortgage Loan, a valuation of the
related Mortgaged Property by a court of competent jurisdiction in an amount
less than the then outstanding indebtedness under the Mortgage Loan, or any
reduction in the amount of principal to be paid in connection with any Scheduled
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from an order of such court which is final and non-appealable
in a proceeding under the Bankruptcy Code.

     Definitive Certificate: A Certificate of any Class issued in definitive,
fully registered, certificated form.

     Deleted Mortgage Loan: As defined in Section 2.04(a).

     Delinquent: Any Mortgage Loan with respect to which the Scheduled Payment
due on a Due Date is not received.

     Depositor: Merrill Lynch Mortgage Investors, Inc., a Delaware corporation,
having its principal place of business at 250 Vesey Street, 4 World Financial
Center, 10th Floor, New York, New York 10080, or its successors in interest.

                                       10

<PAGE>

     Determination Date: With respect to each Distribution Date, the 15th day of
the month in which such Distribution Date occurs, or, if such 15th day is not a
Business Day, the next succeeding Business Day.

     Disqualified Organization: A "disqualified organization" as defined in
Section 860E(e)(5) of the Code.

     Distribution Account: The separate Eligible Account created and maintained
by the Trustee pursuant to Section 4.01 in the name of the Trustee for the
benefit of the Certificateholders and designated "Wells Fargo Bank, N.A., in
trust for registered holders of Merrill Lynch Mortgage Investors Trust Series
MLCC 2006-1, Mortgage Pass-Through Certificates." Funds in the Distribution
Account (exclusive of any earnings on investments made with funds deposited in
the Distribution Account) shall be held in trust for the Trustee and the
Certificateholders for the uses and purposes set forth in this Agreement.

     Distribution Account Deposit Date: The 18th day of each calendar month
after the initial issuance of the Certificates or, if such 18th day is not a
Business Day, the immediately preceding Business Day, commencing in March 2006.

     Distribution Date: The 25th day of each month or, if such 25th day is not a
Business Day, the next succeeding Business Day, commencing in March 2006.

     Due Date: With respect to any Mortgage Loan, the date on which a Scheduled
Payment is due under the related Mortgage Note as indicated in the Mortgage
Note, which is the first day of the calendar month.

     Due Period: As to any Distribution Date, the period beginning on the second
day of the month preceding the month of such Distribution Date, and ending on
the first day of the month of such Distribution Date.

     EDP: The electronic data processing system used by the Sponsor and the
Servicer, which are licensees of ALLTEL Information Services, Inc.

     Effective Loan-to-Value Ratio: A fraction, expressed as a percentage, the
numerator of which is the original Stated Principal Balance of the Mortgage
Loan, less the amount of Additional Collateral required to secure such Mortgage
Loan at the time of origination, if any, and the denominator of which is the
Appraised Value of the related Mortgage Property at such date.

     Eligible Account: Any of (i) an account or accounts maintained with a
federal or state chartered depository institution or trust company the
short-term unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a holding
company, the debt obligations of such holding company) have the highest
short-term ratings of each Rating Agency at the time any amounts are held on
deposit therein, or (ii) an account or accounts in a depository institution or
trust company in which such accounts are insured by the FDIC or the SAIF (to the
limits established by the FDIC or the SAIF) and the uninsured deposits in which
accounts are otherwise secured such that, as evidenced by an Opinion of Counsel
delivered to the Trustee and to each Rating Agency, the Certificateholders have
a claim with respect to the funds in such account or a perfected first priority
security interest against any collateral (which shall be limited to Permitted
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution or trust

                                       11

<PAGE>

company in which such account is maintained, or (iii) a trust account or
accounts maintained with the trust department of a federal or state chartered
depository institution or trust company, acting in its fiduciary capacity or
(iv) any other account acceptable to each Rating Agency. Eligible Accounts may
bear interest, and may include, if otherwise qualified under this definition,
accounts maintained with the Trustee, any Paying Agent, or the Servicer.

     ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
as it may be further amended from time to time, any successor statutes thereto,
and applicable U.S. Department of Labor regulations issued pursuant thereto in
temporary or final form.

     ERISA-Qualifying Underwriting: A best efforts or firm commitment
underwriting or private placement that would satisfy the requirements of the
Underwriter's Exemption, except, in relevant part, for the requirement that the
certificates have received a rating at the time of acquisition that is in one of
the three (or four, in the case of a "designated transaction") highest generic
rating categories by at least one of the Rating Agencies.

     ERISA-Restricted Certificate: The Class B-1, Class B-2 and Class B-3
Certificates and any other Certificate, as long as the acquisition and holding
of such other Certificate is not covered by and exempt under the Underwriter's
Exemption.

     Escrow Account: The separate trust account or accounts created and
maintained by the Servicer pursuant to the Fannie Mae Servicing Guide which
shall be entitled "Wells Fargo Bank, N.A., in trust for the registered holders
for Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates." The Escrow Account shall be an Eligible Account.

     Event of Default: As defined in Section 6.14.

     "Exception Report": The exception report prepared by the Trustee, which
lists all exceptions with respect to the Mortgage Loan Schedule, as updated from
time to time in accordance with Section 2.02 hereof.

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

     Fannie Mae: The entity formerly known as the Federal National Mortgage
Association, a federally chartered and privately owned corporation organized and
existing under the Federal National Mortgage Association Charter Act, or any
successor thereto.

     FDIC: The Federal Deposit Insurance Corporation or any successor thereto.

     FHA: The Federal Housing Administration or any successor thereto.

     FHLMC: The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created and existing under Title III of the
Emergency Home Finance Act of 1970, as amended, or any successor thereto.

     Final Certification: As referred to in Section 2.02(c), the form of which
is set forth at Exhibit L.

     Fitch Ratings: Fitch, Inc., or any successor in interest.

     Form 8-K Disclosure Information: As defined in Section 9.21.

                                       12

<PAGE>

     GNMA: The Government National Mortgage Association, or any successor
thereto.

     Global Securities: The global certificates representing the Book-Entry
Certificates.

     Group 1: All of the Group 1 Certificates.

     Group 1 Certificate: Any Class I-A or Class A-R Certificate.

     Group 2: All of the Group 2 Certificates.

     Group 2 Certificate: Any Class II-A-1 or Class II-A-2 Certificate.

     Holder or Certificateholder: The registered owner of any Certificate as
recorded on the books of the Certificate Registrar except that, solely for the
purposes of taking any action or giving any consent pursuant to this Agreement,
any Certificate registered in the name of the Depositor, the Trustee or the
Servicer, or any Affiliate thereof shall be deemed not to be outstanding in
determining whether the requisite percentage necessary to effect any such
consent has been obtained, except that, in determining whether the Trustee shall
be protected in relying upon any such consent, only Certificates which a
Responsible Officer of the Trustee knows to be so owned shall be disregarded.
The Trustee may request and conclusively rely on certifications by the Depositor
and the Servicer in determining whether any Certificates are registered to an
Affiliate of the Depositor or the Servicer.

     HUD: The United States Department of Housing and Urban Development, or any
successor thereto.

     Indemnified Parties: As defined in Section 9.15.

     Independent: When used with respect to any Accountants, a Person who is
"independent" within the meaning of Rule 2-01(b) of the Commission's Regulation
S-X. When used with respect to any other Person, a Person who (a) is in fact
independent of another specified Person and any Affiliate of such other Person,
(b) does not have any material direct financial interest in such other Person or
any Affiliate of such other Person, and (c) is not connected with such other
Person or any Affiliate of such other Person as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions.

     Index: As to each Mortgage Loan, the index from time to time in effect for
adjustment of the Mortgage Rate as set forth as such on the related Mortgage
Note.

     Initial Certification: As referred to in Section 2.02(a), the form of which
is set forth at Exhibit K.

     Initial Optional Purchase Date: The first Distribution Date following the
date on which the Aggregate Stated Principal Balance is less than 10.00% of the
Cut-off Date Balance.

     Insurance Policy: With respect to any Mortgage Loan, any insurance policy,
including all names and endorsements thereto in effect, including any
replacement policy or policies for any Insurance Policies.

     Insurance Proceeds: Proceeds paid by any Insurance Policy (excluding
proceeds required to be applied to the restoration and repair of the related
Mortgaged Property or released to the

                                       13

<PAGE>

Mortgagor), in each case other than any amount included in such Insurance
Proceeds in respect of Insured Expenses and the proceeds from any Limited
Purpose Surety Bond.

     Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.

     Interest Distribution Amount: For each Class of Certificates, on any
Distribution Date, the Current Interest for such Class, as reduced by such
Class's share of Net Prepayment Interest Shortfalls and Relief Act Reductions.
Any such shortfalls and reductions shall be allocated among (i) all Classes of
Certificates of the related Certificate Group from such Mortgage Pool and (ii)
the Subordinate Certificates proportionately on the basis of (1) in the case of
the Senior Certificates, Current Interest otherwise distributable thereon on
such Distribution Date and (2) in the case of Subordinate Certificates, interest
accrued at the Net WAC of the applicable Mortgage Pool on their Apportioned
Principal Balance before taking into account any reductions in such amounts from
Net Interest Shortfalls for that Distribution Date.

     Interest Shortfall: As to any Class of Certificates and any Distribution
Date, (i) the amount by which the Interest Distribution Amount for such Class on
such Distribution Date and all prior Distribution Dates exceeds (ii) amounts
distributed in respect thereof to such Class on prior Distribution Dates (as
determined without reduction for amounts not paid to such Class as a result of
the provisos set forth in Sections 5.02(a)(i) and 5.02(b) hereof).

     Interest Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, an amount equal to one month's interest on the
applicable Principal Transfer Amount at the related Mortgage Pool's Net WAC,
plus any shortfall of interest on the Senior Certificates related to such
Undercollateralized Group remaining unpaid from prior Distribution Dates.

     Intervening Assignments: The original intervening assignments of the
Mortgage, notices of transfer or equivalent instrument.

     Issuing Entity: Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1.

     Latest Possible Maturity Date: The Distribution Date in February 2036.

     LIBOR: With respect to each Accrual Period, a per annum rate determined on
the LIBOR Determination Date in the following manner by the Trustee on the basis
of the "Interest Settlement Rate" set by the BBA for one-month or six-month
United States dollar deposits, as such rates appear on the Telerate Page 3750,
as of 11:00 a.m. (London time) on such LIBOR Determination Date.

     (a) If on such a LIBOR Determination Date, the BBA's Interest Settlement
Rate does not appear on the Telerate Page 3750 as of 11:00 a.m. (London time),
or if the Telerate Page 3750 is not available on such date, the Trustee will
obtain such rate from Reuters' "page LIBOR 01" or Bloomberg's page "BBAM." If
such rate is not published for such LIBOR Determination Date, LIBOR for such
date will be the most recently published Interest Settlement Rate. In the event
that the BBA no longer sets an Interest Settlement Rate, the Trustee will
designate an alternative index that has performed, or that the Trustee expects
to perform, in a manner substantially similar to the BBA's Interest Settlement
Rate. The Trustee will select a particular index as the alternative index only
if it receives an Opinion of Counsel, which opinion shall be an expense
reimbursed from the Distribution Account, that the selection of such index will
not cause any of the REMICs to lose their classification as REMICs for federal
income tax purposes.

                                       14

<PAGE>

     (b) The establishment of LIBOR by the Trustee for the relevant Accrual
Period, in the absence of manifest error, will be final and binding.

     LIBOR Business Day: Any day on which banks in London, England and The City
of New York are open and conducting transactions in foreign currency and
exchange.

     Limited Purpose Surety Bond: Any Limited Purpose Surety Bond listed in
Exhibit F.

     Liquidated Mortgage Loan: With respect to any Distribution Date, a
defaulted Mortgage Loan (including any REO Property) which was liquidated in the
calendar month preceding the month of such Distribution Date and as to which the
Servicer has certified (in accordance with this Agreement) that it has received
all amounts it expects to receive in connection with the liquidation of such
Mortgage Loan including the final disposition of an REO Property.

     Liquidation Proceeds: Amounts, including Insurance Proceeds, received in
connection with the partial or complete liquidation of defaulted Mortgage Loans,
whether through trustee's sale, foreclosure sale or otherwise or amounts
received in connection with any condemnation or partial release of a Mortgaged
Property and any other proceeds received in connection with an REO Property.

     Loan-To-Value Ratio: With respect to any Mortgage Loan and as to any date
of determination, the fraction (expressed as a percentage) the numerator of
which is the principal balance of the related Mortgage Loan at such date of
determination and the denominator of which is the Appraised Value of the related
Mortgaged Property.

     Loss: With respect to any indemnification arising under Section 9.15 of
this Agreement, any and all losses, claims, damages, penalties, liabilities,
obligations, judgments, settlements, awards, demands, offsets, defenses,
counterclaims, actions or proceedings, reasonable out-of-pocket costs, expenses
and attorneys' fees of an Indemnified Party (including but not limited to, (a)
any reasonable costs, expenses and attorneys' fees incurred by such Indemnified
Party in enforcing such right of indemnification against any Indemnifying Party
or with respect to any appeal, and (b) interest on any amount for which an
Indemnified Party is entitled to be indemnified from the date such Indemnified
Party notifies the Servicer of the expenditure or such amounts until such
amounts are paid by the Servicer; provided, however, that in no event shall a
"Loss" include a claim for consequential damages, indirect damages or lost
profits except when the Loss results from the gross negligence, fraud or willful
misconduct of the Servicer.

     Lower Tier Regular Interests: Any of the REMIC 1 Regular Interests.

     Lower Tier REMIC Interests: Any of the REMIC 1 Interests.

     Margin: As to each Mortgage Loan, the percentage amount set forth on the
related Mortgage Note added to the Index in calculating the Mortgage Rate
thereon.

     Material Defect: As defined in Section 2.02(b).

     Maximum Rate: As to any Mortgage Loan, the maximum rate set forth on the
related Mortgage Note at which interest can accrue on such Mortgage Loan.

     MERS: Mortgage Electronic Registration Systems, Inc., a corporation
organized and existing under the laws of the State of Delaware or any successor
thereto.

                                       15

<PAGE>

     MERS Mortgage Loan: Any Mortgage Loan registered with MERS on the MERS
System.

     MERS System: The system of recording transfers of mortgages electronically
maintained by MERS.

     Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.02.

     Moody's: Moody's Investors Service, Inc., or any successor in interest.

     Mortgage: A mortgage, deed of trust or other instrument encumbering a fee
simple interest in real property securing a Mortgage Note, together with
improvements thereto.

     Mortgage Documents: With respect to each Mortgage Loan, the mortgage
documents required to be delivered to the Trustee pursuant to this Agreement.

     Mortgage Loan: A Mortgage and the related notes or other evidences of
indebtedness secured by each such Mortgage conveyed, transferred, sold, assigned
to or deposited with the Trustee pursuant to Section 2.01 (including any
Replacement Loan and REO Property), including without limitation, each Mortgage
Loan listed on the Mortgage Loan Schedule, as amended from time to time.

     Mortgage Loan Sale and Assignment Agreement: The Mortgage Loan Sale and
Assignment Agreement, dated as of February 28, 2006, between the Sponsor and the
Depositor with respect to the sale and purchase of the Mortgage Loans.

     Mortgage Loan Schedule: The schedule attached hereto as Schedule A, which
shall identify each Mortgage Loan, as such schedule may be amended by the
Depositor or the Servicer from time to time to reflect the addition of
Replacement Mortgage Loans to, or the deletion of Deleted Mortgage Loans from,
the Trust Fund. Such schedule shall, among other things (1) identify the
designated Mortgage Pool in which such Mortgage Loan is included and (2)
separately identify One-Year Treasury Loans, Six-Month LIBOR Loans and
Additional Collateral Mortgage Loans.

     Mortgage Note: The original executed note or other evidence of the
indebtedness of a Mortgagor secured by a Mortgage under a Mortgage Loan.

     Mortgage Pools: Pool 1 and Pool 2.

     Mortgaged Property: The underlying property, including any Additional
Collateral, securing a Mortgage Loan which, with respect to a Cooperative Loan,
is the related Cooperative Shares and Property Lease.

     Mortgage Rate: As to any Mortgage Loan, the annual rate of interest borne
by the related Mortgage Notes.

     Mortgagor: The obligor on a Mortgage Note.

     Net Interest Shortfalls: With respect to any Distribution Date, any Net
Prepayment Interest Shortfalls for that Distribution Date and the amount of
interest that would otherwise have

                                       16

<PAGE>

been received with respect to any Mortgage Loan which was subject to (i) a
Relief Act Reduction or (ii) the interest portion of any Debt Service Reduction
or Deficient Valuation, after exhaustion of the respective amounts of coverage
provided by the Subordinate Certificates for those type of losses.

     Net Liquidation Proceeds: With respect to any Liquidated Mortgage Loan or
any other disposition of related Mortgaged Property, the related Liquidation
Proceeds net of Advances, Servicer Advances, related Servicing Fees and any
other accrued and unpaid fees received and retained in connection with the
liquidation of such Mortgage Loan or Mortgaged Property.

     Net Mortgage Rate: With respect to any Mortgage Loan and any Distribution
Date, the related Mortgage Rate as of the Due Date in the month preceding the
month of such Distribution Date reduced by the Servicing Fee Rate for such
Mortgage Loan.

     Net Prepayment Interest Shortfall: With respect to any Mortgage Loan and
any Distribution Date, the amount by which any Prepayment Interest Shortfall for
such date exceeds the amount payable by the Servicer in respect of such
shortfall.

     Net WAC: As to any Distribution Date, the weighted average of the Net
Mortgage Rates of the Mortgage Loans as of the first day of the calendar month
immediately preceding the calendar month of such Distribution Date, weighted on
the basis of their outstanding Stated Principal Balances at such time. When the
term "Net WAC" is used herein with reference to only the One-Year Treasury Loans
or only the Six-Month LIBOR Loans, such weighted average shall be computed with
reference solely to the Mortgage Loans in the relevant group.

     Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.

     Non-permitted Foreign Holder: As defined in Section 3.03(f).

     Nonrecoverable Advance: Any portion of an Advance or Servicer Advance
previously made or proposed to be made by the Servicer (as certified in an
Officer's Certificate of the Servicer) or by the Trustee pursuant to Section
5.04, which in the good faith judgment of such party, shall not be ultimately
recoverable by such party from the related Mortgagor, related Liquidation
Proceeds or otherwise.

     Non-U.S. Person: Any person other than a "United States person" within the
meaning of Section 7701(a)(30) of the Code.

     Offering Document: The Prospectus.

     Officer's Certificate: A certificate signed by the Chairman of the Board,
the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries (or any other officer
customarily performing functions similar to those performed by any of the above
designated officers and also to whom, with respect to a particular matter, such
matter is referred because of such officer's knowledge of and familiarity with a
particular subject) of the Depositor or the Trustee, as the case may be, and
delivered to the Depositor or the Trustee, as the case may be, as required by
this Agreement.

     Officer's Certificate of the Servicer: A certificate (i) signed by the
Chairman of the Board, the Vice Chairman of the Board, the President, a Managing
Director, a Vice President

                                       17

<PAGE>

(however denominated), an Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Treasurers or Assistant Secretaries of the
Servicer, or (ii) if provided for herein, signed by a Servicing Officer, as the
case may be, and delivered to the Trustee or the Depositor, as the case may be.

     One-Year Treasury Index: The twelve-month moving average monthly yield on
the United States Treasury Securities adjusted to a constant maturity of one
year, as published by the Federal Reserve Board in the Federal Reserve
Statistical Release Selected Interest Rates (H.15) 5 19

     One-Year Treasury Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with the One-Year Treasury Index.

     Opinion of Counsel: A written opinion of counsel, who may be an employee of
the Depositor or the Servicer, that is reasonably acceptable to each addressee
of such opinion; provided that any Opinion of Counsel relating to (a)
qualification of the Mortgage Loans in a REMIC or (b) compliance with the REMIC
Provisions, must be an opinion of counsel reasonably acceptable to each
addressee of such opinion, who (i) is in fact independent of the Servicer and
the Depositor, (ii) does not have any material direct or indirect financial
interest in the Servicer or the Depositor or in an affiliate of either and (iii)
is not connected with the Servicer or the Depositor as an officer, employee,
director or person performing similar functions.

     Optional Termination Price: An amount equal to the sum of (i) 100% of the
Stated Principal Balance of the Mortgage Loans (other than any Mortgage Loan
that has become an REO Property) plus accrued interest thereon at the applicable
Mortgage Rate through the Due Date in the month in which the Optional
Termination Price is to be distributed to the Certificateholders and the fair
market value of any REO Property plus accrued interest thereon; (ii) any
unreimbursed costs and damages incurred by the Issuing Entity (or the Trustee on
behalf of the Issuing Entity) in connection with the violation of any
anti-predatory or anti-abusive lending laws; and (iii) the payment of all
amounts (including, without limitation, all previously unreimbursed Advances and
Servicing Advances and accrued and unpaid Servicing Fees) payable or
reimbursable to the Servicer or Trustee.

     Original Applicable Credit Support Percentage: With respect to each Class
of Subordinate Certificates, the corresponding percentage set forth opposite its
Class designation: Class M-1 - 3.50%; Class M-2 - 1.90%; Class M-3 - 1.20%;
Class B-1 - 0.80%; Class B-2 - 0.45%; and Class B-3 - 0.20%.

     Original Subordinate Principal Amount: The aggregate of the initial Class
Principal Amounts of the Classes of Subordinate Certificates.

     Originator: With respect to any Mortgage Loan, the entity that (i) took the
Mortgagor's loan application, (ii) processed the Mortgagor's loan application,
and (iii) closed and/or funded the Mortgagor's Mortgage Loan.

     Overcollateralized Senior Certificates: As defined in Section 5.02(b)(iii).

     Parent Power(R) Guaranty and Security Agreement: With respect to any
Additional Collateral Loan, as defined in the Mortgage Loan Sale and Assignment
Agreement.

     Paying Agent: Any paying agent appointed by the Trustee pursuant to Section
3.08.

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<PAGE>

     PCAOB: The Public Company Accounting Oversight Board.

     Percentage Interest: With respect to any Certificate, its percentage
interest in the undivided beneficial ownership interest in the Trust Fund
evidenced by all Certificates of the same Class as such Certificate. With
respect to any Certificate other than the Class A-R Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal Amount
thereof divided by the initial Class Principal Amount of all Certificates of the
same Class. With respect to the Class A-R Certificate, the Percentage Interest
evidenced thereby shall be as specified on the face thereof, or otherwise, be
equal to 100%.

     Permitted Investments: At any time, any one or more of the following
obligations and securities:

                    (i) obligations of the United States or any agency thereof,
               provided that such obligations are backed by the full faith and
               credit of the United States;

                    (ii) general obligations of or obligations guaranteed by any
               state of the United States or the District of Columbia receiving
               the highest long-term debt rating of each Rating Agency, or such
               lower rating as shall not result in the downgrading or withdrawal
               of the ratings then assigned to the Certificates by the Rating
               Agencies, as evidenced by a signed writing delivered by each
               Rating Agency;

                    (iii) commercial or finance company paper which is then
               receiving the highest commercial or finance company paper rating
               of each Rating Agency rating such paper, or such lower rating as
               shall not result in the downgrading or withdrawal of the ratings
               then assigned to the Certificates by the Rating Agencies, as
               evidenced by a signed writing delivered by each Rating Agency;

                    (iv) certificates of deposit, demand or time deposits, or
               bankers' acceptances issued by any depository institution or
               trust company incorporated under the laws of the United States or
               of any state thereof and subject to supervision and examination
               by federal and/or state banking authorities, provided that the
               commercial paper and/or long-term unsecured debt obligations of
               such depository institution or trust company (or in the case of
               the principal depository institution in a holding company system,
               the commercial paper or long-term unsecured debt obligations of
               such holding company, but only if Moody's is not the applicable
               Rating Agency) are then rated one of the two highest long-term
               and the highest short-term ratings of each Rating Agency for such
               securities, or such lower ratings as shall not result in the
               downgrading or withdrawal of the ratings then assigned to the
               Certificates by the Rating Agencies, as evidenced by a signed
               writing delivered by each Rating Agency;

                    (v) guaranteed reinvestment agreements issued by any bank,
               insurance company or other corporation acceptable to the Rating
               Agencies at the time of the issuance of such agreements, as
               evidenced by a signed writing delivered by each Rating Agency;

                                       19

<PAGE>

                    (vi) repurchase obligations with respect to any security
               described in clauses (i) and (ii) above, in either case entered
               into with a depository institution or trust company (acting as
               principal) described in clause (iv) above;

                    (vii) securities (other than stripped bonds, stripped
               coupons or instruments sold at a purchase price in excess of 115%
               of the face amount thereof) bearing interest or sold at a
               discount issued by any corporation incorporated under the laws of
               the United States or any state thereof which, at the time of such
               investment, have one of the two highest ratings of each Rating
               Agency (except if the Rating Agency is Moody's, such rating shall
               be the highest commercial paper rating of Moody's for any such
               series), or such lower rating as shall not result in the
               downgrading or withdrawal of the ratings then assigned to the
               Certificates by the Rating Agencies, as evidenced by a signed
               writing delivered by each Rating Agency;

                    (viii) interests in any money market fund which at the date
               of acquisition of the interests in such fund and throughout the
               time such interests are held in such fund has the highest
               applicable rating by each Rating Agency rating such fund or such
               lower rating as shall not result in a change in the rating then
               assigned to the Certificates by each Rating Agency including
               funds for which the Trustee or any of its Affiliates is
               investment manager or adviser;

                    (ix) short-term investment funds sponsored by any trust
               company or national banking association incorporated under the
               laws of the United States or any state thereof which on the date
               of acquisition has been rated by each applicable Rating Agency in
               their respective highest applicable rating category or such lower
               rating as shall not result in a change in the rating then
               specified stated maturity and bearing interest or sold at a
               discount acceptable to each Rating Agency as shall not result in
               the downgrading or withdrawal of the ratings then assigned to the
               Certificates by the Rating Agencies; and

                    (x) such other investments having a specified stated
               maturity and bearing interest or sold at a discount acceptable to
               the Rating Agencies as shall not result in the downgrading or
               withdrawal of the ratings then assigned to the Certificates by
               the Rating Agencies;

     provided, that no such instrument shall be a Permitted Investment if (i)
such instrument evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) such instrument
would require the Depositor to register as an investment company under the
Investment Company Act of 1940, as amended, or (iii) such instrument would not
be a "permitted investment" within the meaning of such term as provided for in
Section 860G(a)(5) of the Code and the Treasury Regulations thereunder.

     Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, limited liability company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

                                       20

<PAGE>

     PHH: PHH Mortgage Corporation or its successors in interest.

     Pool Net WAC: The Pool 1 Net WAC or Pool 2 Net WAC, as the context may
require.

     Pool 1: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 1.

     Pool 1 Mortgage Loans: Any Mortgage Loan in Pool 1.

     Pool 1 Net WAC: With respect to any Distribution Date, the weighted average
of the Net Mortgage Rates of the Pool 1 Mortgage Loans as of the first day of
the calendar month immediately preceding the calendar month of such Distribution
Date, weighted on the basis of their Stated Principal Balances at such time.

     Pool 1 Subordinate Amount: For any Distribution Date, the excess of (a) the
Aggregate Stated Principal Balance of the Pool 1 Mortgage Loans as of the first
day of the month preceding the month in which such Distribution Date occurs over
(b) the sum of the Class Principal Amounts of the Class I-A and Class A-R
Certificates immediately before such Distribution Date.

     Pool 2: The aggregate of Mortgage Loans identified on the Mortgage Loan
Schedule as being included in Pool 2.

     Pool 2 Mortgage Loans: Any Mortgage Loan in Pool 2.

     Pool 2 Net WAC: With respect to any Distribution Date, the weighted average
of the Net Mortgage Rates of the Pool 2 Mortgage Loans as of the first day of
the calendar month immediately preceding the calendar month of such Distribution
Date, weighted on the basis of their Stated Principal Balances at such time.

     Pool 2 Subordinate Amount: For any Distribution Date, the excess of (a) the
Aggregate Stated Principal Balance of the Pool 2 Mortgage Loans as of the first
day of the month preceding the month in which such Distribution Date occurs over
(b) the aggregate Class Principal Amount of the Class II-A-1 and Class II-A-2
Certificates immediately before such Distribution Date.

     Pool Percentage: With respect to each Mortgage Pool and any Distribution
Date, a fraction, expressed as a percentage, the numerator of which is the
Aggregate Stated Principal Balance of such Mortgage Pool and the denominator of
which is the Aggregate Stated Principal Balance as of such Due Date.

     Pool Subordinate Amount: Either of the Pool 1 Subordinate Amount or the
Pool 2 Subordinate Amount.

     Prepayment Interest Shortfall: With respect to any full or partial
Principal Prepayment of a Mortgage Loan, the excess, if any, of (i) one full
month's interest at the applicable Mortgage Rate on the outstanding principal
balance of such Mortgage Loan immediately prior to such Principal Prepayment
over (ii) the amount of interest actually received with respect to such Mortgage
Loan in connection with such Principal Prepayment.

     Prepayment Period: With respect to each Distribution Date, the calendar
month immediately preceding the month in which the Distribution Date occurs.

                                       21

<PAGE>

     Primary Mortgage Insurance Policy: Each policy of primary mortgage guaranty
insurance or any replacement policy therefor with respect to any Mortgage Loan.

     Principal Distribution Amount: With respect to any Mortgage Pool and any
Distribution Date, the sum of (a) each Scheduled Payment of principal collected
or advanced on the related Mortgage Loans (before taking into account any
Deficient Valuations or Debt Service Reductions) and due during the related Due
Period, (b) that portion of the Purchase Price representing principal of any
Mortgage Loans in such Mortgage Pool purchased in accordance with Section 2.04
hereof and received during the related Prepayment Period, (c) the principal
portion of any related Substitution Amount received during the related
Prepayment Period, (d) the principal portion of all Insurance Proceeds received
during the related Prepayment Period with respect to Mortgage Loans in such
Mortgage Pool that are not yet Liquidated Mortgage Loans, (e) the principal
portion of all Net Liquidation Proceeds received during the related Prepayment
Period with respect to Liquidated Mortgage Loans in such Mortgage Pool, (f) all
Subsequent Recoveries received during the related Prepayment Period with respect
to Liquidated Mortgage Loans in such Mortgage Pool, (g) the principal portion of
the proceeds of any Additional Collateral with respect to the Mortgage Loans in
such Mortgage Pool, (h) the principal portion of all partial and full principal
prepayments of Mortgage Loans in such Mortgage Pool applied by the Servicer
during the related Prepayment Period and (i) on the Distribution Date on which
the Trust Fund is to be terminated pursuant to Article VII hereof, that portion
of the Optional Termination Price in respect of principal for such Mortgage
Pool.

     Principal Prepayment: Any Mortgagor payment of principal or other recovery
of principal on a Mortgage Loan that is recognized as having been received or
recovered in advance of its scheduled Due Date and applied to reduce the
principal balance of the Mortgage Loan in accordance with the terms of the
Mortgage Note or this Agreement.

     Principal Prepayment In Full: Any Principal Prepayment of the entire
principal balance of the Mortgage Loans.

     Principal Transfer Amount: For any Distribution Date and for any
Undercollateralized Group, the excess, if any, of the aggregate Class Principal
Amount of such Undercollateralized Group immediately prior to such Distribution
Date over the Aggregate Stated Principal Balance of the related Mortgage Pool
immediately prior to such Distribution Date.

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

     Proprietary Lease: With respect to any Cooperative Property, a lease or
occupancy agreement between a Cooperative Corporation and a holder of related
Cooperative Shares.

     Pro Rata Senior Percentage: With respect to each Distribution Date and each
Mortgage Pool, the percentage equivalent of a fraction the numerator of which is
the aggregate Class Principal Amount of the Class or Classes of the Related
Certificate Group immediately prior to such Distribution Date and the
denominator of which is the Aggregate Stated Principal Balance of the related
Mortgage Pool for such Distribution Date.

     Prospectus: The prospectus supplement dated February 24, 2006, together
with the accompanying prospectus dated January 18, 2006, relating to the initial
sale of the Class I-A, Class II-A-1, Class II-A-2, Class A-R, Class M-1, Class
M-2 and Class M-3 Certificates.

                                       22

<PAGE>

     Purchase Date: Any Distribution Date on which Certificates may be
repurchased pursuant to Section 7.01(c).

     Purchase Price: With respect to any Mortgage Loan required or permitted to
be purchased by the Depositor pursuant to this Agreement, by the Servicer
pursuant to this Agreement, or by the Sponsor pursuant to the Mortgage Loan
Purchase Agreement, an amount equal to the sum of (i) 100% of the unpaid
principal balance of the Mortgage Loan on the date of such purchase, (ii)
accrued interest thereon at the applicable Net Mortgage Rate from the date
through which interest was last paid by the Mortgagor to the Due Date in the
month in which the Purchase Price is to be distributed to Certificateholders and
(iii) any unreimbursed costs, penalties and/or damages incurred by the Trust
Fund in connection with any violation relating to such Mortgage Loan of any
predatory or abusive lending law.

     Rating Agency: Each of Moody's, S&P and Fitch.

     Realized Loss: With respect to each Liquidated Mortgage Loan, an amount
(not less than zero or more than the Stated Principal Balance of the Mortgage
Loan) as of the date of such liquidation, equal to (i) the Stated Principal
Balance of the Liquidated Mortgage Loan as of the date of such liquidation, plus
(ii) interest at the Net Mortgage Rate from the Due Date as to which interest
was last paid or advanced (and not reimbursed) to Certificateholders up to the
Due Date in the month in which Liquidation Proceeds are required to be
distributed on the Stated Principal Balance of such Liquidated Mortgage Loan
from time to time, minus (iii) the Net Liquidation Proceeds and the proceeds of
any Additional Collateral, if any, received during the month in which such
liquidation occurred, to the extent applied as recoveries of interest at the Net
Mortgage Rate and to principal of the Liquidated Mortgage Loan. With respect to
each Mortgage Loan which has become the subject of a Deficient Valuation, if the
principal amount due under the related Mortgage Note has been reduced, the
difference between the principal balance of the Mortgage Loan outstanding
immediately prior to such Deficient Valuation and the principal balance of the
Mortgage Loan as reduced by the Deficient Valuation.

     Record Date: As to any Distribution Date, the last Business Day of the
month preceding the month of each Distribution Date.

     Refinancing Mortgage Loan: Any Mortgage Loan originated in connection with
the refinancing of an existing mortgage loan.

     Regulation AB: Subpart 22.1100 - Asset Backed Securities (Regulation AB),
17 C.F.R. Sections 229.1100-229.1123, as such may be amended from time to time,
and subject to such clarification and interpretation as have been provided by
the Commission in the adopting release (Asset-Backed Securities, Securities Act
Release No. 33-8518, 70 Fed Reg. 1,506, 1.531 (Jan. 7, 2005) or by the staff of
the Commission, or as may be provided by the Commission or its staff from time
to time.

     Related Certificate Group: The Certificate Group related to a particular
Mortgage Pool as indicated by the same numerical designation (i.e., Group 1
Certificates are related to Pool 1 and Group 2 Certificates are related to Pool
2).

     Related Class of Upper Tier REMIC Interest: With respect to any Class of
Certificates, the interest in the Upper Tier REMIC appearing opposite such Class
in the Preliminary Statement hereto.

                                       23

<PAGE>

     Relevant Servicing Criteria: The Servicing Criteria applicable to the
various parties, as set forth on Exhibit S-2 hereto. For clarification purposes,
multiple parties can have responsibility for the same Relevant Servicing
Criteria. With respect to a Subcontractor engaged by the Trustee or the
Servicer, the term "Relevant Servicing Criteria" may refer to one or more
discrete functions specified in the Relevant Servicing Criteria applicable to
the Servicer or the Trustee.

     Relief Act Reductions: With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended calendar month as a result of
the application of the Civil Relief Act, the amount, if any, by which (i)
interest collectible on such Mortgage Loan for the most recently ended calendar
month is less than (ii) interest accrued thereon for such month pursuant to the
Mortgage Note.

     REMIC: Each pool of assets in the Trust Fund designated as a REMIC as
described in the Preliminary Statement.

     REMIC Interests: Any regular or residual interest in any of REMIC 1 or the
Upper Tier REMIC, as described in the Preliminary Statement.

     REMIC Provisions: The provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at Sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations, including proposed regulations and rulings, and administrative
pronouncements promulgated thereunder, as the foregoing may be in effect from
time to time.

     REMIC 1: As described in the Preliminary Statement.

     REMIC 1 Interest: Each class of interest in REMIC 1 as described in the
Preliminary Statement.

     REMIC 1 Regular Interest: Each of the REMIC 1 Interests other than the
Class LT1-R Interest.

     REMIC 1 Subordinate Balance Ratio: The ratio among the uncertificated
principal balances of each of the REMIC 1 Interests ending with the designation
"A" that is equal to the ratio among, with respect to each such REMIC 1
Interest, the excess of (x) the aggregate Scheduled Principal Balance of the
Mortgage Loans in the related Mortgage Pool over (y) the aggregate Class
Principal Amount of the Certificates in the Certificate Group related to such
Mortgage Pool.

     REO Disposition: The final sale by the Servicer of an REO Property.

     REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.

     Replacement Mortgage Loan: A mortgage loan substituted by the Sponsor for a
Deleted Mortgage Loan which must, on the date of such substitution, as confirmed
in a Request for Release substantially in the form attached to this Agreement,
(i) have a Stated Principal Balance, after deduction of the principal portion of
the Scheduled Payment due in the month of substitution, not in excess of, and
not more than 10% less than, the Stated Principal Balance of

                                       24

<PAGE>

the Deleted Mortgage Loan; (ii) have a Maximum Rate not less than (and not more
than two percentage points greater than) the Maximum Rate of the Deleted
Mortgage Loan; (iii) have a gross margin not less than that of the Deleted
Mortgage Loan and, if Mortgage Loans equal to 1% or more of the balance of the
related Mortgage Pool as of the Cut-off Date have become Deleted Mortgage Loans,
not more than two percentage points more than that of the Deleted Mortgage Loan;
(iv) have an Effective Loan-to-Value Ratio no higher than that of the Deleted
Mortgage Loan; (v) have Adjustment Dates that are no more or less frequent than
the Deleted Mortgage Loan; (vi) have a remaining term to maturity no greater
than (and not more than one year less than that of) the Deleted Mortgage Loan;
(vii) not permit conversion of the related Mortgage Rate to a permanent fixed
Mortgage Rate; (viii) not be a Cooperative Loan unless the Deleted Mortgage Loan
was a Cooperative Loan; (ix) have the same or better FICO credit score; (x) have
an initial interest adjustment date no earlier than five months before (and no
later than five months after) the initial adjustment date of the Deleted
Mortgage Loan, (xi) comply with each representation and warranty set forth in
Section 2.03 of this Agreement; and (xii) shall be accompanied by an Opinion of
Counsel that such Replacement Mortgage Loan would not adversely affect the REMIC
status of any of the REMICs formed pursuant to this Pooling and Servicing
Agreement or would not otherwise be prohibited by this Pooling and Servicing
Agreement.

     Reportable Event: As defined in Section 9.21.

     Request for Release: A request for release, substantially in the form of
Exhibit N attached hereto, properly completed and signed by a Servicing Officer
(or, if delivered on behalf of the Sponsor or Depositor, an Authorized Officer
thereof).

     Residual Certificate: The Class A-R Certificate.

     Residual Interest: The Residual Certificate, other than the portion thereof
representing the right to payments in respect of the Class LT1-R Interest.

     RESPA: The Real Estate Settlement Procedures Act, 12 U.S.C Section 2601 et
seq., and Regulation X, 24 C.F.R. Section 3500.21, thereunder, as the foregoing
may be amended from time to time.

     Responsible Officer: With respect to the Trustee, any officer in the
corporate trust department or similar group of the Trustee with direct
responsibility for the administration of this Agreement and also, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of his or her knowledge of and familiarity with the particular
subject.

     Restricted Certificate: Any Class B-1, Class B-2 or Class B-3 Certificate.

     Restricted Global Security: As defined in Section 3.01(c).

     S&P: Standard & Poor's, a division of The McGraw-Hill Companies, Inc., or
any successor in interest.

     SAIF: The Saving's Association Insurance Fund, or any successor thereto.

     Sarbanes-Oxley Certification: As defined in Section 9.21.

                                       25

<PAGE>

     Schedule of Exceptions: As defined in Section 2.02(a) of this Agreement.

     Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due on
any Due Date allocable to principal and/or interest on such Mortgage Loan which,
unless otherwise specified in this Agreement, shall give effect to any related
Debt Service Reduction and any Deficient Valuation that affects the amount of
the monthly payment due on such Mortgage Loan.

     Section 302 Requirements: Any rules or regulations promulgated pursuant to
the Sarbanes-Oxley Act of 2002 (as such may be amended from time to time).

     Securities Act: The Securities Act of 1933, as amended.

     Senior Certificate: Any one of the Class I-A, Class II-A-1, Class II-A-2 or
Class A-R Certificates.

     Senior Percentage: Except as provided in this definition, for each Mortgage
Pool with respect to any Distribution Date before March 2013, 100%.
Notwithstanding the foregoing sentence, for any Distribution Date (i) occurring
prior to the Distribution Date in March 2017 but in or after March 2009 on which
the Two Times Test is satisfied or (ii) in or after March 2017, the related
Senior Percentage for each Mortgage Pool will be the related Pro Rata Senior
Percentage. For any Distribution Date occurring prior to March 2009 on which the
Two Times Test is satisfied, the related Senior Percentage for such Mortgage
Pool will be equal to the related Pro Rata Senior Percentage plus 50% of an
amount equal to 100% minus the related Pro Rata Senior Percentage. With respect
to any Distribution Date after the related Senior Termination Date, the related
Senior Percentage will be 0%. If on any Distribution Date the allocation to the
Senior Certificates of the related Certificate Group then entitled to
distributions of principal of full and partial prepayments and other amounts in
the percentage required above would reduce the sum of the Class Principal
Amounts of those Certificates to below zero, the Senior Percentage for such
Distribution Date shall be limited to the percentage necessary to reduce such
Class Principal Amounts to zero.

     Senior Prepayment Percentage: For the Senior Certificates for any
Distribution Date and each related Certificate Group occurring in or after March
2013, will be as follows:

          (i) for any Distribution Date occurring in or after March 2013 but
     before March 2014, the related Pro Rata Senior Percentage plus 70% of the
     related Subordinate Percentage for that date;

          (ii) for any Distribution Date occurring in or after March 2014 but
     before March 2015, the related Pro Rata Senior Percentage plus 60% of the
     related Subordinate Percentage for that date;

          (iii) for any Distribution Date occurring in or after March 2015 but
     before March 2016, the related Pro Rata Senior Percentage plus 40% of the
     related Subordinate Percentage for that date;

          (iv) for any Distribution Date occurring in or after March 2016 but
     before March 2017, the related Pro Rata Senior Percentage plus 20% of the
     related Subordinate Percentage for that date; and

                                       26

<PAGE>

          (v) for any Distribution Date occurring in March 2017 or thereafter,
     the related Pro Rata Senior Percentage for that date;

     (i) provided however, that any scheduled reduction to the Senior Prepayment
Percentage for any Mortgage Pool as described above will occur unless either:
(a)(i)(x) the Stated Principal Balance of Mortgage Loans delinquent 60 days or
more (including for this purpose any such Mortgage Loans in foreclosure or
Bankruptcy and REO Property), averaged over the last six months, as a percentage
of the aggregate outstanding Class Principal Amount of the Subordinate
Certificates, is less than 50% or (y) the Stated Principal Balance of Mortgage
Loans delinquent 60 days or more averaged over the last six months, as a
percentage of the aggregate Stated Principal Balance of all Mortgage Loans
averaged over the last six months, does not exceed 2%, and

     (ii) Realized Losses on the Mortgage Loans to date for such Distribution
Date, if occurring during the eighth, ninth, tenth, eleventh or twelfth year (or
any year thereafter) after the Closing Date, are less than 30%, 35%, 40%, 45% or
50%, respectively, of the sum of the Class Principal Amount of the Subordinate
Certificates as of the Closing Date; or (b)(i) the Stated Principal Balance of
Mortgage Loans delinquent 60 days or more (including for this purpose any such
Mortgage Loans in foreclosure or Bankruptcy and REO Property), averaged over the
last six months, as a percentage of the aggregate outstanding principal balance
of all Mortgage Loans averaged over the last six months, does not exceed 4%, and
(ii) Realized Losses on the Mortgage Loans to date for such Distribution Date,
if occurring during the eighth, ninth, tenth, eleventh or twelfth year (or any
year thereafter) after the Closing Date, are less than 10%, 15%, 20%, 25% or
30%, respectively, of the sum of the Class Principal Amount of the Subordinate
Certificates as of the Closing Date and (ii) that for any Distribution Date on
which the Pro Rata Senior Percentage exceeds the Pro Rata Senior Percentage as
of the Closing Date, the Senior Prepayment Percentage for the related Mortgage
Pool shall be 100%. Notwithstanding the foregoing, upon the reduction of the
Class Principal Amount of the Senior Certificates to zero, the Senior Prepayment
Percentage will equal 0%.

     In addition, on any Distribution Date on or after the Distribution Date
occurring in March 2009, if the current weighted average of the Subordinate
Percentage of both Mortgage Pools is equal to or greater than two times the
weighted average of the Subordinate Percentage as of the Closing Date, and (a)
the Stated Principal Balance of the Mortgage Loans delinquent 60 days or more
(including for this purpose any such Mortgage Loans in foreclosure or Bankruptcy
and REO Property), averaged over the last six months, as a percentage of the
Subordinate Percentage for that Distribution Date times the aggregate Stated
Principal Balance of the Mortgage Loans, does not exceed 50% and (b) cumulative
Realized Losses on the Mortgage Loans do not exceed 20% of the Subordinate
Percentage as of the Closing Date times the aggregate Stated Principal Balance
of the Mortgage Loans as of the Cut-off Date, then, in each case, the related
Senior Percentage for such Distribution Date will equal the related Senior
Prepayment Percentage (such test, the "Two Times Test").

     Senior Principal Distribution Amount: With respect to any Mortgage Pool and
Distribution Date, the sum of:

          1. the product of (a) the related Pro Rata Senior Percentage and (b)
     the principal portion of each Scheduled Payment (without giving effect to
     any Debt Service Reduction) on each Mortgage Loan in the related Mortgage
     Pool due during the related Due Period;

                                       27

<PAGE>

          2. the product of (a) the related Senior Prepayment Percentage and (b)
     each of the following amounts: (i) the principal portion of each full and
     partial principal prepayment made by a borrower on a Mortgage Loan in the
     related Mortgage Pool during the related Prepayment Period; (ii) each other
     unscheduled collection, including Insurance Proceeds and net Liquidation
     Proceeds (other than with respect to any Mortgage Loan in the related
     Mortgage Pool that was finally liquidated during the related Prepayment
     Period) representing or allocable to recoveries of principal of the related
     Mortgage Loans received during the related Prepayment Period; and (iii) the
     principal portion of the purchase price of each Mortgage Loan purchased by
     the Sponsor or any other person pursuant to the Mortgage Loan Purchase
     Agreement due to a defect in documentation or a material breach of a
     representation and warranty with respect to such Mortgage Loan or, in the
     case of a permitted substitution of a Defective Mortgage Loan, the amount
     representing any principal adjustment in connection with any such replaced
     Mortgage Loan in the related Mortgage Pool with respect to the related
     Prepayment Period;

          3. with respect to unscheduled recoveries allocable to principal of
     any Mortgage Loan in the related Mortgage Pool that was fully liquidated
     during the related Prepayment Period, the lesser of (a) the product of (i)
     the Senior Percentage for that date and (ii) the remaining Stated Principal
     Balance of the related Mortgage Loan at the time of liquidation and (b) the
     product of (i) the Senior Prepayment Percentage for that date and (ii) the
     net Liquidation Proceeds allocable to principal; and

          4. any amounts described in clauses (1) through (3) above that remain
     unpaid with respect to such Certificate Group from prior Distribution
     Dates.

     Senior Termination Date: For each Certificate Group, the Distribution Date
when the aggregate of the Class Certificate Principal Balances of that Group has
been reduced to zero.

     Servicer: PHH and its successors and assigns.

     Servicer Advance: The outstanding moneys that have been advanced by the
Servicer from its funds in connection with its servicing of a Mortgage Loan
(including, but not limited to, taxes, ground rents, assessments, insurance
premiums, release fees, foreclosure and bankruptcy fees and expenses, and other
expenses) (i) that have been made by the Servicer in accordance with the terms
and provisions herein, (ii) that are recoverable through Liquidation Proceeds
and/or Insurance Proceeds, or that are made at the direction of the Sponsor or
to preserve its security interest in the related Mortgaged Property and (iii)
for which the Servicer has a right of reimbursement.

     Servicing Criteria: The "servicing criteria" set forth in Item 1122(d) of
Regulation AB, as such may be amended from time to time.

     Servicing Fee: As to any Distribution Date and each Mortgage Loan, an
amount equal to the product of (a) one-twelfth of the Servicing Fee Rate and (b)
the outstanding principal balance of such Mortgage Loan as of the first day of
the related Due Period.

     Servicing Fee Rate: With respect to each Mortgage Loan and any Distribution
Date, 0.25% per annum.

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<PAGE>

     Servicing Officer: Any officer of the Servicer involved in, or responsible
for, the administration and servicing of the Mortgage Loans whose name and
facsimile signature appear on a list of servicing officers furnished to the
Trustee by the Servicer on the Closing Date and attached hereto as Exhibit M, as
such list may from time to time be amended.

     Servicing Transfer Costs: As defined in Section 6.14(b).

     Six-Month LIBOR Loan: Each Mortgage Loan bearing a Mortgage Rate that
adjusts in accordance with LIBOR for six-month U.S. dollar deposits.

     Sponsor: Merrill Lynch Mortgage Lending, Inc., or its successor in
interest.

     Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.

     Stated Principal Balance: As to any Mortgage Loan and Due Date, the unpaid
principal balance of such Mortgage Loan as of such Due Date as specified in the
amortization schedule at the time relating thereto (before any adjustment to
such amortization schedule by reason of any moratorium or similar waiver or
grace period) after giving effect to any previous Principal Prepayments and
Liquidation Proceeds allocable to principal and to the payment of principal due
on such Due Date and irrespective of any delinquency in payment by the related
Mortgagor.

     Subcontractor: Any outsourcer that performs one or more discrete functions
identified in Item 1122(d) of Regulation AB with respect to more than 5% of the
Mortgage Loans under the direction or authority of a Servicer or the Trustee
(measured by aggregate Stated Principal Balance of the Mortgage Loans, annually
at the commencement of the calendar year prior to the year in which an
Assessment of Compliance is required to be delivered, multiplied by a fraction,
the numerator of which is the number of months during which such Subcontractor
performs such discrete functions and the denominator of which is 12, or, in the
case of the year in which the Closing Date occurs, the number of months elapsed
in such calendar year).

     Subordinate Certificate: Any of the Class M-1, Class M-2, Class M-3, Class
B-1, Class B-2 or Class B-3 Certificates.

     Subordinate Certificate Writedown Amount: The amount described in Section
5.03(b)(iii).

     Subordinate Class Percentage: As to any Distribution Date and any Class of
Subordinate Certificates, a fraction, expressed as a percentage, the numerator
of which is the Class Principal Amount of such Class on such date, and the
denominator of which is the aggregate Class Principal Amount of all Classes of
Subordinate Certificates on such date.

     Subordinate Net WAC: For any Distribution Date, the weighted average of the
Pool 1 Net WAC and the Pool 2 Net WAC, weighted on the basis of the Pool
Subordinate Amounts for Pool 1 and Pool 2, respectively, for such Distribution
Date.

     Subordinate Percentage: With respect to each Mortgage Pool and any
Distribution Date, the difference between 100% and the related Senior Percentage
for such Mortgage Pool for such Distribution Date; provided, however, that on
any Distribution Date after a Senior Termination Date has occurred with respect
a Mortgage Pool, the Subordinate Percentage will represent the entire interest
of the Subordinate Certificates in the Mortgage Loans and will be equal to the

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<PAGE>

difference between 100% and the Senior Percentage related to the Mortgage Loans
in the aggregate for such Distribution Date.

     Subordinate Prepayment Percentage: With respect to any Distribution Date
and for any Mortgage Pool, the difference between 100% and the related Senior
Prepayment Percentage for such Mortgage Pool for that Distribution Date;
provided, however, that on any Distribution Date after a Senior Termination Date
has occurred with respect to a Mortgage Pool, the Subordinate Prepayment
Percentage will represent the entire interest of the Subordinate Certificates in
the Mortgage Loans and will be equal to the difference between 100% and the
Senior Prepayment Percentage related to the Mortgage Loans in the aggregate for
such Distribution Date.

     Subordinate Principal Distribution Amount: With respect to any Distribution
Date and each Mortgage Pool, an amount equal to the sum of:

          1. the related Subordinate Percentage of all amounts described in
     clause (a) of the definition of "Principal Distribution Amount" for that
     Distribution Date;

          2. with respect to each Mortgage Loan in the related Mortgage Pool
     that became a Liquidated Mortgage Loan during the related Prepayment Period
     the amount of the Net Liquidation Proceeds allocated to principal received
     with respect thereto remaining after application thereof pursuant to clause
     (2) of the definition of "Senior Principal Distribution Amount" for that
     Distribution Date, up to the Subordinate Percentage of the Stated Principal
     Balance of such Mortgage Loan;

          3. the related Subordinate Prepayment Percentage of all amounts
     described in clauses (b), (c), (d), (f), (g), (h) and (i) of the definition
     of "Principal Distribution Amount" for that Mortgage Pool and that
     Distribution Date; and

          4. any amounts described in clauses (1) through (3) for any previous
     Distribution Date that remain unpaid

          minus the sum of:

          5. if the aggregate Class Principal Amount of any Certificate Group
     has been reduced to zero, principal paid from the Available Distribution
     Amount from the related Mortgage Pool to the remaining Certificate Group;
     and

          6. the amounts paid from the Available Distribution Amount for the
     Overcollateralized Senior Certificates to the Undercollateralized Senior
     Certificates.

     Subsequent Recovery: The amount, if any, recovered by the Servicer with
respect to a Liquidated Mortgage Loan with respect to which a Realized Loss has
been incurred after liquidation and disposition of such Mortgage Loan.

     Sub-Servicer: Any Person that services Mortgage Loans on behalf of the
Servicer pursuant to a subservicing agreement and is responsible for the
performance of the material servicing functions required to be performed by the
Servicer under this Agreement that are identified in Item 1122(d) of Regulation
AB and meets any of the criteria of Item 1108(a)(2)(i) through (iii) under the
direction or authority of the Servicer (measured by aggregate Stated Principal
Balance of the Mortgage Loans, annually at the commencement of the calendar year
prior to the year in which an Assessment of Compliance is required to be
delivered, multiplied by

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<PAGE>

a fraction, the numerator of which is the number of months during which such
Sub-Servicer services the related Mortgage Loans and the denominator of which is
12, or, in the case of the year in which the Closing Date occurs, the number of
months elapsed in such calendar year). Any Sub-Servicer shall meet the
qualifications set forth in Section 3.02. For classification purposes, the
Trustee shall not be deemed a Sub-Servicer.

     Subservicing Agreement: As defined in Section 9.21.

     Substitution Amount: As defined in the second paragraph of Section 2.04(b).

     Tax Matters Person: The "tax matters person" as specified in the REMIC
Provisions which shall initially be the Holder of the Class A-R Certificate.

     Telerate Page 3750: The display currently so designated as "Page 3750" on
the Bridge Telerate Service (or such other page selected by the Trustee as may
replace Page 3750 on that service for the purpose of displaying daily comparable
rates on prices).

     Transfer Agreement: The Master Mortgage Loan Purchase Agreement, dated as
of August 1, 2004 between Merrill Lynch Credit Corporation and Merrill Lynch
Mortgage Lending, Inc., as amended by Amendment Number One thereto, dated as of
September 21, 2005.

     Transferor: Merrill Lynch Credit Corporation.

     Trust Fund: The corpus of the Issuing Entity created pursuant to this
Agreement, consisting of (i) the Mortgage Loans, including the right to all
payments of principal and interest received on or with respect to the Mortgage
Loans on and after the Cut-off Date (other than Scheduled Payments due on or
before such date), and all such payments due after such date but received prior
to such date and intended by the related Mortgagors to be applied after such
date; (ii) all of the Depositor's right, title and interest in and to all
amounts from time to time credited to and the proceeds of the Distribution
Account, any Custodial Accounts or any Escrow Accounts established with respect
to the Mortgage Loans; (iii) all of the Depositor's rights under the Mortgage
Loan Sale and Assignment Agreement; (iv) all of the Depositor's right, title or
interest in REO Property and the proceeds thereof; (v) all of the Depositor's
rights under any Insurance Policies relating to the Mortgage Loans; (vi) all
proceeds of the conversion, voluntary or involuntary, of any of the foregoing
into cash or other liquid assets, including without limitation, all Insurance
Proceeds, Liquidation Proceeds and condemnation awards; and (vii) the
Depositor's security interest in any collateral pledged to secure the Mortgage
Loans, including the Mortgaged Properties and any Additional Collateral relating
to the Additional Collateral Mortgage Loans, including, but not limited to, any
pledge, control and guaranty agreements and the Limited Purpose Surety Bond and
any proceeds of the foregoing.

     Trustee: Wells Fargo Bank, N.A. and any Person succeeding the Trustee
hereunder, or if any separate trustee or any co-trustee shall be appointed as
herein provided, then such separate trustee and such co-trustee, as the case may
be.

     Trustee Mortgage Files: With respect to each Mortgage Loan, the Mortgage
Documents to be retained in the custody and possession of the Trustee.

     Two Times Test: As defined in the definition of "Senior Prepayment
Percentage".

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     UCC: The Uniform Commercial Code as enacted in the relevant jurisdiction.

     Undercollateralized Amount: As defined in Section 5.02(b)(iii).

     Undercollateralized Senior Certificates: As defined in Section
5.02(b)(iii).

     Underwriter: Merrill Lynch, Pierce, Fenner & Smith Incorporated.

     Underwriter's Exemption: Prohibited Transaction Exemption ("PTE") 90-29
(Exemption Application No. D-8019, 55 Fed. Reg. 21459 (1990)) as amended, or any
substantially similar administrative exemption granted by the U.S. Department of
Labor to the Underwriter.

     Underwriting Agreement: The underwriting agreement, dated February 28, 2003
and the terms agreement, dated February 23 2006, between the Depositor and the
Underwriter, referred to collectively.

     Underwriting Standards: As to each Mortgage Loan, the Sponsor's or
Originator's written underwriting guidelines in effect as of the origination
date of such Mortgage Loan.

     Uniform Commercial Code: The Uniform Commercial Code as in effect in any
applicable jurisdiction from time to time.

     Upper Tier REMIC: As described in the Preliminary Statement.

     Upper Tier REMIC Regular Interest: Each of the Class I-A Certificates, the
Class II-A-1 Certificates, the Class II-A-2 Certificates, the Class M-1
Certificates, the Class M-2 Certificates, the Class M-3 Certificates, the Class
B-1 Certificates, the Class B-2 Certificates and the Class B-3 Certificates.

     Voting Interests: The portion of the voting rights of all the Certificates
that is allocated to any Certificate for purposes of the voting provisions of
this Agreement. At all times during the term of this Agreement, 100.00% of all
Voting Interests shall be allocated to the Class I-A, Class II-A-1, Class
II-A-2, Class A-R, Class M-1, Class M-2, Class M-3, Class B-1, Class B-2 and
Class B-3 Certificates. Voting Interests shall be allocated among such
Certificates (other than the Class A-R Certificates) based on the product of (i)
98.00% and (ii) the fraction, expressed as a percentage, the numerator of which
is the aggregate Class Principal Amounts for each Class then outstanding and the
denominator of which is the Aggregate Stated Principal Balance outstanding, and
the remainder of such percentage of Voting Interests shall be allocated to the
Class A-R Certificates. Voting Interests shall be allocated among the
Certificates within each such Class in proportion to their Certificate Principal
Amounts or Percentage Interests.

     Section 1.02. Calculations Respecting Mortgage Loans.

     Calculations required to be made pursuant to this Agreement with respect to
any Mortgage Loan in the Trust Fund shall be made based upon current information
as to the terms of the Mortgage Loans and reports of payments received from the
Mortgagor on such Mortgage Loans and payments to be made to the Trustee as
provided by the Servicer. The Trustee shall not be required to recompute, verify
or recalculate the information supplied to it by the Servicer.

                                       32
<PAGE>

                                  ARTICLE II.

                              DECLARATION OF TRUST;
                            ISSUANCE OF CERTIFICATES

     Section 2.01. Creation and Declaration of Trust Fund; Conveyance of
Mortgage Loans.

     (a) Concurrently with the execution and delivery of this Agreement, the
Depositor does hereby establish the Trust Fund and transfer, assign, set over,
deposit with and otherwise convey to the Trustee, without recourse, subject to
Sections 2.02 and 2.04, in trust, all the right, title and interest of the
Depositor in and to the Trust Fund. Such conveyance includes, without
limitation, (i) the Mortgage Loans, including the right to all payments of
principal and interest received on or with respect to the Mortgage Loans on and
after the Cut-off Date (other than Scheduled Payments due on or before such
date), and all such payments due after such date but received prior to such date
and intended by the related Mortgagors to be applied after such date; (ii) all
of the Depositor's right, title and interest in and to all amounts from time to
time credited to and the proceeds of the Distribution Account, any Custodial
Accounts or any Escrow Account established with respect to the Mortgage Loans;
(iii) all of the Depositor's rights under the Mortgage Loan Sale and Assignment
Agreement; (iv) all of the Depositor's right, title or interest in REO Property
and the proceeds thereof; (v) all of the Depositor's rights under any Insurance
Policies relating to the Mortgage Loans; (vi) all proceeds of the conversion,
voluntary or involuntary, of any of the foregoing into cash or other liquid
assets, including, without limitation, all Insurance Proceeds, Liquidation
Proceeds and condemnation awards; and (vii) the Depositor's security interest in
any collateral pledged to secure the Mortgage Loans, including the Mortgaged
Properties and any Additional Collateral relating to the Additional Collateral
Mortgage Loans, including, but not limited to, any pledge, control and guaranty
agreements and the Limited Purpose Surety Bond and any proceeds of the
foregoing, to have and to hold, in trust; and the Trustee declares that, subject
to the review provided for in Section 2.02, it has received and shall hold the
Trust Fund, as trustee, in trust, for the benefit and use of the Holders of the
Certificates and for the purposes and subject to the terms and conditions set
forth in this Agreement, and, concurrently with such receipt, has caused to be
executed, authenticated and delivered to or upon the order of the Depositor, in
exchange for the Trust Fund, Certificates in the authorized denominations
evidencing the entire ownership of the Trust Fund. Notwithstanding anything to
the contrary in this Agreement, the Trust Fund shall not obtain title to or
beneficial ownership of any Additional Collateral as a result of or in lieu of
the disposition thereof or otherwise.

     The foregoing sale, transfer, assignment, set-over, deposit and conveyance
does not and is not intended to result in the creation or assumption by the
Trustee of any obligation of the Depositor, the Sponsor or any other Person in
connection with the Mortgage Loans or any other agreement or instrument relating
thereto except as specifically set forth therein.

     It is agreed and understood by the parties hereto that it is not intended
that any Mortgage Loan be included in the Trust Fund that is a "High-Cost Home
Loan" as defined in the New Jersey Home Ownership Act, effective November 27,
2003, the New Mexico Home Loan Protection Act, effective January 1, 2004, the
Massachusetts Predatory Home Loan Practices Act, effective November 7, 2004, and
the Indiana High Cost Home Loan Law, effective January 1, 2005.

     In connection with such transfer and assignment of the Mortgage Loans, the
Depositor shall deliver to, and deposit with, or cause to be delivered to and
deposited with, the Trustee, the following documents or instruments; provided
that in Section 2.01(a)(i) below, a lost note

                                       33

<PAGE>

affidavit (including a copy of the original Mortgage Note) may be delivered in
lieu of the original Mortgage Note (each a "Trustee Mortgage File") so
transferred and assigned:

     (i) The original Mortgage Note endorsed, "Pay to the order of ___________,
     without recourse" and signed in the name of the name of last endorsee, by
     an authorized officer of the last endorsee. If the Mortgage Loan was
     acquired by the last endorsee in a merger or other type of acquisition, the
     endorsement must be by "[name of last endorsee], successor [by merger to or
     in interest to, as applicable] [name of predecessor]"; and if the Mortgage
     Loan was acquired or originated by the last endorsee while doing business
     under another name, the endorsement must be by "[name of last endorsee],
     successor in interest to [previous name]." The Mortgage Note shall include
     all intervening endorsements showing a complete chain of title from the
     originator to the last endorsee.

     (ii) The original recorded Mortgage, with evidence of recording thereon,
     or, if the original Mortgage has not yet been returned from the recording
     office, a copy of the original Mortgage certified by the previous owner to
     be a true copy of the original of the Mortgage which has been delivered for
     recording in the appropriate recording office of the jurisdiction in which
     the Mortgaged Property is located.

     (iii) The original Assignment of Mortgage, executed in blank. If the
     Mortgage Loan was acquired by the last endorsee in a merger or other type
     of acquisition, the assignment must be by "[name of last assignee],
     successor [by merger to or in interest to, as applicable] [name of
     predecessor]"; and if the Mortgage Loan was acquired or originated by the
     last endorsee while doing business under another name, the assignment must
     be by "[name of last assignee], successor in interest to [previous name]."

     (iv) The original policy of title insurance (or a preliminary title report
     if the original title insurance policy has not been received from the title
     insurance company).

     (v) Originals of any intervening assignments of the Mortgage, with evidence
     of recording thereon or, if the original intervening assignment has not yet
     been returned from the recording office, a copy of such assignment
     certified by the Depositor to be a true copy of the original of the
     assignment which has been delivered for recording in the appropriate
     recording office of the jurisdiction in which the Mortgaged Property is
     located.

     (vi) With respect to a Mortgage Loan that, according to the Mortgage Loan
     Schedule is covered by a primary mortgage insurance policy, the original or
     a copy of primary mortgage insurance certificate, if any.

     (vii) If indicated on the Mortgage Loan Schedule, originals of all
     assumption and modification agreements, if any, with originals or copies of
     the underlying instruments being modified.

     (viii) With respect to each Additional Collateral Mortgage Loan,

                    A. Copy of the related Mortgage 100 Pledge Agreement for
                    Securities Account or the Parent Power Guaranty and Security
                    Agreement for Securities Account or the Parent Power
                    Guaranty Agreement for Real Estate, as the case may be;

                                       34

<PAGE>

                    B. copy of the UCC-1 (applicable for South Carolina and
                    Rhode Island only);

                    C. an original form UCC-3, if applicable;

                    D. For loans originated by a correspondent lender, an
                    original assignment of security interest of the related
                    Mortgage 100 Pledge Agreement or Parent Power Agreement, as
                    the case may be.

     (ix) With respect to each Cooperative Loan:

                    A. the original proprietary lease;

                    B. the original recognition agreement;

                    C. the original security agreement;

                    D. the original or copy of the assignment of proprietary
                    lease;

                    E. the original cooperative stock certificate and stock
                    power executed by borrower in blank;

                    F. the original UCC-1 financing statements; and

                    G. the original UCC-3 financing statements.

     (xi) Power of attorney, if applicable.

     (b) The Depositor shall cause the Mortgage Notes with respect to each
Mortgage Loan to be completed either (A) in blank, without recourse, or (B)
endorsed to "Wells Fargo Bank, N.A., as Trustee of the Merrill Lynch Mortgage
Investors Trust Series MLCC 2006-1, Mortgage Pass-Through Certificates, without
recourse" and the Depositor shall cause Assignments of Mortgage with respect to
each Mortgage Loan other than a Cooperative Mortgage Loan to be completed either
(A) in blank or (B) to "Wells Fargo Bank, N.A., as Trustee of the Merrill Lynch
Mortgage Investors Trust Series MLCC 2006-1, Mortgage Pass-Through
Certificates," within 30 days of the Closing Date for purpose of their
recording; provided, however, that such Assignments of Mortgage need not be
recorded unless required in writing by the Rating Agencies; provided, further,
that with respect to each MERS Mortgage Loan where MERS is not the Mortgagee of
record, the original Assignment of Mortgage showing MERS as the assignee of the
Mortgage, with the evidence of recording thereon or copies thereof certified by
an officer of the Depositor to have been submitted for recordation, shall be
delivered to the Trustee.

     If any Mortgage has been recorded in the name of MERS or its designee, no
Assignment of Mortgage in favor of the Trustee will be required to be prepared
or delivered and instead, the Servicer shall take all actions as are necessary
to cause the Trustee to be shown as the owner of the related Mortgage Loan on
the records of MERS for the purpose of the system of recording transfer of
beneficial ownership of mortgages maintained by MERS.

     (c) In instances where a title insurance policy is required to be delivered
to the Trustee and is not so delivered, the Depositor will provide a copy of
such title insurance policy to the

                                       35

<PAGE>

Trustee, as promptly as practicable after the execution and delivery hereof, but
in any case within 270 days of the Closing Date.

     (d) For Mortgage Loans (if any) that have been prepaid in full after the
Cut-off Date and prior to the Closing Date, the Depositor, in lieu of delivering
the above Trustee Mortgage File, shall deliver to the Trustee an Officer's
Certificate which shall include a statement to the effect that all amounts
received in connection with such prepayment that are required to be deposited in
the Distribution Account pursuant to Section 4.01 have been so deposited. All
original documents that are not delivered to the Trustee shall be held by the
Servicer in trust for the benefit of the Trustee and the Certificateholders.

     Section 2.02. Acceptance of Trust Fund by Trustee; Review of Documentation
for Trust Fund.

     (a) The Trustee, by execution and delivery hereof, acknowledges receipt by
it of the Trustee Mortgage Files pertaining to the Mortgage Loans listed on the
Mortgage Loan Schedule, subject to review thereof as provided herein. Upon
receipt by the Trustee of each Trustee Mortgage File, the Trustee shall review
each Trustee Mortgage File in accordance with the following review procedures:

     The Trustee shall review the documents delivered to it and shall deliver to
     the Depositor, prior to the Closing Date, a Mortgage Loan Schedule and
     Schedule of Exceptions (as defined below) with respect to the Mortgage
     Loans, and the delivery of each Mortgage Loan Schedule and Schedule of
     Exceptions by the Trustee hereunder shall be the Trustee's certification
     that such Mortgage Loans are held for the Trust Fund and that, as to each
     Mortgage Loan listed in the related Mortgage Loan Schedule (other than any
     Mortgage Loan paid in full or any Mortgage Loan specifically identified in
     such certification as not covered by the Schedule of Exceptions):

          (A) all documents described in Sections 2.02(a)(i) through 2.02(a)(v)
     and to the extent provided in the Trustee's Mortgage Files Sections
     2.02(a)(vi) through 2.02(a)(xi), if applicable, of this Agreement are in
     its possession;

          (B) such documents have reviewed by it and appear regular on their
     face and relate to such Mortgage Loan;

          (C) based on its examination and only as to the foregoing documents,
     the information set forth in the Mortgage Loan Schedule corresponding to
     the loan number for the Mortgage Loan, the Mortgagor's name, including the
     street address but excluding the zip code, the Mortgage Interest Rate and
     the original principal balance of the Mortgage Loan respecting such
     Mortgage Loan is correct; and

          (D) each Mortgage Note has been endorsed and each Assignment has been
     executed as provided in Section 2.01 hereof.

     In making such verifications, the Trustee may rely conclusively on the
Mortgage Loan Schedule and the documents constituting the Trustee Mortgage File,
and the Trustee shall have no obligation to independently verify the validity,
enforceability, recordability, sufficiency, due authorization or genuineness of
any document in any Trustee Mortgage File or any Mortgage Loan hereunder, nor
the collectibility, insurability, effectiveness or suitability of any Mortgage
Loan hereunder. The Trustee shall prepare an initial certification to be
delivered to the Depositor,

                                       36

<PAGE>

the Sponsor and the Servicer on the Closing Date in the form annexed hereto as
Exhibit K (the "Initial Certification") with respect to the Mortgage Loans
(other than any Mortgage Loan paid in full or any Mortgage Loan specifically
identified on the Schedule of Exceptions attached to the Initial Certification
(the "Schedule of Exceptions") as not covered by such Initial Certification)
listed on the Mortgage Loan Schedule. If the Trustee determines from such
verification that any discrepancy or deficiency exists with respect to a Trustee
Mortgage File, the Trustee shall note such omission, discrepancy or deficiency
on the Schedule of Exceptions attached to the Initial Certification, and shall
deliver a copy (which shall be electronic, if requested) of the Schedule of
Exceptions to the Depositor on the Closing Date. During the life of the Mortgage
Loans (while subject to this Agreement), in the event the Trustee discovers any
defect with respect to any Trustee Mortgage File, the Trustee shall give written
specification of such defect to the Depositor. Except as specifically provided
above, the Trustee shall be under no duty to review, inspect or examine such
documents to determine that any of them are enforceable or appropriate for their
prescribed purpose.

     (b) If in the course of the review described in paragraph (a) of this
Section 2.02 the Trustee discovers any document or documents constituting a part
of a Trustee Mortgage File that is missing, does not appear regular on its face
(i.e., is mutilated, damaged, defaced, torn or otherwise physically altered) or
appears to be unrelated to the Mortgage Loans identified in the Mortgage Loan
Schedule (each, a "Material Defect"), the Trustee, upon discovering such
Material Defect shall promptly identify the Mortgage Loan to which such Material
Defect relates to the Depositor, the Sponsor and the Servicer. Within 90 days of
its receipt of such notice (but in no case prior to the 270th day following the
Closing Date), the Depositor shall be required to cure such Material Defect
(and, in such event, the Depositor shall provide the Trustee with an Officer's
Certificate confirming that such cure has been effected). If the Servicer
notifies the Depositor and the Trustee in writing that (i) a loss has occurred
and (ii) such loss relates to a Mortgage Loan for which the Trustee previously
identified a Material Defect or for which the Servicer has identified a Material
Defect and the Depositor has not cured such Material Defect, then the Depositor
shall repurchase such Mortgage Loan at the Purchase Price therefor in the event
that such loss would, if such Mortgage Loan is not repurchased by the Depositor,
constitute a Realized Loss and such loss is attributable to the failure of the
Depositor to have cured such Material Defect. A loss shall be deemed to be
attributable to the failure of the Depositor to cure a Material Defect if, as
determined by the Depositor, upon mutual agreement with the Trustee each acting
in good faith, absent such Material Defect, such loss would not have been
incurred. Within the two-year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02(b),
substitute for such Mortgage Loan a Replacement Mortgage Loan subject to the
provisions of Section 2.04.

     (c) Within 270 days following the Closing Date, the Trustee shall deliver
to the Depositor, the Sponsor and the Servicer, a final certification
substantially in the form attached as Exhibit L (the "Final Certification")
evidencing the completeness of the Trustee Mortgage Files in its possession or
control, with any exceptions noted on the Schedule of Exceptions attached to the
Final Certification.

     (d) Nothing in this Agreement shall be construed to constitute an
assumption by the Trust Fund, the Trustee or the Certificateholders of any
unsatisfied duty, claim or other liability on any Mortgage Loan or to any
Mortgagor.

     (e) Upon execution of this Agreement, the Depositor hereby delivers to the
Trustee and the Trustee acknowledges receipt of the Mortgage Loan Sale and
Assignment Agreement.

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<PAGE>

     Section 2.03. Representations and Warranties of the Depositor and the
Servicer.

     (a) The Depositor hereby represents and warrants to the Servicer and to the
Trustee, for the benefit of the Certificateholders as of the Closing Date or
such other date as is specified, that:

          (i) the Depositor is a corporation duly organized, validly existing
     and in good standing under the laws governing its creation and existence
     and has full corporate power and authority to own its property, to carry on
     its business as presently conducted, to enter into and perform its
     obligations under this Agreement, and to create the trust pursuant hereto;

          (ii) the execution and delivery by the Depositor of this Agreement
     have been duly authorized by all necessary corporate action on the part of
     the Depositor; neither the execution and delivery of this Agreement, nor
     the consummation of the transactions herein contemplated, nor compliance
     with the provisions hereof, will conflict with or result in a breach of, or
     constitute a default under, any of the provisions of any law, governmental
     rule, regulation, judgment, decree or order binding on the Depositor or its
     properties or the certificate of incorporation or bylaws of the Depositor;

          (iii) the execution, delivery and performance by the Depositor of this
     Agreement and the consummation of the transactions contemplated hereby do
     not require the consent or approval of, the giving of notice to, the
     registration with, or the taking of any other action in respect of, any
     state, federal or other governmental authority or agency, except such as
     has been obtained, given, effected or taken prior to the date hereof;

          (iv) this Agreement has been duly executed and delivered by the
     Depositor and, assuming due authorization, execution and delivery by the
     Trustee, constitutes a valid and binding obligation of the Depositor
     enforceable against it in accordance with its terms except as such
     enforceability may be subject to (A) applicable bankruptcy and insolvency
     laws and other similar laws affecting the enforcement of the rights of
     creditors generally and (B) general principles of equity regardless of
     whether such enforcement is considered in a proceeding in equity or at law;

          (v) there are no actions, suits or proceedings pending or, to the
     knowledge of the Depositor, threatened or likely to be asserted against or
     affecting the Depositor, before or by any court, administrative agency,
     arbitrator or governmental body (A) with respect to any of the transactions
     contemplated by this Agreement or (B) with respect to any other matter
     which in the judgment of the Depositor will be determined adversely to the
     Depositor and will if determined adversely to the Depositor materially and
     adversely affect it or its business, assets, operations or condition,
     financial or otherwise, or adversely affect its ability to perform its
     obligations under this Agreement;

          (vi) immediately prior to the transfer and assignment of the Mortgage
     Loans to the Trustee, the Depositor was the sole owner of record and holder
     of each Mortgage Loan, and the Depositor had good and marketable title
     thereto, and had full right to transfer and sell each Mortgage Loan to the
     Trustee free and clear, subject only to (1) liens of current real property
     taxes and assessments not yet due and payable and, if the related Mortgaged
     Property is a condominium unit, any lien for common charges permitted by
     statute, (2) covenants, conditions and restrictions, rights of way,
     easements

                                       38

<PAGE>

     and other matters of public record as of the date or recording of such
     Mortgage acceptable to mortgage lending institutions in the area in which
     the related Mortgaged Property is located and specifically referred to in
     the lender's title insurance policy or attorney's opinion f title and
     abstract of title delivered to the Originator of such Mortgage Loan, and
     (3) such other matters to which like properties are commonly subject which
     do not, individually or in the aggregate, materially interfere with the
     benefits of the security intended to be provided by the Mortgage, of any
     encumbrance, equity, participation interest, lien, pledge, charge, claim or
     security interest, and had full right and authority, subject to no interest
     or participation of, or agreement with, any other party, to sell and assign
     each Mortgage Loan pursuant to this Agreement;

          (vii) None of the Mortgage Loans have any marks or notations
     indicating that such Mortgage Loans have been pledged, assigned or
     otherwise conveyed to any Person other than the Trustee;

          (viii) The Depositor has received all consents and approvals required
     by the terms of the Mortgage Loans to convey the Mortgage Loans hereunder
     to the Trustee;

          (ix) As of the Closing Date, no Mortgage Loan provides for interest
     other than at either (x) a single fixed rate in effect throughout the term
     of the Mortgage Loan or (y) a single "variable rate" (within the meaning of
     Treasury Regulations Section 1.860G-1(a)(3)) in effect throughout the term
     of the Mortgage Loan;

          (x) As of the Closing Date, each Mortgage Loan is a "qualified
     mortgage" within the meaning of Section 860G(a)(3) of the Code (without
     regard to Treasury Regulations Section 1.860G-2(f)) or any similar rule
     that provides that a defective obligation is a qualified mortgage for a
     temporary period);

          (xi) As of the Closing Date, no Mortgage Loan is the subject of
     pending or final foreclosure proceedings; and

          (xii) As of the Closing Date, the Depositor would not initiate
     foreclosure proceedings with respect to any Mortgage Loan based on such
     Mortgage Loan's delinquency status prior to the next scheduled payment date
     for such Mortgage Loan.

     The foregoing representations made in this Section 2.03 by the Depositor
shall survive the termination of this Agreement and shall not be waived by any
party hereto

     (b) The representations and warranties of the Transferor with respect to
the related Mortgage Loans in the Transfer Agreement, which have been assigned
to the Trustee hereunder, were made as of the date specified in the Transfer
Agreement. The representations and warranties of the Sponsor with respect to the
Mortgage Loans contained in the Mortgage Loan Sale and Assignment Agreement were
made as of the Closing Date. To the extent that any fact, condition or event
with respect to a Mortgage Loan constitutes a breach of both (i) a
representation or warranty of the Transferor under the Transfer Agreement and
(ii) a representation or warranty of the Sponsor under the Mortgage Loan Sale
and Assignment Agreement, the obligations of the Sponsor under the Mortgage Loan
Sale and Assignment Agreement shall be enforced against the Transferor or the
Sponsor, as applicable, as set forth in the Mortgage Loan Sale and Assignment
Agreement. The Trustee acknowledges that the Sponsor shall have no obligation or
liability with respect to any breach of a representation or warranty made by it
with respect to any related Mortgage Loans, if the fact, condition or event
constituting

                                       39

<PAGE>

such breach also constitutes a breach of a representation or warranty made by
the Transferor in the Transfer Agreement, without regard to whether the
Transferor fulfills its contractual obligations in respect of such
representation or warranty. The Trustee also acknowledges that the Sponsor shall
have no obligation or liability with respect to any breach of a representation
or warranty made solely by the Transferor with respect to the Mortgage Loans,
without regard to whether the related Transferor fulfills its contractual
obligations in respect of such representation or warranty. The Trustee further
acknowledges that the Depositor shall have no obligation or liability with
respect to any breach of any representation or warranty with respect to the
Mortgage Loans (except as set forth in Section 2.03(a)(iii)) under any
circumstances.

     In addition to the representations and warranties of the Transferor in the
Transfer Agreement, with respect to each Mortgage Loan, the Transferor made
certain additional covenants regarding such Mortgage Loan, as set forth in the
related Transfer Agreement. With respect to any breach of such additional
covenants that materially and adversely affects the interests of the
Certificateholders in such Mortgage Loan, the Sponsor shall (1) use reasonable
efforts to enforce such covenant against the Transferor and (2) if the Sponsor
successfully enforces any obligation of the Transferor to repurchase such
Mortgage Loan, the Sponsor shall repurchase such Mortgage Loan in accordance
with this Section 2.03. If the Sponsor does not successfully enforce the
obligation, if any, of the Transferor to repurchase a Mortgage Loan with respect
to any breach of any such additional covenants, the Sponsor shall have no
obligation or right to repurchase or cure such Mortgage Loan.

     (c) The Servicer hereby represents, warrants, and covenants to the
Depositor and to the Trustee, for the benefit of the Certificateholders as of
the Closing Date that:

          (i) The Servicer is a corporation duly organized, validly existing and
     in good standing under the laws of the State of New Jersey. The Servicer
     has in full force and effect (without notice of possible suspension,
     revocation or impairment) all required qualifications, permits, approvals,
     licenses, and registrations, or exemption therefrom, to conduct all
     activities in all jurisdictions in which its activities with respect to the
     Mortgage Loans require it to be qualified or licensed;

          (ii) The Servicer has all requisite corporate power, authority and
     capacity to carry on its business as it is now being conducted, to execute
     and deliver this Agreement, and to perform all of its obligations
     hereunder. The Servicer does not believe, nor does it have any cause or
     reason to believe, that it cannot perform each and every covenant contained
     in this Agreement;

          (iii) The execution, delivery and performance of this Agreement by the
     Servicer and consummation of the transactions contemplated hereby have been
     duly and validly authorized by all necessary corporate, shareholder or
     other action by the Servicer; this Agreement has been duly and validly
     executed and delivered by the Servicer; and this Agreement is a valid and
     legally binding agreement of the Servicer, enforceable against the Servicer
     in accordance with its respective terms, subject to bankruptcy, insolvency
     and similar laws affecting generally the enforcement of creditors' rights
     and the discretion of a court to grant specific performance of contracts;

          (iv) Neither the execution and delivery of this Agreement, nor the
     consummation of the transactions contemplated hereby, nor compliance with
     their respective terms and conditions shall (a) violate, conflict with,
     result in the breach of, constitute a default under, be prohibited by or
     require any additional approval under any

                                       40

<PAGE>

     terms, conditions or provisions of the Servicer's articles of incorporation
     or by-laws or any other similar corporate or organizational document of the
     Servicer; any mortgage, indenture, deed of trust, loan or credit agreement
     or other agreement or instrument to which the Servicer is now a party or by
     which it is bound; or any law, ordinance, rule, regulation, order, judgment
     or decree of any governmental authority applicable to the Servicer; or (b)
     result in the creation or imposition of any lien, charge or encumbrance of
     any material nature upon any of the properties or assets of the Servicer;

          (v) The Servicer holds all licenses, approvals, permits and other
     authorizations, or exemptions therefrom, required under applicable law to
     assume responsibility for servicing the Mortgage Loans;

          (vi) There is no litigation, claim, demand, proceeding or governmental
     investigation existing or pending, or to the knowledge of the Servicer,
     threatened, nor is there any order, injunction or decree outstanding
     against or relating to the Servicer that could (i) have a material adverse
     effect upon the performance by the Servicer of its obligations under this
     Agreement or (ii) to the Servicer's knowledge, result in any material loss
     or liability to Depositor, the Trustee, the Trust Fund or the Sponsor.
     Further, to the Servicer's knowledge, there is no meritorious basis for any
     such litigation, claim, demand, proceeding, or governmental investigation;

          (vii) The Servicer has been approved by GNMA, Fannie Mae and FHLMC and
     will remain approved as an "eligible seller/servicer" of residential
     mortgage loans as provided in GNMA, Fannie Mae, or FHLMC guidelines and in
     good standing. The Servicer has not received any notification from GNMA,
     Fannie Mae or FHLMC that the Servicer is not in compliance with the
     requirements of the approved "seller/servicer" status. The Servicer is a
     mortgagee approved by the Secretary of HUD pursuant to Section 203 and 211
     of the National Housing Act. The Servicer has not received any notification
     from HUD that the Servicer is not in compliance with the requirements of
     the approved mortgagee status;

          (viii) The servicing practices to be used by the Servicer under this
     Agreement are, and shall remain, in all material respects in compliance
     with Accepted Servicing Practices, including without limitation, all
     federal, state and local laws, rules, all regulations and requirements in
     connection therewith, and Fannie Mae guidelines, as applicable;

          (ix) The Servicer has not received written notice from or on behalf of
     FHA, HUD, FDIC, Fannie Mae, FHLMC or GNMA, advising the Servicer of its
     failure to comply with applicable servicing or claims procedures, or
     resulted in a request for repurchase of mortgage loans or indemnification
     in connection with any mortgage loans;

          (x) The Servicer has in place a contingency plan that will enable it
     to perform its obligations under this Agreement in all material respects,
     at another location within five (5) Business Days in the event its primary
     location is rendered inoperative as a result of a natural or other disaster
     or emergency;

          (xi) The Servicer maintains and shall maintain, in good standing, all
     licenses and approvals necessary to service the Mortgage Loans and
     maintains and shall at all times maintain the capital requirements imposed
     by the licensing or approving entities having jurisdiction over the
     Servicer. The Servicer has filed applications for all

                                       41

<PAGE>

     applicable licenses and qualifications to do business and to service the
     Mortgage Loans in the U.S. Virgin Islands;

          (xii) The Servicer maintains and shall at all times maintain error and
     omissions and fidelity insurance coverage of the type and in the amounts
     required by Fannie Mae;

          (xiii) The Servicer has, and shall at all times maintain during the
     term of this Agreement, sufficient systems, including but not limited to
     the Servicer's EDP, and trained and experienced personnel in place to
     perform its obligations under this Agreement;

          (xiv) For so long as, and to the extent that, the Servicer services
     the Mortgage Loans, the Servicer will continue to comply with each
     applicable federal, state, or local, law, statute, and ordinance, and any
     rule, regulation, or order issued thereunder, pertaining to the subject
     matter of this Agreement, including, but not limited to, usury, RESPA,
     Consumer Credit Reporting Act, Equal Credit Opportunity Act, Federal
     Deposit Insurance Corporation Improvement Act, Regulation B, Fair Credit
     Reporting Act, Fair Debt Collection Practices Act, Fair Housing Act, Truth
     in Lending Act and Regulation Z, Flood Disaster Protection Act of 1973, and
     any applicable regulations related thereto, and such other fair housing,
     anti-redlining, equal credit opportunity, truth-in-lending, real estate
     settlement procedures, fair credit reporting, and every other prohibition
     against unlawful discrimination in residential mortgage lending or
     governing consumer credit, and all state consumer credit statutes and
     regulations, as amended. In the event the Depositor or the Trustee has a
     reasonable good faith belief in the Servicer's non-compliance with this
     representation and warranty and upon the Depositor's or the Trustee's
     written request, the Servicer shall deliver to the Depositor or the Trustee
     reasonable evidence of compliance with any of the requirements of this
     representation and warranty; and

          (xv) Neither the Servicer, its parent, nor any of its subsidiaries is
     in bankruptcy, receivership or conservatorship. The Servicer has the
     requisite financial resources and ability to meet its obligations under
     this Agreement, including, but not limited to, any and all indemnification
     obligations.

     Within 60 days of the earlier of either discovery by or notice to the
Servicer of any breach of a representation or warranty set forth in this Section
2.03(c), which materially and adversely affects the ability of the Servicer to
perform its duties and obligations under this Agreement or otherwise materially
and adversely affects the value of the Mortgage Loans, the Mortgaged Property or
the priority of the security interest on such Mortgaged Property, the Servicer
shall use its best efforts promptly to cure such breach in all material respects
and, if such breach cannot be cured, the Servicer shall, at the Trustee's
option, assign the Servicer's rights and obligations under this Agreement (or
respecting the affected Mortgage Loans) to a successor servicer selected by the
Depositor with the prior consent and approval of the Trustee. Such assignment
shall be made in accordance with this Agreement.

     Section 2.04. Discovery of Breach; Repurchase or Substitution of Mortgage
Loans.

     Upon discovery (i) by the Depositor, the Sponsor, the Servicer or the
Trustee of a breach of any representation or warranty made by the Depositor
under Section 2.03 which materially adversely affects the value of a Mortgage
Loan or the interest therein of the Certificateholder (a

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<PAGE>
"Defective Mortgage Loan"), or (ii) by the Depositor or the Sponsor of the
breach by the Sponsor or the Transferor of any representation or warranty herein
or under the Mortgage Loan Sale and Assignment Agreement or the Transfer
Agreement, respectively, in respect of any Mortgage Loan, which breach results
in the Mortgage Loan being a "Defective Mortgage Loan" (each of such parties
hereby agreeing to give written notice of such breach to the Trustee and the
other of such parties), the Trustee, or its designee, shall promptly notify the
Depositor in writing of such breach and request that the Depositor cure or cause
the cure of such breach within 90 days from the date that the Depositor
discovered or was notified of such breach, and if the Depositor does not cure
such breach in all material respects during such period, the Trustee shall (i)
in the case of an uncured breach under Section 2.03, cause the Depositor to
repurchase such Defective Mortgage Loan at the Purchase Price, (ii) in the case
of an uncured breach by the Sponsor under the Mortgage Loan Sale and Assignment
Agreement, cause the Depositor to enforce the Sponsor's obligation under the
Mortgage Loan Sale and Assignment Agreement to repurchase that Defective
Mortgage Loan from the Trust Fund at the Purchase Price, and (iii) in the case
of an uncured breach by the Transferor under the Transfer Agreement, cause the
Depositor to enforce the Transferor's obligation under the Transfer Agreement to
repurchase that Defective Mortgage Loan from the Trust Fund at the Purchase
Price, in each case on or prior to the Determination Date following the
expiration of such 90-day period (subject to Section 2.04(b) below); provided,
however, that, in connection with any such breach under clauses (ii) or (iii)
above that could not reasonably have been cured within such 90-day period, if
the Sponsor or the Transferor shall have commenced to cure such breach within
such 90-day period and, if the defective Mortgage Loan qualifies as a "qualified
mortgage" within the meaning of Section 860G(a)(3) of the Code following such
90-day period, the Sponsor or the Transferor shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within an additional
90-day period. The Purchase Price for the repurchased Defective Mortgage Loan
shall be deposited in the related Distribution Account, and the Trustee, or its
designee, upon receipt of such deposit and two copies of a Request for Release
with respect to such Defective Mortgage Loan, shall release to the Sponsor or
the Depositor, as applicable, the related Trustee Mortgage File and shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, representation or warranties, as either party shall furnish to
it and as shall be necessary to vest in such party any Defective Mortgage Loan
released pursuant hereto and the Trustee, or its designee, shall have no further
responsibility with regard to such Trustee Mortgage File (it being understood
that the Trustee shall have no responsibility for determining the sufficiency of
such assignment for its intended purpose). In lieu of repurchasing any such
Defective Mortgage Loan as provided above, the Sponsor may cause such Defective
Mortgage Loan to be removed from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Replacement Mortgage Loans in
the manner and subject to the limitations set forth in Section 2.04(b) below. It
is understood and agreed that the obligation of the Sponsor or the Transferor
(or the Depositor, if applicable) to cure or to repurchase (or to substitute
for) any Mortgage Loan as to which a breach has occurred and is continuing shall
constitute the sole remedy against the Sponsor or the Transferor (or the
Depositor, if applicable) respecting such breach available to the Trustee on
behalf of the Certificateholders. With respect to the representations and
warranties that are made to the best of the Sponsor's knowledge, if it is
discovered by any of the Depositor, the Sponsor or the Trustee that the
substance of such representation and warranty is inaccurate and such inaccuracy
materially and adversely affects the value of the related Mortgage Loan, then
notwithstanding the Sponsor's lack of knowledge with respect to the substance of
such representation and warranty, such inaccuracy shall be deemed a breach of
the applicable representation or warranty.

     (a) Any substitution of Replacement Mortgage Loans for Deleted Mortgage
Loans made pursuant to Section 2.04(a) above must be effected prior to the last
Business Day that is

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<PAGE>
within two years after the Closing Date. As to any Deleted Mortgage Loan for
which the Sponsor substitutes a Replacement Mortgage Loan or Loans, such
substitution shall be effected by delivering to the Trustee for such Replacement
Mortgage Loan or Loans, the Mortgage Note, the Mortgage, the Assignment to the
Trustee, and such other documents and agreements, with all necessary
endorsements thereon, together with an Officers' Certificate stating that each
such Replacement Mortgage Loan satisfies the definition thereof and specifying
the Substitution Amount (as described below), if any, in connection with such
substitution. The Trustee shall acknowledge receipt for such Replacement
Mortgage Loan and, within 45 days thereafter, shall review such Mortgage
Documents as specified in this Agreement under Section 2.02(a) and deliver to
the Depositor, with respect to such Replacement Mortgage Loans, a certification
substantially in the form of a revised Initial Certification, with any
exceptions noted thereon. Within one year of the date of substitution, the
Trustee shall deliver to the Depositor a certification substantially in the form
of a revised Final Certification, with respect to such Replacement Mortgage
Loans, with any exceptions noted thereon. Monthly Payments due with respect to
Replacement Mortgage Loans in the month of substitution shall not be included as
part of the Trust Fund and shall be retained by the Sponsor. For the month of
substitution, distributions to Certificateholders shall reflect the collections
and recoveries in respect of such Deleted Mortgage in the Due Period preceding
the month of substitution and the Sponsor shall thereafter be entitled to retain
all amounts subsequently received in respect of such Deleted Mortgage Loan. Upon
such substitution, such Replacement Mortgage Loan shall constitute part of the
Trust Fund and shall be subject in all respects to the terms of this Agreement
and the Mortgage Loan Sale and Assignment Agreement, including all
representations and warranties thereof included in the Mortgage Loan Sale and
Assignment Agreement, in each case as of the date of substitution.

     For any month in which the Sponsor substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Trustee, based upon
information provided by the Servicer, shall determine the excess (each, a
"Substitution Amount"), if any, by which the aggregate Purchase Price of all
such Deleted Mortgage Loans exceeds the aggregate Stated Principal Balance of
the Replacement Mortgage Loans replacing such Deleted Mortgage Loans, together
with one month's interest on such excess amount at the applicable Net Mortgage
Rate. On the date of such substitution, the Sponsor shall deliver or cause to be
delivered to the Servicer for deposit in the Custodial Account an amount equal
to the related Substitution Amount, if any, and the Trustee, upon receipt of the
related Replacement Mortgage Loan or Loans and two copies of a Request for
Release with respect to the Deleted Mortgage Loan or Loans, shall release to the
Sponsor the related Trustee Mortgage File or Files and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Sponsor shall deliver to it and as shall be necessary to vest therein any
Deleted Mortgage Loan released pursuant hereto.

     In addition, the Sponsor shall obtain at its own expense and deliver to the
Trustee an Opinion of Counsel to the effect that such substitution (either
specifically or as a class of transactions) shall not cause (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of the Code or on
"contributions after the startup date" under Section 860G(d)(l) of the Code, or
(b) any REMIC created hereunder to fail to qualify as a REMIC at any time that
any Certificate is outstanding. If such Opinion of Counsel can not be delivered,
then such substitution may only be effected at such time as the required Opinion
of Counsel can be given.

     (b) Upon discovery by the Sponsor, the Depositor, the Servicer or the
Trustee that any Mortgage Loan does not constitute a "qualified mortgage" within
the meaning of Section 860G(a)(3) of the Code, the party discovering such fact
shall within two Business Days give

                                       44

<PAGE>

written notice thereof to the other parties. In connection therewith, the
Sponsor or Depositor, as applicable, shall repurchase, or the Sponsor, subject
to the limitations set forth in Section 2.04(b), shall substitute one or more
Replacement Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Any such repurchase or substitution shall be made in the same
manner as set forth in Sections 2.04(a) and 2.04(b) above. The Trustee shall
re-convey to the Sponsor the Mortgage Loan to be released pursuant hereto in the
same manner, and on the same terms and conditions, as it would a Mortgage Loan
repurchased for breach of a representation or warranty.

     The Sponsor indemnifies and holds the Trust Fund, the Trustee, the
Depositor, the Servicer and each Certificateholder harmless against any and all
taxes, claims, losses, penalties, fines, forfeitures, reasonable legal fees and
related costs, judgments, and any other costs, fees and expenses that the Trust
Fund, the Trustee, the Depositor, the Servicer and any Certificateholder may
sustain in connection with any actions of such party relating to a repurchase of
a Mortgage Loan other than in compliance with the terms of this Section 2.04 and
the Mortgage Loan Sale and Assignment Agreement, to the extent that any such
action causes (i) any federal or state tax to be imposed on the Trust Fund,
including without limitation, any federal tax imposed on "prohibited
transactions" under Section 860F(a)(1) of the Code or on "contributions after
the startup date" under Section 860G(d)(1) of the Code, or (ii) any REMIC formed
hereby to fail to qualify as a REMIC at any time that any Certificate is
outstanding.

     (c) Notwithstanding anything to the contrary in this Agreement, Sponsor
shall service and administer the Additional Collateral, it being understood and
agreed that only Sponsor shall service and administer the related securities
accounts, lines of credit and guarantees with respect to Additional Collateral.

     Section 2.05. Grant Clause.

     (a) It is intended that the conveyance of the Depositor's right, title and
interest in and to property constituting the Trust Fund pursuant to this
Agreement shall constitute, and shall be construed as, a sale of such property
and not a grant of a security interest to secure a loan. However, if such
conveyance is deemed to be in respect of a loan, it is intended that: (1) the
rights and obligations of the parties shall be established pursuant to the terms
of this Agreement; (2) the Depositor hereby grants to the Trustee for the
benefit of the Holders of the Certificates a first priority security interest in
all of the Depositor's right, title and interest in, to and under, whether now
owned or hereafter acquired, the Trust Fund and all proceeds of any and all
property constituting the Trust Fund to secure payment of the Certificates; and
(3) this Agreement shall constitute a security agreement under applicable law.
If such conveyance is deemed to be in respect of a loan and the trust created by
this Agreement terminates prior to the satisfaction of the claims of any Person
holding any Certificate, the security interest created hereby shall continue in
full force and effect and the Trustee shall be deemed to be the collateral agent
for the benefit of such Person, and all proceeds shall be distributed as herein
provided.

     (b) The Depositor shall, to the extent consistent with this Agreement, take
such reasonable actions as may be necessary to ensure that, if this Agreement
were deemed to create a security interest in the Mortgage Loans and the other
property described above, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of this Agreement. The Depositor will, at
its own expense, make all initial filings on or about the Closing Date and shall
forward a copy of such filing or filings to the Trustee. Without limiting the
generality of the foregoing, the Depositor shall prepare and forward for filing,
or shall cause to be forwarded for filing, at the

                                       45

<PAGE>

expense of the Depositor, all filings necessary to maintain the effectiveness of
any original filings necessary under the relevant UCC to perfect the Trustee's
security interest in or lien on the Mortgage Loans and the other property
described above, including without limitation (x) continuation statements, and
(y) such other statements as may be occasioned by (1) any change of name of
Sponsor, the Depositor or the Trustee, (2) any change of location of the place
of business or the chief executive office of the Sponsor or the Depositor, (3)
any transfer of any interest of the Depositor in any Mortgage Loan or (4) any
change under the relevant UCC or other applicable laws. The Depositor shall not
organize under the law of any jurisdiction other than the State under which each
is organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without giving 30
days prior written notice of such action to its immediate and intermediate
transferee, including the Trustee. Before effecting such change, the Depositor
proposing to change its jurisdiction of organization shall prepare and file in
the appropriate filing office any financing statements or other statements
necessary to continue the perfection of the interests of its immediate and
mediate transferees, including the Trustee, in the Mortgage Loans and the other
property described above. In connection with the transactions contemplated by
this Agreement, the Depositor authorizes its immediate or mediate transferee to
file in any filing office any initial financing statements, any amendments to
financing statements, any continuation statements, or any other statements or
filings described in this paragraph (b).

                                  ARTICLE III.

                                THE CERTIFICATES

     Section 3.01. The Certificates.

     (a) The Certificates shall be issuable in registered form only and shall be
securities governed by Article 8 of the New York Uniform Commercial Code. The
Book-Entry Certificates will be evidenced by one or more certificates,
beneficial ownership of which will be held in the dollar denominations in
Certificate Principal Amount or in the Percentage Interests specified herein.
Each Class of Book-Entry Certificates will be issued in the minimum
denominations in Certificate Principal Amount specified in the Preliminary
Statement hereto and in integral multiples of $1 in excess thereof. The Residual
Certificates shall be issued as single Certificates and maintained in
definitive, fully registered form in a denomination equal to 100% of the
Percentage Interest of each such Class.

     (b) The Certificates shall be executed by manual or facsimile signature on
behalf of the Trustee by an authorized officer. Each Certificate shall, on
original issue, be authenticated by the Trustee or an Authenticating Agent upon
the order of the Depositor upon receipt by the Trustee of the Trustee Mortgage
Files described in Section 2.01. No Certificate shall be entitled to any benefit
under this Agreement, or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein, executed by an authorized officer of the Trustee or of an
Authenticating Agent, by manual signature, and such certification upon any
Certificate shall be conclusive evidence, and the only evidence, that such
Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication. At any time and
from time to time after the execution and delivery of this Agreement, the
Depositor may deliver Certificates executed by the Trustee to the Trustee or the
Authenticating Agent for authentication and the Trustee or the Authenticating
Agent shall authenticate and deliver such Certificates as in this Agreement
provided and not otherwise.

                                       46
<PAGE>

     (c) The Class B-1, Class B-2 and Class B-3 certificates offered and sold in
reliance on the exemption from registration under Rule 144A under the Securities
Act shall be issued initially in the form of one or more permanent global
Certificates in definitive, fully registered form without interest coupons with
the applicable legends set forth in Exhibit A added to the forms of such
Certificates (each, a "Restricted Global Security").

     Section 3.02. Registration.

     The Trustee is hereby appointed, and the Trustee hereby accepts its
appointment as, initial Certificate Registrar in respect of the Certificates and
shall maintain books for the registration and for the transfer of Certificates
(the "Certificate Register"). The Trustee may appoint a bank or trust company to
act as successor Certificate Registrar. A registration book shall be maintained
for the Certificates collectively. The Certificate Registrar may resign or be
discharged or removed and a new successor may be appointed in accordance with
the procedures and requirements set forth in Sections 6.06 and 6.07 hereof with
respect to the resignation, discharge or removal of the Trustee and the
appointment of a successor Trustee. The Certificate Registrar may appoint, by a
written instrument delivered to the Holders, any bank or trust company to act as
co-registrar under such conditions as the Certificate Registrar may prescribe;
provided, however, that the Certificate Registrar shall not be relieved of any
of its duties or responsibilities hereunder by reason of such appointment.

     Section 3.03. Transfer and Exchange of Certificates.

     (a) A Certificate (other than Book-Entry Certificates which shall be
subject to Section 3.09 hereof) may be transferred by the Holder thereof only
upon presentation and surrender of such Certificate at the office of the
Certificate Registrar duly endorsed or accompanied by an assignment duly
executed by such Holder or his duly authorized attorney in such form as shall be
satisfactory to the Certificate Registrar. Upon the transfer of any Certificate
in accordance with the preceding sentence, the Trustee shall execute, and the
Authenticating Agent shall authenticate and deliver to the transferee, one or
more new Certificates of the same Class and evidencing, in the aggregate, the
same aggregate Certificate Principal Amount as the Certificate being
transferred. No service charge shall be made to a Certificateholder for any
registration of transfer of Certificates, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any registration of transfer of Certificates.

     (b) A Certificate may be exchanged by the Holder thereof for any number of
new Certificates of the same Class, in authorized denominations, representing in
the aggregate the same Certificate Principal Amount as the Certificate
surrendered, upon surrender of the Certificate to be exchanged at the office of
the Certificate Registrar duly endorsed or accompanied by a written instrument
of transfer duly executed by such Holder or his duly authorized attorney in such
form as is satisfactory to the Certificate Registrar. Certificates delivered
upon any such exchange will evidence the same obligations, and will be entitled
to the same rights and privileges, as the Certificates surrendered. No service
charge shall be made to a Certificateholder for any exchange of Certificates,
but the Certificate Registrar may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
exchange of Certificates. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute, and the Authenticating Agent shall
authenticate, date and deliver the Certificates which the Certificateholder
making the exchange is entitled to receive.

                                       47

<PAGE>

     (c) By acceptance of a Restricted Certificate, whether upon original
issuance or subsequent transfer, each Holder of such a Certificate acknowledges
the restrictions on the transfer of such Certificate set forth thereon and
agrees that it will transfer such a Certificate only as provided herein.

     The following restrictions shall apply with respect to the transfer and
registration of transfer of a Restricted Certificate to a transferee that takes
delivery in the form of a Definitive Certificate:

          (i) The Certificate Registrar shall register the transfer of a
     Restricted Certificate if the requested transfer is (x) to the Depositor or
     an affiliate (as defined in Rule 405 under the 1933 Act) of the Depositor
     or (y) being made to a "qualified institutional buyer" (a "QIB") as defined
     in Rule 144A under the Securities Act by a transferor that has provided the
     Certificate Registrar with a certificate in the form of Exhibit G hereto;
     and

          (ii) The Certificate Registrar shall register the transfer of a
     Restricted Certificate if the requested transfer is being made to an
     "accredited investor" under Rule 501(a)(1), (2), (3) or (7) under the
     Securities Act, or to any Person all of the equity owners in which are such
     accredited investors, by a transferor who furnishes to the Certificate
     Registrar a letter of the transferee substantially in the form of Exhibit H
     hereto.

     (d) (i) No transfer of an ERISA-Restricted Certificate or a Class A-R
Certificate shall be made unless the prospective transferee provides the Trustee
and the Depositor with (I) a representation as set forth in Exhibit B or Exhibit
I, as applicable, to the effect that such transferee is not an employee benefit
plan subject to Title I of ERISA, a plan subject to Section 4975 of the Code or
a plan or arrangement subject to any provisions under any federal, state, local,
non-U.S. or other laws or regulations that are substantively similar to the
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring such Certificate for, on
behalf of or with any assets of any such Plan, or (II) solely in the case of
ERISA-Restricted Certificates, (A) if the ERISA-Restricted Certificate has been
the subject of an ERISA-Qualifying Underwriting, a representation as set forth
in Exhibit I that such transferee is an insurance company that is acquiring the
ERISA-Restricted Certificate with assets contained in an "insurance company
general account," as defined in Section V(E) of Prohibited Transaction Class
Exemption ("PTCE") 95-60, and the acquisition and holding of the
ERISA-Restricted Certificate are covered and exempt under Sections I and III of
PTCE 95-60, or (B) solely in the case of a Definitive Certificate, an Opinion of
Counsel satisfactory to the Trustee and the Depositor to the effect that the
acquisition and holding of such ERISA-Restricted Certificate will not constitute
or result in a nonexempt prohibited transaction under ERISA or the Code, or a
violation of Similar Law, and will not subject the Certificate Registrar, the
Depositor, the Servicer or the Trustee to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Certificate Registrar, the Depositor, the Servicer or the
Trustee.

          (ii) Except in the case of a Definitive Certificate, the
     representations set forth in paragraph (i) of this Subsection 3.03(d),
     other than subparagraph (II)(B) and in Exhibit B or Exhibit I, as
     applicable, shall be deemed to have been made to the Trustee or the
     Depositor by the transferee's acceptance of an ERISA-Restricted Certificate
     or a Class A-R Certificate (or the acceptance by a Certificate Owner of the
     beneficial interest in any Class of ERISA-Restricted Certificates or a
     Class A-R Certificate). Notwithstanding any

                                       48

<PAGE>

     other provision herein to the contrary, any purported transfer of an
     ERISA-Restricted Certificate or a Class A-R Certificate to or on behalf of
     a Plan without the delivery to the Trustee or the Depositor of a
     representation or an Opinion of Counsel satisfactory to the Trustee or the
     Depositor as described above shall be void and of no effect. None of the
     Certificate Registrar, the Depositor, the Servicer or the Trustee shall be
     under any liability to any Person for any registration or transfer of any
     ERISA-Restricted Certificate or Class A-R Certificate that is in fact not
     permitted by this Section 3.03(d) nor shall the Paying Agent be under any
     liability for making any payments due on such Certificate to the Holder
     thereof or taking any other action with respect to such Holder under the
     provisions of this Agreement so long as the transfer was registered by the
     Certificate Registrar in accordance with the foregoing requirements. The
     Certificate Registrar, Depositor, Servicer, Paying Agent and/or Trustee
     shall be entitled, but not obligated, to recover from any Holder of any
     ERISA-Restricted Certificate or Class A-R Certificate that was in fact a
     Plan and that held such Certificate in violation of this Section 3.03(d)
     all payments made on such ERISA-Restricted Certificate or Class A-R
     Certificate at and after the time it commenced such holding. Any such
     payments so recovered shall be paid and delivered to the last preceding
     Holder of such Certificate that is not a Plan.

          (iii) Notwithstanding the foregoing, no representation or Opinion of
     Counsel shall be required for the initial issuance of the ERISA-Restricted
     Certificates.

     (e) As a condition of the registration of transfer or exchange of any
Certificate, the Certificate Registrar may require the certified taxpayer
identification number of the owner of the Certificate and the payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith; provided, however, that the Certificate Registrar shall have no
obligation to require such payment or to determine whether or not any such tax
or charge may be applicable. No service charge shall be made to the
Certificateholder for any registration, transfer or exchange of a Certificate.

     (f) Notwithstanding anything to the contrary contained herein, no Residual
Certificate or beneficial interest therein may be owned, pledged or transferred,
directly or indirectly, by or to (i) a Disqualified Organization or (ii) an
individual, corporation or partnership or other person unless, in the case of
clause (ii), such person is (A) not a Non-U.S. Person or (B) is a Non-U.S.
Person that holds a Residual Certificate in connection with the conduct of a
trade or business within the United States and has furnished the transferor and
the Certificate Registrar with an effective Internal Revenue Service Form W-8ECI
or successor form at the time and in the manner required by the Code (any such
person who is not covered by clause (A) or (B) above is referred to herein as a
"Non-permitted Foreign Holder").

     Prior to and as a condition of the registration of any transfer, sale or
other disposition of a Residual Certificate or a beneficial interest therein,
the proposed transferee shall deliver to the Trustee and the Certificate
Registrar an affidavit in substantially the form attached hereto as Exhibit B
representing and warranting, among other things, that such transferee is neither
a Disqualified Organization, an agent or nominee acting on behalf of a
Disqualified Organization, nor a Non-permitted Foreign Holder (any such
transferee, a "Permitted Transferee"), and the proposed transferor shall deliver
to the Trustee and the Certificate Registrar an affidavit in substantially the
form attached hereto as Exhibit C. In addition, the Trustee or the Certificate
Registrar may (but shall have no obligation to) require, prior to and as a
condition of any such transfer, the delivery by the proposed transferee of an
Opinion of Counsel, addressed to the Trustee and the Certificate Registrar, that
such proposed transferee or, if the proposed transferee is an agent or nominee,
the proposed beneficial owner, is not a Disqualified Organization, agent or
nominee thereof, or a Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall be
deemed to be of no legal force or effect whatsoever and such Disqualified
Organization, agent

                                       49

<PAGE>

or nominee thereof, or Non-permitted Foreign Holder shall not be deemed to be a
Certificateholder for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Residual Certificate. The Depositor, the
Certificate Registrar and the Trustee shall be under no liability to any Person
for any registration or transfer of a Residual Certificate to a Disqualified
Organization, agent or nominee thereof or Non-permitted Foreign Holder or for
the Paying Agent making any payments due on such Residual Certificate to the
Holder thereof or for taking any other action with respect to such Holder under
the provisions of the Agreement, so long as the transfer was effected in
accordance with this Section 3.03(f), unless the Certificate Registrar shall
have actual knowledge at the time of such transfer or the time of such payment
or other action that the transferee is a Disqualified Organization, or an agent
or nominee thereof, or Non-permitted Foreign Holder. The Certificate Registrar
shall be entitled to recover from any Holder of a Residual Certificate that was
a Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder at the time it became a Holder or at any subsequent time became a
Disqualified Organization, agent or nominee thereof, or Non-permitted Foreign
Holder, all payments made on such Residual Certificate at and after either of
such times (and all costs and expenses, including but not limited to attorneys'
fees, incurred in connection therewith). Any payment (not including any such
costs and expenses) so recovered by the Certificate Registrar shall be paid and
delivered to the last preceding Holder of such Residual Certificate.

     If any purported transferee shall become a registered Holder of a Residual
Certificate in violation of the provisions of this Section 3.03(f), then upon
receipt of written notice to the Trustee that the registration of transfer of
such Residual Certificate was not in fact permitted by this Section 3.03(f),
such transfer shall be absolutely null and void and shall vest no rights in the
purported transferee and the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the date of such
registration of transfer of such Residual Certificate. The Depositor, the
Certificate Registrar and the Trustee shall be under no liability to any Person
for any registration of transfer of a Residual Certificate that is in fact not
permitted by this Section 3.03(f), or for the Paying Agent making any payment
due on such Certificate to the registered Holder thereof or for taking any other
action with respect to such Holder under the provisions of this Agreement so
long as the transfer was registered upon receipt of the affidavit described in
the preceding paragraph of this Section 3.03(f).

     (g) Each Holder or Certificate Owner of a Restricted Certificate,
ERISA-Restricted Certificate or Residual Certificate, or an interest therein, by
such Holder's or Owner's acceptance thereof, shall be deemed for all purposes to
have consented to the provisions of this section.

     Section 3.04. Cancellation of Certificates.

     Any Certificate surrendered for registration of transfer or exchange shall
be cancelled and retained in accordance with normal retention policies with
respect to cancelled certificates maintained by the Trustee or the Certificate
Registrar.

     Section 3.05. Replacement of Certificates.

     If (i) any Certificate is mutilated and is surrendered to the Trustee or
the Certificate Registrar or (ii) the Trustee or the Certificate Registrar
receives evidence to its satisfaction of the

                                       50

<PAGE>

destruction, loss or theft of any Certificate, and there is delivered to the
Trustee and the Certificate Registrar such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Depositor, the Trustee or the Certificate Registrar that such destroyed,
lost or stolen Certificate has been acquired by a protected purchaser, the
Trustee shall execute and the Authenticating Agent shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Certificate, a new Certificate of like tenor and Certificate Principal
Amount. Upon the issuance of any new Certificate under this Section 3.05, the
Trustee, the Depositor or the Certificate Registrar 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, the Depositor or the Certificate Registrar) connected therewith.
Any replacement Certificate issued pursuant to this Section 3.05 shall
constitute complete and indefeasible evidence of ownership in the applicable
Trust Fund, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.

     If after the delivery of such new Certificate, a protected purchaser of the
original Certificate in lieu of which such new Certificate was issued presents
for payment such original Certificate, the Depositor, the Certificate Registrar
and the Trustee or any agent shall be entitled to recover such new Certificate
from the Person to whom it was delivered or any Person taking therefrom, except
a protected purchaser, and shall be entitled to recover upon the security or
indemnity provided therefor to the extent of any loss, damage, cost or expenses
incurred by the Depositor, the Certificate Registrar, the Trustee or any agent
in connection therewith.

     Section 3.06. Persons Deemed Owners.

     Subject to the provisions of Section 3.09 with respect to Book-Entry
Certificates, the Depositor, the Trustee, the Certificate Registrar, the Paying
Agent and any agent of any of them shall treat the Person in whose name any
Certificate is registered upon the books of the Certificate Registrar as the
owner of such Certificate for the purpose of receiving distributions pursuant to
Sections 5.01 and 5.02 and for all other purposes whatsoever, and neither the
Depositor, the Trustee, the Certificate Registrar, the Paying Agent nor any
agent of any of them shall be affected by notice to the contrary.

     Section 3.07. Temporary Certificates.

     (a) Pending the preparation of definitive Certificates, upon the order of
the Depositor, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver temporary Certificates that are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Certificates in lieu of which they
are issued and with such variations as the authorized officers executing such
Certificates may determine, as evidenced by their execution of such
Certificates.

     (b) If temporary Certificates are issued, the Depositor will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the office or agency of the Certificate Registrar without charge
to the Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Trustee shall execute and the Authenticating Agent shall
authenticate and deliver in exchange therefor a like aggregate Certificate
Principal Amount of definitive Certificates of the same Class in the authorized
denominations. Until so exchanged, the temporary Certificates shall in all
respects be entitled to the same benefits under this Agreement as definitive
Certificates of the same Class.

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<PAGE>

     Section 3.08. Appointment of Paying Agent.

     The Trustee may appoint a Paying Agent (which may be the Trustee) for the
purpose of making distributions to Certificateholders hereunder. The Trustee
shall cause any Paying Agent to execute and deliver to the Trustee an instrument
in which such Paying Agent shall agree with the Trustee that such Paying Agent
will hold all sums held by it for the payment to Certificateholders in an
Eligible Account (which shall be the Distribution Account) in trust for the
benefit of the Certificateholders entitled thereto until such sums shall be paid
to the Certificateholders. All funds remitted by the Trustee to any such Paying
Agent for the purpose of making distributions shall be paid to
Certificateholders on each Distribution Date and any amounts not so paid shall
be returned on such Distribution Date to the Trustee. If the Paying Agent is not
the Trustee, the Trustee shall cause to be remitted to the Paying Agent on or
before the Business Day prior to each Distribution Date, by wire transfer in
immediately available funds, the funds to be distributed on such Distribution
Date. Any Paying Agent shall be either a bank or trust company or otherwise
authorized under law to exercise corporate trust powers.

     Section 3.09. Book-Entry Certificates.

     (a) Each Class of Book-Entry Certificates, upon original issuance, shall be
issued in the form of one or more typewritten Certificates representing the
Book-Entry Certificates. The Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of the nominee of the
Clearing Agency, and no Certificate Owner will receive a definitive certificate
representing such Certificate Owner's interest in the Book-Entry Certificates,
except as provided in Section 3.09(c). Unless Definitive Certificates have been
issued to Certificate Owners of Book-Entry Certificates pursuant to Section
3.09(c):

          (i) the provisions of this Section 3.09 shall be in full force and
     effect;

          (ii) the Certificate Registrar, the Paying Agent and the Trustee shall
     deal with the Clearing Agency for all purposes (including the making of
     distributions on the Book-Entry Certificates) as the authorized
     representatives of the Certificate Owners and the Clearing Agency and shall
     be responsible for crediting the amount of such distributions to the
     accounts of such Persons entitled thereto, in accordance with the Clearing
     Agency's normal procedures;

          (iii) to the extent that the provisions of this Section 3.09 conflict
     with any other provisions of this Agreement, the provisions of this Section
     3.09 shall control; and

          (iv) the rights of Certificate Owners shall be exercised only through
     the Clearing Agency and the Clearing Agency Participants and shall be
     limited to those established by law and agreements between such Certificate
     Owners and the Clearing Agency and/or the Clearing Agency Participants.
     Unless and until Definitive Certificates are issued pursuant to Section
     3.09(c), the initial Clearing Agency will make book-entry transfers among
     the Clearing Agency Participants and receive and transmit distributions of
     principal of and interest on the Book-Entry Certificates to such Clearing
     Agency Participants.

     (b) Whenever notice or other communication to the Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 3.09(c), the Trustee
shall give all such notices and communications specified herein to be given to
Holders of the Book-Entry Certificates to the Clearing Agency.

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<PAGE>

     (c) If (i) (A) the Clearing Agency or the Depositor advises the Paying
Agent in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Book-Entry
Certificates, and (B) the Depositor is unable to locate a qualified successor
satisfactory to the Depositor and the Paying Agent, (ii) the Depositor, at its
option, advises the Paying Agent in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Certificate Owners representing beneficial interests
aggregating not less than 50% of the Class Principal Amount of a Class of
Book-Entry Certificates advise the Paying Agent and the Clearing Agency through
the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of a Class of Book-Entry Certificates, the Certificate
Registrar shall notify the Clearing Agency to effect notification to all
Certificate Owners, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Certificate Registrar of the
Book-Entry Certificates by the Clearing Agency, accompanied by registration
instructions from the Clearing Agency for registration, the Certificate
Registrar shall issue the Definitive Certificates. None of the Depositor, the
Certificate Registrar or the Trustee shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates all
references herein to obligations imposed upon or to be performed by the Clearing
Agency shall be deemed to be imposed upon and performed by the Certificate
Registrar, to the extent applicable, with respect to such Definitive
Certificates and the Certificate Registrar shall recognize the holders of the
Definitive Certificates as Certificateholders hereunder. Notwithstanding the
foregoing, the Certificate Registrar, upon the instruction of the Depositor,
shall have the right to issue Definitive Certificates on the Closing Date in
connection with credit enhancement programs.

                                   ARTICLE IV.

                        ADMINISTRATION OF THE TRUST FUND

     Section 4.01. Custodial Accounts; Distribution Account.

     (a) On or prior to the Closing Date, the Servicer shall establish and
maintain one or more Custodial Accounts, as provided herein, into which the
Servicer shall deposit daily, within two Business Days of receipt thereof, in
immediately available funds, any Scheduled Payments and unscheduled payments
with respect to the Mortgage Loans, net of any deductions or reimbursements
permitted under this Agreement. Prior to 1:00 p.m. New York City time on each
Distribution Account Deposit Date, the Servicer shall remit to the Trustee for
deposit into the Distribution Account, all amounts so required to be deposited
into such account in accordance with the terms of this Agreement.

     (b) Funds in the Custodial Accounts may be invested in Permitted
Investments selected by the Servicer, which shall mature not later than one
Business Day prior to the Distribution Account Deposit Date (except that if such
Permitted Investment is an obligation of the Servicer or is managed or advised
by the Servicer or its affiliates, then such Permitted Investment shall mature
not later than such applicable Distribution Account Deposit Date) and any such
Permitted Investment shall not be sold or disposed of prior to its maturity. All
such Permitted Investments shall be made in the name of the Servicer (in its
capacity as such) or its nominee. All income and gain realized from any
Permitted Investment shall be for the benefit of the Servicer as servicing
compensation and shall be subject to its withdrawal or order from time to time,
and shall not be part of the Trust Fund. The amount of any losses incurred in
respect of

                                       53

<PAGE>

any such investments shall be deposited in the Custodial Accounts by the
Servicer out of its own funds, without any right of reimbursement therefor,
immediately as realized. Any such funds that are not invested in Permitted
Investments may be held uninvested.

     (c) The Trustee, shall establish and maintain an Eligible Account entitled
"Distribution Account of Wells Fargo Bank, N.A., as Trustee, for the benefit of
Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Holders of Mortgage
Pass-Through Certificates." The Trustee shall, promptly upon receipt from the
Servicer on each Distribution Account Deposit Date, deposit into the
Distribution Account and retain on deposit until the related Distribution Date
the following amounts:

          (i) the aggregate of collections with respect to the Mortgage Loans
     remitted by the Servicer from the Custodial Accounts in accordance with
     this Agreement, including the amount of any Advances or Compensating
     Interest Payments with respect to the Mortgage Loans required to be paid by
     the Servicer; and

          (ii) any other amounts so required to be deposited in the Distribution
     Account in the related Due Period pursuant to this Agreement.

     (d) In the event Servicer has remitted in error to the Distribution Account
any amount not required to be remitted in accordance with the definition of
Available Distribution Amount, it may at any time direct the Trustee to withdraw
such amount from the Distribution Account for repayment to the Servicer, as
applicable, by delivery of an Officer's Certificate of the Servicer to the
Trustee which describes the amount deposited in error.

     (e) On each Distribution Date and Purchase Date, the Trustee shall
distribute the Available Distribution Amount to the Certificateholders and any
other parties entitled thereto in the amounts and priorities set forth in
Section 5.02. The Trustee may from time to time withdraw from the Distribution
Account and pay itself or the Servicer any amounts permitted to be paid or
reimbursed to such Person from funds in the Distribution Account pursuant to the
clauses (A) through (D) of the definition of Available Distribution Amount.

     (f) Funds in the Distribution Account may be invested in Permitted
Investments selected by the Trustee, which shall mature not later than one
Business Day prior to the Distribution Date (except that if such Permitted
Investment is an obligation of the Trustee or is managed or advised by the
Trustee or its affiliates, then such Permitted Investment shall mature not later
than such applicable Distribution Date) and any such Permitted Investment shall
not be sold or disposed of prior to its maturity. All such Permitted Investments
shall be made in the name of the Trustee (in its capacity as such) or its
nominee. All income and gain realized from any Permitted Investment shall be for
the benefit of the Trustee and shall be subject to its withdrawal or order from
time to time, and shall not be part of the Trust Fund. The amount of any losses
incurred in respect of any such investments shall be deposited in such
Distribution Account by the Trustee out of its own funds, without any right of
reimbursement therefor, immediately as realized. Any such funds that are not
invested in Permitted Investments may be held uninvested.

     Section 4.02. Reports to Trustee and Certificateholders.

     On each Distribution Date, the Trustee shall have prepared and shall make
available to each Certificateholder and other interested parties a written
report setting forth the following

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<PAGE>

information (based solely on the report provided to the Trustee by the Servicer
pursuant to Section 9.18).

          (i) the amount of the distributions, separately identified, with
     respect to each Class of Certificates;

          (ii) the amount of the distributions set forth in the clause (i)
     allocable to principal, separately identifying the aggregate amount of any
     Principal Prepayments or other unscheduled recoveries of principal included
     in that amount;

          (iii) the amount of the distributions set forth in the clause (i)
     allocable to interest and how it was calculated;

          (iv) the amount of any unpaid Interest Shortfall and the related
     accrued interest thereon, with respect to each Class of Certificates;

          (v) the Class Principal Amount of each Class of Certificates after
     giving effect to the distribution of principal on that Distribution Date;

          (vi) the Aggregate Stated Principal Balance of the Mortgage Loans in
     each Mortgage Pool and the applicable Net WAC of the Mortgage Loans at the
     end of the related Prepayment Period;

          (vii) the Stated Principal Balance of the Mortgage Loans in each
     Mortgage Pool whose Mortgage Rates adjust on the basis of the One-Year
     Treasury index and the Six-Month LIBOR index at the end of the related
     Prepayment Period;

          (viii) the Pro Rata Senior Percentage, Senior Percentage and the
     Subordinate Percentage for each Mortgage Pool for the following
     Distribution Date;

          (ix) the Senior Prepayment Percentage and Subordinate Prepayment
     Percentage for each Mortgage Pool the following Distribution Date;

          (x) in the aggregate and with respect to each Mortgage Pool, the
     amount of Servicing Fee paid to or retained by the Servicer;

          (xi) in the aggregate and with respect to each Mortgage Pool, the
     amount of Advances for the related Due Period;

          (xii) in the aggregate and with respect to each Mortgage Pool, the
     number and Stated Principal Balance of the Mortgage Loans that were (A)
     Delinquent (exclusive of Mortgage Loans in foreclosure) (1) 30 to 59 days,
     (2) 60 to 89 days and (3) 90 or more days, (B) in foreclosure and
     Delinquent (1) 30 to 59 days, (2) 60 to 89 days and (3) 90 or more days and
     (C) in bankruptcy as of the close of business on the last day of the
     calendar month preceding that Distribution Date as determined in accordance
     with the MBA methodology;

          (xiii) in the aggregate and with respect to each Mortgage Pool, for
     any Mortgage Loan as to which the related Mortgaged Property was an REO
     property during the preceding calendar month, the principal balance of that
     Mortgage Loan as of the close of business on the last day of the related
     Due Period;

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          (xiv) in the aggregate and with respect to each Mortgage Pool, the
     total number and principal balance of any REO properties as of the close of
     business on the last day of the preceding Due Period;

          (xv) in the aggregate and with respect to each Mortgage Pool, the
     amount of Realized Losses incurred during the preceding calendar month;

          (xvi) in the aggregate and with respect to each Mortgage Pool, the
     cumulative amount of Realized Losses incurred since the Closing Date;

          (xvii) the Realized Losses, if any, allocated to each Class of
     Certificates on that Distribution Date;

          (xviii) the Certificate Interest Rate for each Class of Certificates
     for that Distribution Date; and

          (xix) the amount of any Compensating Interest Payments, if any,
     allocated to each Class of Certificates on that Distribution Date.

     The Trustee shall make such reports available each month via its website at
http://www.ctslink.com. Assistance in using the website may be obtained by
calling the Trustee's customer service desk at (301) 815-6600.
Certificateholders and other parties that are unable to use the website are
entitled to have a paper copy mailed to them via first class mail by contacting
the Trustee and indicating such. In preparing or furnishing the foregoing
information, the Trustee shall be entitled to rely conclusively on the accuracy
of the information or data regarding the Mortgage Loans and the related REO
Properties that has been provided to the Trustee by the Servicer, and the
Trustee shall not be obligated to verify, recompute, reconcile or recalculate
any such information or data.

     Upon receipt by the Trustee of the reasonable advance written request of
any Certificateholder that is a savings and loan, bank or insurance company, the
Trustee shall provide, or cause to be provided (or, to the extent that such
information or documentation is not required to be provided by a Servicer under
this Agreement, shall use reasonable efforts to obtain such information and
documentation from the Servicer, and provide) to such Certificateholders such
reports and access to information and documentation regarding the Mortgage Loans
as such Certificateholders may reasonably deem necessary to comply with
applicable regulations of the Office of Thrift Supervision or its successor or
other regulatory authorities with respect to an investment in the Certificates;
provided, however, that the Trustee shall be entitled to be reimbursed by such
Certificateholders for the Trustee's actual expenses incurred in providing such
reports and access.

     The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of each of REMIC 1 and the Upper Tier REMIC, an application
for an employer identification number on IRS Form SS-4 or by any other
acceptable method. The Trustee shall also file a Form 8811 as required. The
Trustee, upon receipt from the IRS of the Notice of Taxpayer Identification
Number Assigned, shall upon request promptly forward a copy of such notice to
the Depositor. The Trustee shall furnish any other information that is required
by the Code and regulations thereunder to be made available to
Certificateholders. The Depositor shall cause the Servicer to provide the
Trustee with such information as is necessary for the Trustee to prepare such
reports.

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                                   ARTICLE V.

                    DISTRIBUTIONS TO HOLDERS OF CERTIFICATES

     Section 5.01. Distributions Generally.

     (a) Subject to Section 7.01 respecting the final distribution on the
Certificates, on each Distribution Date the Trustee or the Paying Agent shall
make distributions in accordance with this Article V. Such distributions shall
be made by check mailed to each Certificateholder's address as it appears on the
Certificate Register of the Certificate Registrar or, upon written request made
to the Trustee at least five Business Days prior to the related Record Date by
any Certificateholder owning an aggregate initial Certificate Principal Amount
of at least $1,000,000, or in the case of a Residual Certificate, a Percentage
Interest of not less than 100%, by wire transfer in immediately available funds
to an account specified in the request and at the expense of such
Certificateholder; provided, however, that the final distribution in respect of
any Certificate shall be made only upon presentation and surrender of such
Certificate at the Certificate Registrar's Corporate Trust Office; provided,
further, that the foregoing provisions shall not apply to any Class of
Certificates as long as such Certificate remains a Book-Entry Certificate in
which case all payments made shall be made through the Clearing Agency and its
Clearing Agency Participants. Wire transfers will be made at the expense of the
Holder requesting such wire transfer by deducting a wire transfer fee from the
related distribution. Notwithstanding such final payment of principal of any of
the Certificates, each Residual Certificate will remain outstanding until the
termination of each REMIC and the payment in full of all other amounts due with
respect to the Residual Certificates and at such time such final payment in
retirement of any Residual Certificate will be made only upon presentation and
surrender of such Certificate at the Certificate Registrar's Corporate Trust
Office. If any payment required to be made on the Certificates is to be made on
a day that is not a Business Day, then such payment will be made on the next
succeeding Business Day.

     (b) All distributions or allocations made with respect to
Certificateholders within each Class on each Distribution Date shall be
allocated among the outstanding Certificates in such Class equally in proportion
to their respective initial Class Principal Amounts (or Percentage Interests).

     Section 5.02. Distributions from the Distribution Account.

     (a) Subject to Sections 5.02(g) and 5.02(h), on each Distribution Date, the
Available Distribution Amount for the related Mortgage Pool (in the case of the
Senior Certificates and the Mortgage Pools in the aggregate (in the case of the
Subordinate Certificates) shall be withdrawn by the Trustee from the
Distribution Account and allocated among the classes of Senior Certificates and
Subordinate Certificates in the following order of priority:

          (i) Concurrently, to the payment of the Interest Distribution Amount
     and any accrued but unpaid Interest Shortfalls on each class of Senior
     Certificates;

          (ii) Concurrently, to the Senior Certificates from the Available
     Distribution Amount remaining in the related Mortgage Pool after
     application of amounts pursuant to clause (i) above, as follows:

               (A) first, to the Class A-R Certificate and Class I-A
          Certificates sequentially in that order, an amount up to the Senior
          Principal Distribution

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          Amount for Pool 1, until their respective Class Principal Amounts have
          been reduced to zero; and

               (B) second, to the Class II-A-1 and II-A-2 Certificates, pro rata
          an amount up to the Senior Principal Distribution Amount for Pool 2,
          until the Class Principal Amount thereof has been reduced to zero.

          (iii) From the Available Distribution Amount from the Mortgage Pools
     in the aggregate remaining after application amounts pursuant to clauses
     (i) and (ii) above:

               (A) to the Class M-1 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (B) to the Class M-2 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (C) to the Class M-3 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (D) to the Class B-1 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (E) to the Class B-2 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (F) to the Class B-3 Certificates, the payment of its applicable
          Interest Distribution Amount and any outstanding Interest Shortfalls;

               (G) to the Class M-1 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero;

               (H) to the Class M-2 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero;

               (I) to the Class M-3 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero;

               (J) to the Class B-1 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero;

               (K) to the Class B-2 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero; and

               (L) to the Class B-3 Certificates, such class's Subordinate Class
          Percentage of the Subordinate Principal Distribution Amount for each
          Mortgage Pool, until its Class Principal Amount has been reduced to
          zero.

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          (iv) To the Class A-R Certificate, any remaining amount of the
     Available Distribution Amount from the Mortgage Pools in the aggregate.

     (b) (i) On each Distribution Date on and after the Credit Support Depletion
Date, the Available Distribution Amount for each Mortgage Pool remaining after
the distributions in clause (a) above and any distributions required to be made
pursuant to clause b(ii) and b(iii) below, will be distributed to the remaining
classes of the related Certificate Group on a pro rata basis, first, to pay the
Interest Distribution Amount and any accrued but unpaid Interest Shortfalls;
second, to pay the Senior Principal Distribution Amount; and third, to the Class
A-R Certificate, any remaining Available Distribution Amount for such Mortgage
Pool.

          (ii) On each Distribution Date prior to the Credit Support Depletion
     Date but after the reduction of the aggregate Class Principal Amount of the
     Senior Certificates of a Certificate Group to zero, the remaining class or
     classes of Senior Certificates in the remaining Certificate Group or
     Groups, will be entitled to receive in reduction of their Class Principal
     Amount, pro rata, based upon their Class Principal Amount immediately prior
     to such Distribution Date, in addition to any principal prepayments related
     to such remaining Senior Certificates' respective Mortgage Pool allocated
     to such Senior Certificates, 100% of the Principal Payments on any Mortgage
     Loan in the Mortgage Pool relating to the fully repaid class or classes of
     Senior Certificates of the fully repaid Certificate Group; provided,
     however, that if both (a) the weighted average of the Aggregate Subordinate
     Percentage equals or exceeds 200% of the original weighted average of the
     Aggregate Subordinate Percentage as of the Closing Date on or after the
     Distribution Date in March 2009 and (b) the aggregate Stated Principal
     Balance of the Mortgage Loans delinquent 60 days or more, averaged over the
     last six months, as a percentage of the aggregate Class Principal Amount of
     the Class M Certificates and Class B Certificates, does not exceed 100%,
     then the additional allocation of principal prepayments to the Senior
     Certificates in accordance with this clause (b) will not be made and 100%
     of the Principal Prepayments on any Mortgage Loan in the Mortgage Pool
     relating to the fully repaid class or classes of Senior Certificates will
     be applied as a principal distribution to the Subordinate Certificates.

          (iii) If on any Distribution Date on which the aggregate Class
     Principal Amount of any class or classes of Senior Certificates would be
     greater than the aggregate Stated Principal Balance of the Mortgage Loans
     in its related Mortgage Pool (the amount of such excess, the
     "Undercollateralized Amount," and any such class or classes of Senior
     Certificates, the "Undercollateralized Senior Certificates") and the other
     class or classes of Senior Certificates, the "Overcollateralized Senior
     Certificates") and any Subordinate Certificates are still outstanding in
     each case after giving effect to distributions to be made on such
     Distribution Date, (i) 100% of amounts otherwise allocable to the
     Subordinate Certificates in respect of principal will be distributed to the
     Undercollateralized Senior Certificates in reduction of the Class Principal
     Amounts thereof, until the aggregate Class Principal Amount of such class
     or classes of Undercollateralized Senior Certificates is equal to the
     aggregate Stated Principal Balance of the Mortgage Loans in its related
     Senior Certificates, and (ii) the Interest Distribution Amount otherwise
     allocable to the Subordinate Certificates on such Distribution Date will be
     reduced, if necessary, and distributed to such class or classes of
     Undercollateralized Senior Certificates pursuant to 5.02(a) above, in an
     amount equal to the Net WAC of the related Mortgage Pool for such class or
     classes of Undercollateralized Senior Certificates for such Distribution
     Date on a balance equal to the related Undercollateralized Amount. Any such
     reduction in the Interest Distribution

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<PAGE>

     Amount on the Subordinate Certificates will be allocated to the Class B-3,
     Class B-2, Class B-1, Class M-3, Class M-2 and Class M-1 Certificates, in
     that order.

     (c) Notwithstanding the priority and allocation set forth in Section
5.02(a)(iii) above, if with respect to any Class of Subordinate Certificates on
any Distribution Date the sum of the related Class Subordination Percentages of
such Class and of all other Classes of Subordinate Certificates which have a
higher numerical Class designation than such Class is less than the Original
Applicable Credit Support Percentage for such Class, no distribution of
Principal Prepayments shall be made to any such Classes and the amount of such
Principal Prepayment otherwise distributable to such Classes shall be
distributed to any Classes of Subordinate Certificates having lower numerical
Class designations than such Class, pro rata, based on the Class Principal
Amounts of the respective Classes immediately prior to such Distribution Date
and shall be distributed in the sequential order provided in Section
5.02(a)(iii) above.

     (d) Amounts distributed to the Residual Certificates pursuant to
subparagraph (a)(iv) of this Section 5.02 on any Distribution Date shall be
allocated among the REMIC residual interests represented thereby such that each
such interest is allocated the excess of funds available to the related REMIC
over required distributions to the regular interests in such REMIC on such
Distribution Date.

     (e) For purposes of distributions provided in this Section 5.02, each
Mortgage Pool shall "relate" to the Senior Class or Classes of the applicable
Related Certificate Group.

     (f) For purposes of distributions of interest in paragraph (a) of this
Section 5.02 such distributions to a Class of Certificates on any Distribution
Date shall be made first, in respect of Current Interest; and second, in respect
of Interest Shortfall.

     Section 5.03. Allocation of Losses.

     (a) On or prior to each Distribution Date, the Trustee shall aggregate the
information provided by the Servicer with respect to the total amount of
Realized Losses, with respect to the Mortgage Loans for the related Distribution
Date.

     (b) On each Distribution Date, the principal portion of Realized Losses on
the Mortgage Loans with respect to such Distribution Date shall be allocated in
the following order:

          (i) to the Class B-3 Certificates; second, to the Class B-2
     Certificates; third, to the Class B-1 Certificates; fourth, to the Class
     M-3 Certificates; fifth, to the Class M-2 Certificates; and sixth, to the
     Class M-1 Certificates, in each case until the Class Principal Amount of
     such class of Certificates has been reduced to zero; and

          (ii) commencing on the Credit Support Depletion Date, Realized Losses
     will be allocated among the Senior Certificates as follows:

               first, if the Realized Loss occurs on a Mortgage Loan in a
          Mortgage Pool where the aggregate Stated Principal Balance of the
          Mortgage Loans in such Mortgage Pool is greater than the aggregate
          Class Principal Amount of the related Senior Certificates, the
          Realized Loss will be allocated to any Senior Certificates related to
          a Mortgage Pool where the aggregate Stated Principal Balance of the
          Mortgage Loans in such Mortgage Pool is less than the aggregate Class
          Principal Amount of the related Senior Certificates (any such amount,
          the

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          "Deficiency Amount"), pro rata, based on the respective Deficiency
          Amount, in each case until the amount by which the aggregate Stated
          Principal Balance of the Mortgage Loans in the Mortgage Pool in which
          the Realized Loss occurs exceeds the aggregate Class Principal Amount
          of the related Senior Certificates until the Class Principal Amounts
          of such Senior Certificates have been reduced to zero; and

               second, to the Senior Certificates related to the Mortgage Pool
          in which the Realized Loss occurred, until the Class Principal Amounts
          thereof have been reduced to zero.

          (iii) Reserved.

          (iv) Any allocation of a loss pursuant to this section to a Class of
     Certificates shall be achieved by reducing the Class Principal Amount
     thereof by the amount of such loss.

     (c) Notwithstanding the other provisions of Section 5.03, the first $0.02
of Realized Losses shall not be allocated to any Class of Certificates.

     Section 5.04. Advances.

     If the Servicer fails to remit any Advance required to be made under this
Agreement, the Trustee solely in its capacity as successor Servicer shall itself
make, or shall cause the successor Servicer to make, such Advance. If the
Trustee solely in its capacity as successor Servicer determines that an Advance
is required, it shall on the Business Day preceding the related Distribution
Date immediately following such Determination Date remit from its own funds (or
funds advanced by the successor Servicer) for deposit in the Distribution
Account immediately available funds in an amount equal to such Advance. Each of
the Trustee and the Servicer shall be entitled to be reimbursed for all Advances
made by it, respectively. Notwithstanding anything to the contrary herein, in
the event the Trustee (or successor servicer) determines in its reasonable
judgment that an Advance is Nonrecoverable, the Trustee (or successor servicer)
shall be under no obligation to make such Advance.

                                  ARTICLE VI.

                    CONCERNING THE TRUSTEE; EVENTS OF DEFAULT

     Section 6.01. Duties of Trustee.

     (a) The Trustee, except during the continuance of an Event of Default,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. Any permissive right of the Trustee provided for in
this Agreement shall not be construed as a duty of the Trustee. If an Event of
Default has occurred and has not otherwise been cured or waived, the Trustee
shall exercise such of the rights and powers vested in it by this Agreement and
use the same degree of care and skill in their exercise as a prudent Person
would exercise or use under the circumstances in the conduct of such Person's
own affairs.

     (b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to

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<PAGE>

determine whether they are in the form required by this Agreement; provided,
however, that the Trustee shall not be responsible for the accuracy or content
of any such resolution, certificate, statement, opinion, report, document, order
or other instrument furnished by the Servicer to the Trustee pursuant to this
Agreement, and shall not be required to recalculate or verify any numerical
information furnished to the Trustee pursuant to this Agreement. Subject to the
immediately preceding sentence, if any such resolution, certificate, statement,
opinion, report, document, order or other instrument is found not to conform to
the form required by this Agreement in a material manner the Trustee shall take
such action as it deems appropriate to cause the instrument to be corrected, and
if the instrument is not corrected to the Trustee's satisfaction, the Trustee
will provide notice thereof to the Certificateholders and will, at the expense
of the Trust Fund, which expense shall be reasonable given the scope and nature
of the required action, take such further action as directed by the
Certificateholders.

     (c) The Trustee shall not have any liability arising out of or in
connection with this Agreement, except for its negligence or willful misconduct.
Notwithstanding anything in this Agreement to the contrary, the Trustee shall
not be liable for special, indirect or consequential losses or damages of any
kind whatsoever (including, but not limited to, lost profits). No provision of
this Agreement shall be construed to relieve the Trustee of liability for its
own negligent action, its own negligent failure to act or its own willful
misconduct; provided, however, that:

          (i) The Trustee shall not be liable with respect to any action taken,
     suffered or omitted to be taken by it in good faith in accordance with the
     direction of Holders of Certificates as provided in Section 6.18 hereof;

          (ii) For all purposes under this Agreement, the Trustee shall not be
     deemed to have notice of any Event of Default (other than resulting from a
     failure by the Servicer (i) to remit funds (or to make Advances) or (ii) to
     furnish information to the Trustee when required to do so) unless a
     Responsible Officer of the Trustee has actual knowledge thereof or unless
     written notice of any event which is in fact such a default is received by
     the Trustee at the Corporate Trust Office of the Trustee, and such notice
     references the Holders of the Certificates and this Agreement;

          (iii) No provision of this Agreement 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; and none of the provisions
     contained in this Agreement shall in any event require the Trustee to
     perform, or be responsible for the manner of performance of, any of the
     obligations of the Servicer under this Agreement;

          (iv) The Trustee shall not be responsible for any act or omission of
     the Servicer, the Depositor or the Sponsor.

     (d) The Trustee shall have no duty hereunder with respect to any complaint,
claim, demand, notice or other document it may receive or which may be alleged
to have been delivered to or served upon it by the parties as a consequence of
the assignment of any Mortgage Loan hereunder; provided, however, that the
Trustee shall promptly remit to the Servicer upon receipt any such complaint,
claim, demand, notice or other document (i) which is delivered to the Corporate
Trust Office of the Trustee, (ii) of which a Responsible Officer has actual
knowledge,

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<PAGE>

and (iii) which contains information sufficient to permit the Trustee to make a
determination that the real property to which such document relates is a
Mortgaged Property.

     (e) The Trustee shall not be personally liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in accordance with
the direction of the Certificateholders of any Class holding Certificates which
evidence, as to such Class, Percentage Interests aggregating not less than 25%
as to the time, method and place of conducting any proceeding for any remedy
available to the Trustee or exercising any trust or power conferred upon the
Trustee under this Agreement.

     (f) The Trustee shall not be required to perform services under this
Agreement, or to expend or risk its own funds or otherwise incur financial
liability for the performance of any of its duties hereunder or the exercise of
any of its rights or powers if there is reasonable ground for believing that the
timely payment of its fees and expenses or the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers and privileges of, the Servicer in accordance with
the terms of this Agreement.

     (g) The Trustee shall not be held liable by reason of any insufficiency in
the Distribution Account resulting from any investment loss on any Permitted
Investment included therein (except to the extent that the Trustee is the
obligor and has defaulted thereon).

     (h) Except as otherwise provided herein, the Trustee shall not have any
duty (A) to see to any recording, filing, or depositing of this Agreement or any
agreement referred to herein or any financing statement or continuation
statement evidencing a security interest, or to see to the maintenance of any
such recording or filing or depositing or to any re-recording, refiling or
redepositing of any thereof, (B) to see to the provision of any insurance, (C)
to see to the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Trust Fund other than from funds available in
the Distribution Account, or (D) to confirm or verify the contents of any
reports or certificates of the Servicer delivered to the Trustee pursuant to
this Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.

     (i) The Trustee shall not be liable, in its individual capacity, for an
error of judgment made in good faith by a Responsible Officer or other officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts.

     (j) Notwithstanding anything in this Agreement to the contrary, the Trustee
shall not be liable for special, indirect or consequential losses or damages of
any kind whatsoever (including, but not limited to, lost profits), even if the
Trustee has been advised of the likelihood of such loss or damage and regardless
of the form of action.

     Section 6.02. Certain Matters Affecting the Trustee.

Except as otherwise provided in Section 6.01:

          (i) The Trustee may request, and may rely and shall be protected in
     acting or refraining from acting upon any resolution, Officer's
     Certificate, certificate of auditors or

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<PAGE>

     any other certificate, statement, instrument, opinion, report, notice,
     request, consent, order, approval, bond or other paper or document believed
     by it to be genuine and to have been signed or presented by the proper
     party or parties;

          (ii) The Trustee may consult with counsel and any advice of its
     counsel or Opinion of Counsel shall be full and complete authorization and
     protection in respect of any action taken or suffered or omitted by it
     hereunder in good faith and in accordance with such advice or Opinion of
     Counsel;

          (iii) The Trustee shall not be personally liable for any action taken,
     suffered or omitted by it in good faith and reasonably believed by it to be
     authorized or within the discretion or rights or powers conferred upon it
     by this Agreement;

          (iv) Unless an Event of Default shall have occurred and be continuing,
     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, consent, order, approval, bond or other
     paper or document (provided the same appears regular on its face), unless
     requested in writing to do so by the Holders of at least a majority in
     Class Principal Amount (or Percentage Interest) of each Class of
     Certificates; provided, however, that, if the payment within a reasonable
     time to the Trustee of the costs, expenses or liabilities likely to be
     incurred by it in the making of such investigation is, in the opinion of
     the Trustee, not reasonably assured to the Trustee by the security afforded
     to it by the terms of this Agreement, the Trustee may require reasonable
     indemnity against such expense or liability or payment of such estimated
     expenses from the Certificateholders as a condition to proceeding. The
     reasonable expense thereof shall be paid by the party requesting such
     investigation and if not reimbursed by the requesting party shall be
     reimbursed to the Trustee by the Trust Fund;

          (v) The Trustee may execute any of the trusts or powers hereunder or
     perform any duties hereunder either directly or by or through agents,
     custodians or attorneys, which agents, custodians or attorneys shall have
     any and all of the rights, powers, duties and obligations of the Trustee
     conferred on it by such appointment, provided that the Trustee shall
     continue to be responsible for its duties and obligations hereunder to the
     extent provided herein, and provided further that the Trustee shall not be
     responsible for any misconduct or negligence on the part of any such agent
     or attorney appointed with due care by the Trustee;

          (vi) The Trustee shall not be under any obligation to exercise any of
     the trusts or powers vested in it by this Agreement or to institute,
     conduct or defend any litigation hereunder or in relation hereto, in each
     case at the request, order or direction of any of the Certificateholders
     pursuant to the provisions of this Agreement, unless such
     Certificateholders shall have offered to the Trustee reasonable security or
     indemnity against the costs, expenses and liabilities which may be incurred
     therein or thereby;

          (vii) The right of the Trustee to perform any discretionary act
     enumerated in this Agreement shall not be construed as a duty, and the
     Trustee shall not be answerable for other than its negligence or willful
     misconduct in the performance of such act; and

          (viii) The Trustee shall not be required to give any bond or surety in
     respect of the execution of the Trust Fund created hereby or the powers
     granted hereunder.

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<PAGE>

     Section 6.03. Trustee Not Liable for Certificates.

     The Trustee makes no representations as to the validity or sufficiency of
this Agreement or of the Certificates (other than the certificate of
authentication on the Certificates) or of any Mortgage Loan, or related document
save that the Trustee represents that, assuming due execution and delivery by
the other parties hereto, this Agreement has been duly authorized, executed and
delivered by it and constitutes its valid and binding obligation, enforceable
against it in accordance with its terms except as such enforceability may be
subject to (A) applicable bankruptcy and insolvency laws and other similar laws
affecting the enforcement of the rights of creditors generally, and (B) general
principles of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law. The Trustee shall not be accountable for the use
or application by the Depositor of funds paid to the Depositor in consideration
of the assignment of the Mortgage Loans to the Trust Fund by the Depositor or
for the use or application of any funds deposited into the Distribution Account
or any other fund or account maintained with respect to the Certificates. The
Trustee shall not be responsible for the legality or validity of this Agreement
or the validity, priority, perfection or sufficiency of the security for the
Certificates issued or intended to be issued hereunder. Except as otherwise
provided herein, the Trustee shall have no responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to record this Agreement.

     Section 6.04. Trustee May Own Certificates.

     The Trustee and any Affiliate or agent of the Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates and may
transact banking and trust business with the other parties hereto and their
Affiliates with the same rights it would have if it were not Trustee or such
agent.

     Section 6.05. Eligibility Requirements for Trustee.

     The Trustee hereunder shall at all times (i) be an institution insured by
the FDIC, (ii) a corporation or national banking association, organized and
doing business under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of not less than $50,000,000 and subject to
supervision or examination by federal or state authority and (iii) not be an
Affiliate of the Servicer. If such corporation or national banking association
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then, for the
purposes of this Section, the combined capital and surplus of such corporation
or national banking association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 6.06.

     Section 6.06. Resignation and Removal of Trustee.

     (a) The Trustee may at any time resign and be discharged from the trust
hereby created by giving written notice thereof to the Depositor and the
Servicer. Upon receiving such notice of resignation, the Depositor will promptly
appoint a successor trustee by written instrument, one copy of which instrument
shall be delivered to the resigning Trustee, one copy to the successor trustee
and one copy to the Servicer. If no successor trustee shall have been so
appointed and shall have accepted appointment within 30 days after the giving of
such notice of

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resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.

     (b) If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 6.05 and shall fail to resign after written
request therefor by the Depositor, (ii) the Trustee shall become incapable of
acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of either of their property or affairs for
the purpose of rehabilitation, conservation or liquidation, (iii) a tax is
imposed or threatened with respect to the Trust Fund by any state in which the
Trustee or the Trust Fund held by the Trustee is located, or (iv) the continued
use of the Trustee would result in a downgrading of the rating by any Rating
Agency of any Class of Certificates with a rating, then the Depositor shall
remove the Trustee and the Depositor shall appoint a successor trustee by
written instrument, one copy of which instrument shall be delivered to the
Trustee so removed, one copy each to the successor trustee and one copy to the
Servicer.

     (c) The Holders of more than 50% of the Class Principal Amount (or
Percentage Interest) of each Class of Certificates may at any time upon 30 days'
written notice to the Trustee and to the Depositor remove the Trustee by such
written instrument, signed by such Holders or their attorney-in-fact duly
authorized, one copy of which instrument shall be delivered to the Depositor and
one copy to the Trustee; the Depositor shall thereupon appoint a successor
trustee in accordance with this Section.

     (d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall become
effective upon acceptance by the successor trustee of appointment, as provided
in Section 6.07.

     Section 6.07. Successor Trustee.

     (a) Any successor trustee appointed as provided in Section 6.06 shall
execute, acknowledge and deliver to the Depositor and to its predecessor
trustee, an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as trustee. The
predecessor trustee shall deliver to the successor trustee all Trustee Mortgage
Files and documents and statements related to each Trustee Mortgage File held by
it hereunder, and shall duly assign, transfer, deliver and pay over to the
successor trustee the entire Trust Fund, together with all necessary instruments
of transfer and assignment or other documents properly executed necessary to
effect such transfer and such of the records or copies thereof maintained by the
predecessor trustee in the administration hereof as may be requested by the
successor trustee and shall thereupon be discharged from all duties and
responsibilities under this Agreement. In addition, the Depositor and the
predecessor trustee shall execute and deliver such other instruments and do such
other things as may reasonably be required to more fully and certainly vest and
confirm in the successor trustee all such rights, powers, duties and
obligations.

     (b) No successor trustee shall accept appointment as provided in this
Section unless at the time of such appointment such successor trustee shall be
eligible under the provisions of Section 6.05.

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     (c) Upon acceptance by a successor trustee of appointment as provided in
this Section, the predecessor trustee shall mail notice of the succession of
such successor trustee hereunder to all Holders of Certificates at their
addresses as shown in the Certificate Register and to any Rating Agency. The
expenses of such mailing shall be borne by the Depositor.

     Section 6.08. Merger or Consolidation of Trustee.

     Any Person into which the Trustee may be merged 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 Persons succeeding
to the business of the Trustee shall be the successor to the Trustee hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding,
provided that, in the case of the Trustee, such Person shall be eligible under
the provisions of Section 6.05.

     Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.

     (a) Notwithstanding any other provisions hereof, at any time, the Trustee,
the Depositor or the Certificateholders evidencing more than 50% of the Class
Principal Amount (or Percentage Interest) of every Class of Certificates shall
have the power from time to time to appoint one or more Persons, approved by the
Trustee, to act either as co-trustees jointly with the Trustee, or as separate
trustees, or as custodians, for the purpose of holding title to, foreclosing or
otherwise taking action with respect to any Mortgage Loan outside the state
where the Trustee has its principal place of business where such separate
trustee or co-trustee is necessary or advisable (or the Trustee has been advised
by the Servicer that such separate trustee or co-trustee is necessary or
advisable) under the laws of any state in which a property securing a Mortgage
Loan is located or for the purpose of otherwise conforming to any legal
requirement, restriction or condition in any state in which a property securing
a Mortgage Loan is located or in any state in which any portion of the Trust
Fund is located. The separate trustees, co-trustees, or custodians so appointed
shall be trustees or custodians for the benefit of all the Certificateholders
and shall have such powers, rights and remedies as shall be specified in the
instrument of appointment; provided, however, that no such appointment shall, or
shall be deemed to, constitute the appointee an agent of the Trustee. The
obligation of the Trustee to make Advances pursuant to Section 5.04 hereof shall
not be affected or assigned by the appointment of a co-trustee.

     (b) Every separate trustee, co-trustee, and custodian shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:

          (i) all powers, duties, obligations and rights conferred upon the
     Trustee in respect of the receipt, custody and payment of moneys shall be
     exercised solely by the Trustee;

          (ii) all other rights, powers, duties and obligations conferred or
     imposed upon the Trustee shall be conferred or imposed upon and exercised
     or performed by the Trustee and such separate trustee, co-trustee, or
     custodian jointly, except to the extent that under any law of any
     jurisdiction in which any particular act or acts are to be performed the
     Trustee shall be incompetent or unqualified to perform such act or acts, in
     which event such rights, powers, duties and obligations, including the
     holding of title to the Trust Fund or any portion thereof in any such
     jurisdiction, shall be exercised and performed by such separate trustee,
     co-trustee, or custodian at the sole discretion of the Trustee;

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          (iii) no trustee or custodian hereunder shall be personally liable by
     reason of any act or omission of any other trustee or custodian hereunder;
     and

          (iv) the Trustee may at any time, by an instrument in writing executed
     by it, with the concurrence of the Depositor, accept the resignation of or
     remove any separate trustee, co-trustee or custodian, so appointed by it or
     them, if such resignation or removal does not violate the other terms of
     this Agreement.

     (c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee, co-trustee or custodian shall refer to this Agreement and the
conditions of this Article VI. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee and a copy given
to the Servicer.

     (d) Any separate trustee, co-trustee or custodian may, at any time,
constitute the Trustee its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate
trustee, co-trustee or custodian shall die, become incapable of acting, resign
or be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.

     (e) No separate trustee, co-trustee or custodian hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.05 hereunder and no notice to Certificateholders of the appointment shall be
required under Section 6.07 hereof.

     (f) The Trustee agrees to instruct the co-trustees, if any, to the extent
necessary to fulfill the Trustee's obligations hereunder.

     (g) The Issuing Entity shall pay the reasonable compensation of the
co-trustees (which compensation shall not reduce any compensation payable to the
Trustee under such Section).

     Section 6.10. Authenticating Agents.

     (a) The Trustee may appoint one or more Authenticating Agents which shall
be authorized to act on behalf of the Trustee in authenticating Certificates. If
such an agent is so appointed by the Trustee, wherever reference is made in this
Agreement to the authentication of Certificates by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication on behalf of the Trustee by an Authenticating Agent and a
certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent must be a corporation organized
and doing business under the laws of the United States of America or of any
state, having a combined capital and surplus of at least $15,000,000, authorized
under such laws to do a trust business and subject to supervision or examination
by federal or state authorities.

     (b) Any Person into which any 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 any Authenticating Agent shall be a
party, or any Person succeeding to the

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corporate agency business of any Authenticating Agent, shall continue to be the
Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.

     (c) Any Authenticating Agent may at any time resign by giving at least 30
days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance with the provisions of this Section 6.10, the Trustee may appoint a
successor authenticating agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor authenticating agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor authenticating agent
shall be appointed unless eligible under the provisions of this Section 6.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee.

     Section 6.11. Indemnification of Trustee.

     The Trustee and its respective directors, officers, employees and agents
shall be entitled to indemnification from the Depositor and the Trust Fund;
provided that the Trust Fund's indemnification under this Section 6.11 is
limited by Section 4.01(d) for any loss, liability or expense (including,
without limitation, reasonable attorneys' fees and disbursements (and, in
connection with any custody agreement the Trustee may enter pursuant to this
Agreement, including the reasonable compensation and the expenses and
disbursements of its agents or counsel)), incurred without negligence or willful
misconduct on its part, arising out of, or in connection with, the acceptance or
administration of the trusts created hereunder or in connection with the
performance of their duties hereunder including the costs and expenses of
defending themselves against any claim in connection with the exercise or
performance of any of their powers or duties hereunder, provided that:

          (i) with respect to any such claim, the Trustee shall have given the
     Depositor written notice thereof promptly after the Trustee shall have
     knowledge thereof;

          (ii) while maintaining control over its own defense, the Trustee shall
     cooperate and consult fully with the Depositor in preparing such defense;

          (iii) notwithstanding anything to the contrary in this Section 6.11,
     the Trust Fund shall not be liable for settlement of any such claim by the
     Trustee entered into without the prior consent of the Depositor, which
     consent shall not be unreasonably withheld; and

          (iv) the Trust's Fund's indemnification obligations hereunder shall be
     limited to losses, liability, costs or expenses, payments in respect of
     which by the Trust Fund would constitute "unanticipated expenses" within
     the meaning of Treasury Regulations Section 1.860G-1(b)(3)(ii)).

     The provisions of this Section 6.11 shall survive any termination of this
Agreement and the resignation or removal of the Trustee and shall be construed
to include, but not be limited to, any loss, liability or expense under any
environmental law.

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     Section 6.12. Fees and Expenses of the Trustee.

     As compensation for its services hereunder, the Trustee shall be entitled
to retain any and all investment earnings on amounts on deposit in the
Distribution Account pending the distribution of such funds to
Certificateholders on each Distribution Date (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust). Any expenses incurred by the Trustee shall be reimbursed to the
extent provided in Section 6.11.

     Section 6.13. Collection of Monies.

     Except as otherwise expressly provided in this Agreement, the Trustee may
demand payment or delivery of, and shall receive and collect, all money and
other property payable to or receivable by the Trustee pursuant to this
Agreement. The Trustee shall hold all such money and property received by it as
part of the Trust Fund and shall distribute it as provided in this Agreement.

     Section 6.14. Events of Default; Trustee To Act; Appointment of Successor.

     (a)  "Event of Default," wherever used herein, means any one of the
          following events:

          (i) any failure by the Servicer to make any Advance, to deposit in the
     Custodial Account or to remit to the Trustee any payment required to be
     made under the terms of this Agreement on the day it is due;

          (ii) any material breach on the part of the Servicer of any other
     term, agreement, covenant, representation or warranty in this Agreement
     that has not been cured after written notice and a thirty (30) day curative
     period, except, with respect to Sections 9.11, 9.13(a), 9.13(b), 9.21(ix)
     and 9.21(xi), any material breach on the part of the Servicer of any term,
     agreement, covenant, representation or warranty that has not been cured
     after written notice and a twelve (12) day curative period;

          (iii) following entry against the Servicer of a decree or order of a
     court or agency or supervisory authority having jurisdiction for the
     appointment of a trustee, conservator, receiver, liquidator, assignee,
     custodian or sequestrator (or other similar official) for the Servicer in
     any federal or state bankruptcy, insolvency, readjustment of debt,
     marshaling of assets and liabilities or similar proceedings, or for the
     winding-up or liquidation of the Servicer's affairs, if such decree or
     order has remained in force undischarged or unstayed for a period of sixty
     (60) days;

          (iv) upon consent by the Servicer to the appointment of a trustee,
     conservator, receiver, liquidator, assignee, custodian or sequestrator (or
     other similar official) in, or commencement of a voluntary case under, any
     federal or state bankruptcy insolvency, readjustment of debt, marshaling of
     assets and liabilities or similar proceedings of or relating to the
     Servicer or of or relating to all or substantially all of the Servicer's
     property;

          (v) upon the Servicer's (A) admitting in writing its inability to pay
     its debts generally as they become due, (B) filing a petition to take
     advantage of any applicable insolvency or reorganization statute, (C)
     making an assignment for the benefit of its creditors or (D) voluntarily
     suspending payment of its obligations; or

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          (vi) the Servicer ceases to be eligible to sell mortgage loans to or
     service mortgage loans for FNMA, FHLMC or GNMA or ceases to be a
     HUD-approved mortgagee.

     If an Event of Default shall occur and be continuing, then, in each and
every case, subject to applicable law, so long as any such Event of Default
shall not have been remedied within any period of time prescribed by this
Agreement, by notice in writing to the Servicer either (x) the Depositor or (y)
the Trustee may (or the Trustee shall if so directed by Certificateholders
evidencing more than 50% of the Class Principal Amount of each Class of
Certificates) terminate all of the rights and obligations of the Servicer under
this Agreement in accordance with the terms of this Agreement. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer, whether with respect to the Mortgage Loans or otherwise, shall pass to
and be vested in the Trustee; and the Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the defaulting Servicer as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Mortgage Loans and related documents or
otherwise.

     If any Event of Default shall occur, the Trustee, upon becoming aware of
the occurrence thereof, shall promptly notify the Depositor and each Rating
Agency of the nature and extent of such Event of Default.

     (b) Within 90 days of the time the Servicer receives a notice of
termination from the Trustee pursuant to Section 6.14, the Trustee, unless
another Servicer shall have been appointed, shall be the successor in all
respects to the Servicer in its capacity as such under this Agreement and the
transactions set forth or provided for therein and shall have all the rights and
powers and be subject to all the responsibilities, duties and liabilities
relating thereto and arising thereafter placed on the Servicer thereunder,
including the obligation to make Advances; provided, however, that any failure
to perform such duties or responsibilities caused by the Servicer's failure to
provide information required by this Agreement or this Agreement shall not be
considered a default by the Trustee hereunder. In addition, the Trustee shall
have no responsibility for any act or omission of the Servicer prior to the
issuance of any notice of termination. The Trustee shall have no liability
relating to any representations and warranties of the Servicer set forth in this
Agreement. In the Trustee's capacity as such successor, the Trustee shall have
the same limitations on liability provided to the Servicer in this Agreement. As
compensation therefor, the Trustee shall be entitled to receive all compensation
payable to the Servicer under this Agreement.

     The Trustee shall be entitled to be reimbursed by the Depositor and the
Trust Fund (pursuant to Section 6.11 but without regard to any annual limitation
thereunder), in the event that the Servicer does not reimburse the Trustee under
this Agreement, for all costs associated with the transfer of servicing from the
predecessor Servicer, including, without limitation, any costs or expenses
associated with the termination of the predecessor Servicer, the appointment of
a successor servicer, the complete transfer of all servicing data and the
completion, correction or manipulation of such servicing data as may be required
by the Trustee or any successor servicer to correct any errors or
insufficiencies in the servicing data or otherwise to enable the Trustee or
successor servicer to service the Mortgage Loans property and effectively (such
costs, "Servicing Transfer Costs").

     (c) Notwithstanding the above, the Trustee may, if it shall be unwilling to
continue to so act, or shall, if it is unable to so act, petition a court of
competent jurisdiction to appoint, or,

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<PAGE>

with the consent of the Depositor, appoint on its own behalf any established
housing and home finance institution servicer, or servicing or mortgage
servicing institution having a net worth of not less than $15,000,000 and
meeting such other standards for a successor servicer as are set forth in this
Agreement and reasonably satisfactory to the Depositor, as the successor to the
Servicer in the assumption of all of the responsibilities, duties or liabilities
of a servicer, like the Servicer. Any entity designated by the Trustee as a
successor servicer may be an Affiliate of the Trustee; provided, however, that,
unless such Affiliate meets the net worth requirements and other standards set
forth herein for a successor servicer, the Trustee, in its individual capacity
shall agree, at the time of such designation, to be and remain liable to the
Trust Fund for such Affiliate's actions and omissions in performing its duties
under this Agreement. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted to the
Servicer under this Agreement. The Trustee and such successor shall take such
actions, consistent with this Agreement, as shall be necessary to effectuate any
such succession and may make other arrangements with respect to the servicing to
be conducted hereunder which are not inconsistent herewith and therewith.
Neither the Trustee nor any other successor servicer shall be deemed to be in
default hereunder by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer to deliver, or any delay in delivering, cash, documents or records to
it, (ii) the failure of the Servicer to cooperate as required by this Agreement,
(iii) the failure of the Servicer to deliver the Mortgage Loan data to the
Trustee as required by this Agreement or (iv) restrictions imposed by any
regulatory authority having jurisdiction over the Servicer.

     Section 6.15. Additional Remedies of Trustee Upon Event of Default.

     During the continuance of any Event of Default, so long as such Event of
Default shall not have been remedied, the Trustee, in addition to the rights
specified in Section 6.14, shall have the right, in its own name and as trustee
of the Trust Fund, to take all actions now or hereafter existing at law, in
equity or by statute to enforce its rights and remedies and to protect the
interests, and enforce the rights and remedies, of the Certificateholders
(including the institution and prosecution of all judicial, administrative and
other proceedings and the filings of proofs of claim and debt in connection
therewith). Except as otherwise expressly provided in this Agreement, no remedy
provided for by this Agreement shall be exclusive of any other remedy, and each
and every remedy shall be cumulative and in addition to any other remedy, and no
delay or omission to exercise any right or remedy shall impair any such right or
remedy or shall be deemed to be a waiver of any Event of Default.

     Section 6.16. Waiver of Defaults.

     More than 50% of the Aggregate Voting Interests of Certificateholders may
waive any default or Event of Default by the Servicer in the performance of its
obligations hereunder, except that a default in the making of any required
deposit to the Distribution Account that would result in a failure of the
Trustee to make any required payment of principal of or interest on the
Certificates may only be waived with the consent of 100% of the affected
Certificateholders. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent thereon
except to the extent expressly so waived.

     Section 6.17. Notification to Holders.

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     Upon termination of the Servicer or appointment of a successor to the
Servicer, in each case as provided herein, the Trustee shall promptly mail
notice thereof by first class mail to the Certificateholders at their respective
addresses appearing on the Certificate Register. The Trustee shall also, within
45 days after the occurrence of any Event of Default known to the Trustee, give
written notice thereof to the Certificateholders, unless such Event of Default
shall have been cured or waived prior to the issuance of such notice and within
such 45-day period.

     Section 6.18. Directions by Certificateholders and Duties of Trustee During
Event of Default.

     Subject to the provisions of Section 8.01 hereof, during the continuance of
any Event of Default, Holders of Certificates evidencing not less than 25% of
the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Agreement; provided,
however, that the Trustee shall be under no obligation to pursue any such
remedy, or to exercise any of the trusts or powers vested in it by this
Agreement (including, without limitation, (i) the conducting or defending of any
administrative action or litigation hereunder or in relation hereto and (ii) the
terminating of the Servicer or any successor servicer from its rights and duties
as servicer) at the request, order or direction of any of the
Certificateholders, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the cost, expenses and
liabilities which may be incurred therein or thereby; and, provided further,
that, subject to the provisions of Section 8.01, the Trustee shall have the
right to decline to follow any such direction if the Trustee, in accordance with
an Opinion of Counsel, determines that the action or proceeding so directed may
not lawfully be taken or if the Trustee in good faith determines that the action
or proceeding so directed would involve it in personal liability for which it is
not indemnified to its satisfaction or be unjustly prejudicial to the
non-assenting Certificateholders.

     Section 6.19. Preparation of Tax Returns and Other Reports.

     (a) The Trustee shall prepare or cause to be prepared on behalf of the
Trust Fund, based upon information calculated in accordance with this Agreement
pursuant to instructions given by the Depositor, and the Trustee shall file
federal tax returns, all in accordance with Article X hereof. The Trustee shall
prepare and file such state income tax returns and such other returns as may be
required by applicable law relating to the Trust Fund, and, if required by state
law, and shall file any other documents to the extent required by applicable
state tax law (to the extent such documents are in the Trustee's possession).
The Trustee shall forward copies to the Depositor of all such returns and Form
1099 supplemental tax information and such other information within the control
of the Trustee as the Depositor may reasonably request in writing, and shall
distribute to each Certificateholder such forms and furnish such information
within the control of the Trustee as are required by the Code and the REMIC
Provisions to be furnished to them, and will prepare and distribute to
Certificateholders Form 1099 (supplemental tax information) (or otherwise
furnish information within the control of the Trustee) to the extent required by
applicable law.

     (b) The Trustee shall prepare and file with the Internal Revenue Service
("IRS"), on behalf of each of REMIC 1 and the Upper Tier REMIC, an application
on IRS Form SS-4 or shall obtain a Taxpayer Identification Number for each of
REMIC 1 and the Upper Tier REMIC using another reasonable method. If the
application is filed on Form SS-4, the Trustee, upon receipt from the IRS of the
Notice of Taxpayer Identification Number Assigned for each REMIC, shall

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promptly forward copies of such notices to the Depositor, upon request. The
Trustee will file an IRS Form 8811.

                                  ARTICLE VII.

                         PURCHASE OF MORTGAGE LOANS AND
                          TERMINATION OF THE TRUST FUND

     Section 7.01. Purchase of Mortgage Loans; Termination of Trust Fund Upon
Purchase or Liquidation of All Mortgage Loans.

     (a) The respective obligations and responsibilities of the Trustee, the
Servicer and the Depositor created hereby (other than the obligation of the
Trustee to make payments to Certificateholders as set forth in Section 7.02),
shall terminate on the earliest of (i) the final payment or other liquidation of
the last Mortgage Loan remaining in the Trust Fund and the disposition of all
REO Property, (ii) the sale of the property held by the Trust Fund at auction in
accordance with Section 7.01(c) and (iii) the Latest Possible Maturity Date;
provided, however, that in no event shall the Trust Fund created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James's, living on the date hereof. Any termination of the
Trust Fund shall be carried out in such a manner so that the termination of each
REMIC included therein shall qualify as a "qualified liquidation" under the
REMIC Provisions.

     (b) [Reserved]

     (c) Any termination of the Trust Fund pursuant to clause (a)(ii) above
shall be effected by the auction by the Trustee of all of the Mortgage Loans and
REO Properties via a solicitation of bids in accordance with procedures to be
agreed upon by the Trustee and the Depositor. The Trustee shall accept the
highest such bid, provided that such bid equals or exceeds the amount described
in the definition of "Optional Termination Price." Notwithstanding anything to
the contrary herein, the Optional Termination Price received by the Trustee
shall be deposited by the Trustee directly into the Distribution Account no
later than the Business Day prior to the date of termination.

     The right of the Trustee to conduct an auction pursuant to the preceding
paragraph shall be conditioned upon the aggregate outstanding Stated Principal
Balance of the Mortgage Loans, at the time of such auction, aggregating ten (10)
percent or less of the Stated Principal Balance of the Mortgage Loans as of the
Cut-off Date.

     (d) The Servicer and the Trustee shall be reimbursed from the Optional
Termination Price for any Advances, Servicer Advances, accrued and unpaid
Servicing Fees, the cost of any auction conducted pursuant to (c) above or other
amounts with respect to the Mortgage Loans that are reimbursable to such parties
under this Agreement.

     Section 7.02. Procedure Upon Termination of Trust Fund.

     (a) Notice of any optional termination pursuant to the provisions of
Section 7.01(c) specifying the Distribution Date upon which the final
distribution shall be made or the Purchase Date, shall be given promptly by the
Trustee by first class mail to Certificateholders mailed no later than the first
day of the month in which the Distribution Date selected for purchase of the
Mortgage Loans occurs or upon (x) the sale of all of the property of the Trust
Fund by the Trustee

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or in the case of a sale of assets of the Trust Fund, or (y) upon the final
payment or other liquidation of the last Mortgage Loan or REO Property in the
Trust Fund. Such notice shall specify (A) the Purchase Date and the Distribution
Date upon which final distribution on the Certificates of all amounts required
to be distributed to Certificateholders pursuant to Section 5.02 will be made
upon presentation and surrender of the Certificates at the Certificate
Registrar's Corporate Trust Office, and (B) that the Record Date otherwise
applicable to such Distribution Date is not applicable, distribution being made
only upon presentation and surrender of the Certificates at the office or agency
of the Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar at the time such notice is given to Holders of the
Certificates. Upon any such termination, the duties of the Trustee and the
Certificate Registrar with respect to the Certificates shall terminate and the
Trustee shall terminate the Distribution Account and any other account or fund
maintained with respect to the Certificates, subject to the Trustee's obligation
hereunder to hold all amounts payable to Certificateholders in trust without
interest pending such payment.

     (b) In the event that all of the Holders do not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps to contact
the remaining Certificateholders concerning surrender of such Certificates, and
the cost thereof shall be paid out of the amounts distributable to such Holders.
If within two years after the second notice any Certificates shall not have been
surrendered for cancellation, the Trustee shall, subject to applicable state law
relating to escheatment, hold all amounts distributable to such Holders for the
benefit of such Holders. No interest shall accrue on any amount held by the
Trustee and not distributed to a Certificateholder due to such
Certificateholder's failure to surrender its Certificate(s) for payment of the
final distribution thereon in accordance with this Section.

     (c) Any reasonable expenses incurred by the Trustee, to the extent that
such expenses, if paid or reimbursed by the Trust Fund, would constitute
"unanticipated expenses" within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii), in connection with any redemption or termination or
liquidation of the Trust Fund shall be reimbursed from proceeds received from
the liquidation of the Trust Fund.

     Section 7.03. Additional Trust Fund Termination Requirements.

     (a) Any termination of the Trust Fund shall be effected in accordance with
the following additional requirements, unless the Trustee seeks and receives an
Opinion of Counsel (at the expense of such requesting party), addressed to the
Trustee, to the effect that the failure of the Trust Fund to comply with the
requirements of this Section 7.03 will not (I) result in the imposition of taxes
on any REMIC under the REMIC Provisions or (II) cause any REMIC established
hereunder to fail to qualify as a REMIC at any time that any Certificates are
outstanding:

          (i) Within 89 days prior to the time of the making of the final
     payment on the Certificates upon notification by the Depositor that it
     intends to exercise its option to cause the termination of the Trust Fund,
     the Trustee shall adopt a plan of complete liquidation prepared by the
     Depositor of the Trust Fund on behalf of each REMIC, meeting the
     requirements of a qualified liquidation under the REMIC Provisions;

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          (ii) Any sale of the assets of the Trust Fund pursuant to Section 7.01
     or 7.02 shall be a sale for cash and shall occur at or after the time of
     adoption of such a plan of complete liquidation and prior to the time of
     making of the final payment on the Certificates;

          (iii) On the date specified for final payment of the Certificates, the
     Trustee shall make final distributions of principal and interest on the
     Certificates in accordance with Section 5.02 and, after payment of, or
     provision for any outstanding expenses, distribute or credit, or cause to
     be distributed or credited, to the Holders of the Residual Certificates all
     cash on hand after such final payment (other than cash retained to meet
     claims), and the Trust Fund (and each REMIC) shall terminate at that time;
     and

          (iv) In no event may the final payment on the Certificates or the
     final distribution or credit to the Holders of the Residual Certificates be
     made after the 89th day from the date on which the plan of complete
     liquidation is adopted.

     (b) By its acceptance of a Residual Certificate, each Holder thereof hereby
agrees to accept the plan of complete liquidation adopted by the Trustee under
this Section and to take such other action in connection therewith as may be
reasonably requested by the Trustee.

                                 ARTICLE VIII.

                          RIGHTS OF CERTIFICATEHOLDERS

     Section 8.01. Limitation on Rights of Holders.

     (a) The death or incapacity of any Certificateholder shall not operate to
terminate this Agreement or this Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or
take any action or proceeding in any court for a partition or winding up of this
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them. Except as otherwise expressly provided herein, no
Certificateholder, solely by virtue of its status as a Certificateholder, shall
have any right to vote or in any manner otherwise control the Trustee or the
operation and management of the Trust Fund, or the obligations of the parties
hereto, nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from time
to time as partners or members of an association, nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.

     (b) No Certificateholder, solely by virtue of its status as
Certificateholder, shall have any right by virtue or by availing itself of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon, under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of an Event
of Default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Class
Principal Amount (or Percentage Interest) of Certificates of each Class affected
thereby shall have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require against the
cost, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for sixty days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding and no direction inconsistent with such written request has been
given such Trustee during such sixty-day period by such Certificateholders; it
being understood and

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intended, and being expressly covenanted by each Certificateholder with every
other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatever by virtue or by
availing itself of any provision of this Agreement to affect, disturb or
prejudice the rights of the Holders of any other of such Certificates, or to
obtain or seek to obtain priority over or preference to any other such Holder,
or to enforce any right under this Agreement, except in the manner herein
provided and for the benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.

     Section 8.02. Access to List of Holders.

     (a) If the Trustee is not acting as Certificate Registrar, the Certificate
Registrar will furnish or cause to be furnished to the Trustee, within fifteen
days after receipt by the Certificate Registrar of a request by the Trustee in
writing, a list, in such form as the Trustee may reasonably require, of the
names and addresses of the Certificateholders of each Class as of the most
recent Record Date.

     (b) If three or more Holders or Certificate Owners (hereinafter referred to
as "Applicants") apply in writing to the Trustee, and such application states
that the Applicants desire to communicate with other Holders with respect to
their rights under this Agreement or under the Certificates and is accompanied
by a copy of the communication which such Applicants propose to transmit, then
the Trustee shall, within five Business Days after the receipt of such
application, afford such Applicants reasonable access during the normal business
hours of the Trustee to the most recent list of Certificateholders held by the
Trustee or shall, as an alternative, send, at the Applicants' expense, the
written communication proffered by the Applicants to all Certificateholders at
their addresses as they appear in the Certificate Register.

     (c) Every Holder or Certificate Owner, if the Holder is a Clearing Agency,
by receiving and holding a Certificate, agrees with the Depositor, the
Certificate Registrar and the Trustee that neither the Depositor, the
Certificate Registrar nor the Trustee shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the
Certificateholders hereunder, regardless of the source from which such
information was derived.

     Section 8.03. Acts of Holders of Certificates.

     (a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders or
Certificate Owners, if the Holder is a Clearing Agency, may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders in person or by agent duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Trustee. Such instrument or
instruments (as the action embodies therein and evidenced thereby) are herein
sometimes referred to as an "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agents shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, if made in the manner provided in this
Section.

     (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 or deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof.

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Whenever such execution is by an officer of a corporation or a member of a
partnership on behalf of such corporation or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
individual executing the same, may also be proved in any other manner which the
Trustee deems sufficient.

     (c) The ownership of Certificates (whether or not such Certificates shall
be overdue and notwithstanding any notation of ownership or other writing
thereon made by anyone other than the Trustee) shall be proved by the
Certificate Register, and neither the Trustee nor the Depositor shall be
affected by any notice to the contrary.

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

                                  ARTICLE IX.

               ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS

     Section 9.01. Servicer to Act as Servicer.

     (a) Commencing on the Closing Date, the Servicer shall service each
Mortgage Loan in accordance with Accepted Servicing Practices.

     (b) The Servicer shall maintain an EDP containing all information and
programming necessary to service the Mortgage Loans in accordance with Section
2.01(a) hereof. The Mortgage Loans shall be grouped on the Servicer's EDP to
reflect the Trust Fund as the owner of the Mortgage Loans.

     (c) The Servicer may not waive, modify or vary any term of a Mortgage Note
without the Depositor's prior written consent. The Servicer shall comply with
all applicable federal, state and local legal and regulatory requirements
(including laws, statutes, rules, regulations and ordinances) in connection with
the modification of the Mortgage Note.

     (d) Notwithstanding anything herein to the contrary, the Servicer shall
follow any reasonable directions given by the Trustee and/or the Depositor with
respect to the servicing of the Mortgage Loans.

     (e) With the exception of Ancillary Fees and any other charges expressly
permitted by the Mortgage Note and applicable law, the Servicer covenants and
agrees that it will not, without the prior written consent of the Sponsor,
charge or collect from any Mortgagor, or trustee under a deed of trust, any fees
of any kind including, but not limited to charges for amounts expended by the
Servicer, regardless of the characterization of the fee or charge.

     (f) The Trustee agrees to execute such limited powers of attorney provided
to it by the Servicer as are necessary and appropriate to assist the Servicer to
carry out its servicing and administrative responsibilities under this
Agreement.

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     (g) In connection with its duties hereunder, in the event the Servicer
requires an original of any document contained in a Mortgagor's file to service
a Mortgage Loan, it shall submit a written request to the Trustee and the
Trustee shall provide the original document to the Servicer within two (2)
Business Days after receipt of the written request, provided that (a) as to any
recorded document, the applicable recorder's office has returned the recorded
document to the Servicer or (b) as to the original title insurance policy, the
Servicer has received such policy. When requesting a release of documents from
the Trustee, the Servicer shall use the form attached hereto as Exhibit N.
Notwithstanding the foregoing, the Servicer acknowledges and agrees that the
Sponsor maintains agreements with document custodians selected by it from time
to time, pursuant to which such custodians maintain Mortgage Loan files on
behalf of the Sponsor. The Servicer agrees to cooperate with such custodians and
request from such custodians the documents and Mortgage Files required by the
Servicer which are maintained by such custodians (with a copy of such request
sent to the Sponsor).

     (h) The Servicer shall not, unless default by the related Mortgagor has
occurred or is imminent, knowingly permit any modification, waiver or amendment
of any material term of any Mortgage Loan (including but not limited to the
interest rate, the principal balance, the amortization schedule, or any other
term affecting the amount or timing of payments on the Mortgage Loan or the
collateral therefor) unless the Servicer shall have provided to the Depositor
and the Trustee an Opinion of Counsel in writing to the effect that such
modification, waiver or amendment would not cause an Adverse REMIC Event.

     Section 9.02. Title, Management and Disposition of REO Property.

     (a) If title to a Mortgaged Property is acquired in foreclosure or by deed
in lieu of foreclosure, the deed or certificate of sale shall be taken in the
name of the Trustee or its designee. Notwithstanding the foregoing, the Servicer
shall not acquire title to any Mortgaged Property, or proceed with the
management of any REO Property, for which the Servicer has knowledge that such
Mortgaged Property or REO Property is affected by hazardous waste. The Servicer
shall either itself, or through an agent, manage, conserve, protect and operate
each REO Property (and may temporarily rent the same) on behalf of the Trust
Fund.

     In the event that the Trust Fund acquires any REO Property in connection
with a default or imminent default on a Mortgage Loan, the Servicer shall
dispose of such REO Property not later than the end of the third taxable year
after the year of its acquisition by the Trust Fund unless the Servicer has
applied for and received a grant of extension from the Internal Revenue Service
to the effect that, under the REMIC Provisions and any relevant proposed
legislation and under applicable state law, the Trust Fund may hold REO Property
for a longer period without adversely affecting the REMIC status of such REMIC
or causing the imposition of a federal or state tax upon such REMIC. If the
Servicer has received such an extension, then the Servicer shall continue to
attempt to sell the REO Property for its fair market value for such period
longer than three years as such extension permits (the "Extended Period"). If
the Servicer has not received such an extension and the Servicer is unable to
sell the REO Property within the period ending 3 months before the end of such
third taxable year after its acquisition by the Trust Fund or if the Servicer
has received such an extension, and the Servicer is unable to sell the REO
Property within the period ending three months before the close of the Extended
Period, the Servicer shall, before the end of the three year period or the
Extended Period, as applicable, (i) purchase such REO Property at a price equal
to the REO Property's fair market value or (ii) auction the REO Property to the
highest bidder (which may be the Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be. The Trustee shall sign any document
prepared by the

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Servicer or take any other action reasonably requested by the Servicer which
would enable the Servicer, on behalf of the Trust Fund, to request such grant of
extension.

     Notwithstanding any other provisions of this Agreement, no REO Property
acquired by the Trust Fund shall be held, rented (or allowed to continue to be
rented) or otherwise used by or on behalf of the Trust Fund in such a manner or
pursuant to any terms that would: (i) cause such REO Property to fail to qualify
as "foreclosure property" within the meaning of Section 860G(a)(8) of the Code;
or (ii) subject the Trust Fund to the imposition of any federal income taxes on
the income earned from such REO Property, including any taxes imposed by reason
of Sections 860F or 860G(c) of the Code, unless the Servicer has agreed to
indemnify and hold harmless the Trust Fund with respect to the imposition of any
such taxes.

     (b) The Servicer shall deposit or cause to be deposited in the applicable
Custodial Account, on a daily basis, all revenues received with respect to each
REO Property and shall be permitted to withdraw therefrom, to the extent of the
amount of such revenues on deposit therein, funds necessary for the proper
operation, management and maintenance of such REO Property, including but not
limited to the cost of maintaining any hazard insurance and the fees of any
managing agent acting on behalf of the Servicer.

     (c) If the Servicer elects to dispose of an REO Property without utilizing
the services of an agent, the Servicer shall notify the Trustee of its receipt
of any and all bona fide offers to purchase that REO Property. Each such REO
Disposition shall be carried out by the Servicer at such price, and upon such
terms and conditions.

     If the Servicer utilizes the services of an approved agent to dispose of an
REO Property, the Servicer shall provide the Trustee with a copy of such agent's
marketing plan, which shall include, but not be limited to, (i) the marketing
time period, (ii) an estimate of the costs of any repairs or improvements, (iii)
the lowest acceptable sale price for the REO Property and (iv) other proposed
terms and conditions of sale. The REO Disposition shall be carried out by the
Servicer in accordance with the terms thereof. If the Servicer receives a bona
fide offer to purchase an REO Property and would like to accept the offer, but
the offer is outside the parameters of the approved marketing plan, the Servicer
shall provide the Trustee with written notification of the terms and conditions
of the offer.

     The Servicer, upon an REO Disposition, shall be entitled to reimbursement
for any related unreimbursed Servicing Advances from proceeds received in
connection with such REO Disposition. If the proceeds from an REO Disposition
are insufficient to reimburse the Servicer for any related unreimbursed
Servicing Advances, to the extent such reimbursement will constitute an
"unanticipated expense" (within the meaning of Treasury Regulations Section
1.860G-1(b)(3)(ii)) of a REMIC provided for herein, the Servicer shall be
entitled to withdraw any such deficiency from amounts on deposit in the
applicable Custodial Account. All proceeds from an REO Disposition, net of any
reimbursement to the Servicer as provided above, shall be remitted to the
Trustee within three (3) Business Days following receipt thereof.

     Section 9.03. Trustee and Depositor's Right to Examine Servicer Records.

     (a) The Servicer shall cooperate with the Depositor and/or the Trustee, its
counsel, accountants (including outside accountants), supervisory agents,
examiners and other representatives in providing reasonable access during normal
business hours to examine and audit any and all of the books, records,
documentation or other information of the Servicer related to

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the Mortgage Loans, which may be relevant to the performance or observance by
the Servicer of the terms, covenants or conditions of this Agreement.

     (b) The examination and audit rights and other rights to access described
in clause (a) above shall be afforded by the Servicer at its offices without
charge, upon reasonable request, and during normal business hours or at such
other times as may be reasonable under applicable circumstances. The Servicer,
at its expense, shall make available all customary, reasonable office space,
facilities, and equipment for the visiting party and shall provide the visiting
party with access to reasonable cooperation with its officers and employees. The
salaries, travel, subsistence and other related expenses for the Depositor's
and/or the Trustee's representatives shall be borne by the Depositor and/or the
Trustee.

     Section 9.04. Legal Proceedings Involving the Servicer and/or the Mortgage
Loans.

     (a) The Servicer shall commence, defend, appear, or otherwise participate
in any foreclosure, condemnation, bankruptcy, or other legal proceedings
relating to a Mortgage Loan in the name of the Trustee and/or the Trust Fund.
The Servicer shall provide the Trustee, on a monthly basis, with such written
reports as it receives regarding any legal proceedings.

     (b) The Servicer shall commence all foreclosures, bankruptcies and other
legal proceedings in the name of the Trustee and/or the Trust Fund unless
otherwise directed in writing by the Trustee.

     Section 9.05. Material Changes.

     The Servicer shall promptly report to the Trustee and the Depositor any
change in its business operations, financial condition, properties or assets
that could have a material adverse effect on the Servicer's ability to perform
its obligations hereunder. Events for which the Trustee and the Depositor must
receive notice include, but are not limited to, the following:

     (a) any merger or consolidation, any changes in the Servicer's ownership
whether directly or indirectly (including any change in ownership of the
Servicer's parent), or any significant reorganization;

     (b) any material changes in management ordered or required by a regulatory
authority supervising or licensing the Servicer;

     (c) the entry against the Servicer of a decree or order of a court or
agency or supervisory authority having jurisdiction for the appointment of a
trustee, conservator, receiver, liquidator, assignee, custodian or sequestrator
(or other similar official) in any federal or state bankruptcy, insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, if such decree
or order has remained in force undischarged or unstayed for a period of sixty
(60) days;

     (d) the consent by the Servicer to the appointment of a trustee,
conservator, receiver, liquidator, assignee, custodian or sequestrator (or other
similar official) in, or commencement of a voluntary case under, any federal or
state bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceedings;

     (e) upon the Servicer's (A) admitting in writing its inability to pay its
debts generally as they become due, (B) filing a petition to take advantage of
any applicable insolvency or

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reorganization statute, (C) making an assignment for the benefit of its
creditors or (D) voluntarily suspending payment of its obligations;

     (f) entry of any court judgment or regulatory order in which the Servicer
is or may be required to pay a claim or claims that may have a material adverse
effect on the Servicer's financial condition;

     (g) any admission by the Servicer to the commission of, or any finding that
the Servicer has committed, any violation of any law, regulation or order in any
proceeding or audit commenced by any governmental, or regulatory authority, or
any proceeding commenced in any court of law;

     (h) the commencement of any class action law suits against the Servicer;
and

     (i) the Servicer's entry into any agreement with a third party that would
result in any material change in the financial status or ownership of the
Servicer or any merger of the Servicer.

     Section 9.06. Servicer Shall Provide Information as Reasonably Required.

     During the term of this Agreement, the Servicer shall furnish any reports
or documentation that the Trustee and/or the Depositor may reasonably request.
Reports requested may include reports not specified or otherwise required by
this Agreement or reports required to comply with any regulations regarding any
supervisory agents or examiners of the Trustee and/or the Depositor, as
applicable. All reports will be delivered in accordance with the Trustee and/or
the Depositor's reasonable instructions and directions. The Servicer agrees to
execute and deliver all such instruments and take all such action as the Trustee
and/or the Depositor, as applicable, from time to time, may reasonably request
in order to effectuate the purpose and to carry out the terms of this Agreement.

     Section 9.07. Servicer Not to Resign.

     The Servicer shall neither assign this Agreement or the servicing hereunder
or delegate its rights or duties hereunder or any portion hereof (to other than
a third party in the case of outsourcing routine tasks such as taxes, insurance
and property inspection, in which case the Servicer shall be fully liable for
such tasks as if the Servicer performed them itself) nor sell or otherwise
dispose of all or substantially all of its property or assets without the prior
written consent of the Trustee and the Depositor, which consent shall be granted
or withheld in the reasonable discretion of such parties, provided, however,
that (i) the Servicer may assign its rights and obligations hereunder without
prior written consent of the Trustee and the Depositor to any entity that is
directly owned or controlled by the Servicer, and the Servicer guarantees the
performance of such entity hereunder, (ii) the Servicer is no longer permitted
to act as Servicer under applicable law as evidenced by an Opinion of Counsel or
(iii) upon a sale of its servicing rights with respect to the Mortgage Loans
with the prior written consent of the Sponsor. In the case of item (i) above,
the Servicer shall provide the Trustee and the Depositor with a written
statement guaranteeing the successor entity's performance of the Servicer's
obligations under the Agreement.

     Section 9.08. Custodial Accounts and Escrow Accounts.

     The Servicer shall segregate and hold all funds collected and received
pursuant to each Mortgage Loan separate and apart from any of its own funds and
general assets. The Servicer

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shall create and maintain Custodial Accounts and Escrow Accounts for the deposit
of all funds, except as otherwise provided herein, received by the Servicer on
the Mortgage Loans. The Servicer shall be responsible for reviewing and
reconciling all collection accounts in accordance with industry standards. The
Servicer shall act promptly to resolve any discrepancies. The Servicer shall be
responsible for all expenses and consequences for failure to reconcile the
accounts.

     Section 9.09. Assumption Processing.

     Within three (3) Business Days of receipt by the Servicer of a request by a
Mortgagor to be released from liability for payment of a Mortgage Loan in
connection with an assumption of the related Mortgage Note, the Servicer shall
notify the Trustee of such request. Upon the completion of the assumption
processing, the Sponsor shall provide the Servicer with all necessary
information to enable the Servicer to update its EDP.

     Section 9.10. Books and Records.

     The Servicer shall be responsible for maintaining, and shall maintain, a
complete set of records for the Mortgage Loans. The Servicer's books and records
shall clearly reflect the ownership of the Mortgage Loans by the Trust Fund. All
documents, records and correspondence, regardless of the media in which they are
stored or maintained, are property of the Trust Fund, and the Servicer shall
hold the same in a fiduciary capacity for the Trust Fund. The Servicer may
retain copies of all such documents, records and correspondence as may be
necessary to service the Mortgage Loans under this Agreement.

     Section 9.11. Annual Statement as to Compliance.

     Not later than (a) March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs), or (b) with respect to any calendar
year during which an annual report on Form 10-K is not required to be filed
pursuant to Section 9.21 on behalf of the Issuing Entity, by April 15 of each
calendar year (or if such day is not a Business Day, the immediately preceding
Business Day), each of the Servicer and the Trustee shall deliver to the Trustee
and the Depositor, an Officer's Certificate in the form attached hereto as
Exhibit V stating, as to each signatory thereof, that (i) a review of the
activities of such signatory during the preceding calendar year, or portion
thereof, and of the performance of such signatory under this Agreement has been
made under such officer's supervision, and (ii) to the best of such officer's
knowledge, based on such review, such signatory has fulfilled all its
obligations under this Agreement in all material respects throughout such year
or a portion thereof, or, if there has been a failure to fulfill any such
obligation in any material respect, specifying each such failure known to such
officer and the nature and status thereof. With respect to any Sub-Servicer to
which the Servicer has delegated any servicing responsibilities, the Servicer
shall deliver, on behalf of that Sub-Servicer, the Officer's Certificate set
forth in this Section 9.11 in the same manner and with the same time frames as
required by the Servicer and the Trustee above. Promptly after receipt of each
such Officer's Certificate, the Depositor may review such Officer's Certificate
and, if applicable, consult with the Servicer, any Sub-Servicer, and the
Trustee, as applicable, as to the nature of any failures by such party, in the
fulfillment of any of such party's obligations hereunder or, in the case of any
Sub-Servicer, under such other applicable agreement.

     In the event the Trustee or the Servicer is terminated or resigns pursuant
to the terms of this Agreement, such party shall provide, and shall use its
reasonable efforts to cause any Sub-Servicer that resigns or is terminated under
any applicable servicing agreement to provide, an

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annual statement of compliance pursuant to this Section 9.11 with respect to the
period of time that the Trustee or the Servicer was subject to this Agreement or
the period of time that the Sub-Servicer was subject to such other servicing
agreement.

     Section 9.12. [Reserved.]

     Section 9.13. Reports on Assessment of Compliance and Attestation.

     (a) Not later than March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer and the Trustee each at its own expense, shall furnish,
and each of the preceding parties, as applicable, shall cause any Sub-Servicer
or Subcontractor engaged by it to furnish (unless in the case of a
Subcontractor, the Servicer or the Trustee, as applicable, has notified the
Depositor and the Trustee in writing that such compliance statement is not
required for the Subcontractor) and (ii) not later than April 15 of each
calendar year with respect to any calendar year during which the Issuing
Entity's annual report on Form 10-K is not required to be filed in accordance
with the Exchange Act and the rules and regulations of the Commission, the
Servicer and the Trustee each at its own expense, shall furnish, and each of the
preceding parties, as applicable, shall cause any Sub-Servicer or Subcontractor
engaged by it to furnish, to the Trustee and the Depositor an officer's
assessment of its compliance with the Relevant Servicing Criteria during the
preceding calendar year as required by Rules 13a-18 and 15d-18 of the Exchange
Act and Item 1122 of Regulation AB (the "Assessment of Compliance"), which
assessment shall contain (A) a statement by such party of its responsibility for
assessing compliance with the Relevant Servicing Criteria, (B) a statement that
such party used the Relevant Servicing Criteria to assess compliance with the
Relevant Servicing Criteria, (C) such party's assessment of compliance with the
Relevant Servicing Criteria as of and for the fiscal year covered by the Form
10-K required to be filed pursuant to Section 9.13, including, if there has been
any material instance of noncompliance with the Relevant Servicing Criteria, a
discussion of each such failure and the nature and status thereof, which
assessment shall be based on the activities it performs with respect to
asset-backed securities transactions taken as a whole involving such party that
are backed by the same asset type as the Mortgage Loans, and (D) a statement
that a registered public accounting firm has issued an attestation report on
such party's assessment of compliance with the Relevant Servicing Criteria as of
and for such period.

     Promptly after receipt of each report on assessment of compliance, (i) the
Depositor may review each such report and, if applicable, consult with the
Servicer, and the Trustee, and any Sub-Servicer or Subcontractor engaged by such
parties as to the nature of any material instance of noncompliance with the
Relevant Servicing Criteria by the Servicer, the Trustee, and any Sub-Servicer
or Subcontractor engaged by such parties, and (ii) the Trustee shall confirm
that the assessments individually address the Relevant Servicing Criteria for
each party as set forth on Exhibit S-2 and notify the Depositor of any
exceptions.

     In the event the Trustee or the Servicer is terminated or resigns pursuant
to the terms of this Agreement, such party shall provide, and each such party
shall cause any subcontractor engaged by it to provide, and each such party
shall use its reasonable efforts to cause any Sub-Servicer that resigns or is
terminated under any applicable servicing agreement to provide, an annual
assessment of compliance pursuant to this Section 9.13, coupled with an
attestation as required in this Section 9.13 with respect to the period of time
that the Trustee or the Servicer was

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subject to this Agreement or the period of time that the Sub-Servicer was
subject to such other servicing agreement.

     (b) Not later than March 1 of each calendar year (other than the calendar
year during which the Closing Date occurs) with respect to any calendar year
during which the Issuing Entity's annual report on Form 10-K is required to be
filed in accordance with the Exchange Act and the rules and regulations of the
Commission, the Servicer and the Trustee each at its own expense, shall cause,
and each of the preceding parties, as applicable, shall cause any Sub-Servicer
or Subcontractor engaged by it to cause (unless in the case of a Subcontractor,
the Servicer or the Trustee, as applicable, has notified the Depositor and the
Trustee in writing that such report is not required for the Subcontractor) and
(ii) not later than April 15 of each calendar year with respect to any calendar
year during which the Issuing Entity's annual report on Form 10-K is not
required to be filed in accordance with the Exchange Act and the rules and
regulations of the Commission, the Servicer and the Trustee each at its own
expense, shall cause, and each of the preceding parties, as applicable, shall
cause any Sub-Servicer or Subcontractor engaged by it to cause, a nationally or
regionally recognized firm of independent registered public accountants (who may
also render other services to the Servicer, the Trustee, the Sponsor or any
affiliate thereof) which is a member of the American Institute of Certified
Public Accountants to furnish a report (the "Accountants Attestation") to the
Trustee and the Depositor to the effect that (i) it has obtained a
representation regarding certain matters from the management of such party,
which includes an assertion that such party has complied with the Relevant
Servicing Criteria, and (ii) on the basis of an examination conducted by such
firm in accordance with standards for attestation engagements issued or adopted
by the PCAOB, it is expressing an opinion as to whether such party's compliance
with the Relevant Servicing Criteria was fairly stated in all material respects,
or it cannot express an overall opinion regarding such party's assessment of
compliance with the Relevant Servicing Criteria. In the event that an overall
opinion cannot be expressed, such registered public accounting firm shall state
in such report why it was unable to express such an opinion. Such report must be
available for general use and not contain restricted use language. Such
Accountant's Attestation shall be in accordance with Rules 1-02(a)(3) and
2-02(g) of Regulation S-X under the Securities Act and the Exchange Act.

     (c) Promptly after receipt of such report from the Servicer and the
Trustee, and any Sub-Servicer or Subcontractor engaged by such parties, (i) the
Depositor may review the report and, if applicable, consult with such parties as
to the nature of any defaults by any of such parties, as the case may be, in the
fulfillment of such party's obligations hereunder or under any other applicable
agreement, and (ii) the Trustee shall confirm that each assessment submitted
pursuant to Section 9.13(a) is coupled with an attestation meeting the
requirements of Section 9.13(b) and notify the Depositor of any exceptions.

     (d) Each of the parties hereto acknowledges and agrees that the purpose of
this Section 9.13 is to facilitate compliance by the Sponsor and the Depositor
with the provisions of Regulation AB, as such may be amended or clarified from
time to time. Therefore, each of the parties agrees that the parties'
obligations hereunder will be supplemented and modified as necessary to be
consistent with any such amendments, interpretive advice or guidance, convention
or consensus among active participants in the asset-backed securities markets,
advice of counsel, or otherwise in respect of the requirements of Regulation AB
and the parties shall comply with requests made by the Sponsor or the Depositor
for delivery of additional or different information as the Sponsor or the
Depositor may determine in good faith is necessary to comply with the provisions
of Regulation AB. Any such supplementation or modification shall be made in
accordance with Section 11.03 without the consent of the Certificateholders, and
may result in

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a change in the reports filed by the Trustee on behalf of the Issuing Entity
under the Exchange Act.

     Section 9.14. Servicing Compensation.

     (a) Subject to the following paragraph, as compensation for its services
hereunder, the Servicer shall be entitled to a Servicing Fee payable with
respect to each Mortgage Loan. As to each Mortgage Loan, the Servicing Fee shall
be payable monthly from payments of interest on such Mortgage Loan prior to the
deposit of such payments into the applicable Custodial Account, shall accrue at
the applicable Servicing Fee Rate, and shall be computed on the basis of the
same principal amount and for the same period respecting which such interest
payment was computed.

     (b) The Servicing Fee for each Mortgage Loan shall be payable solely from
(i) the interest portion of the related Monthly Payment (to the extent paid by
the Mortgagor, but only if a full interest payment is received), or (ii) from
any payment of interest made with respect to the Mortgage Loan from the proceeds
of foreclosure or any judgment, writ of attachment or levy against the Mortgagor
or the Mortgagor's assets, or (iii) from funds paid in connection with any
prepayment in full, or (iv) from Insurance Proceeds or Liquidation Proceeds.

     (c) As additional compensation hereunder, the Servicer may retain (i) all
net interest earnings on balances maintained in the Custodial Account and Escrow
Accounts and (ii) the Ancillary Fees.

     (d) The Servicer's right to the Servicing Fee shall not be transferred in
whole or in part except in connection with any permitted transfer of all the
Servicer's obligations under this Agreement. The Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
hereunder and shall not be entitled to reimbursement therefor except as
specifically provided for herein.

     Section 9.15. Indemnification.

     The Servicer shall indemnify and hold the Trustee, the Trust Fund and the
Depositor and their respective officers, directors, employees and agents
(collectively, the "Indemnified Parties") harmless from, and will reimburse the
Indemnified Parties for, any and all Losses incurred by any of the Indemnified
Parties to the extent that such Losses result from, are caused by or arise out
of any one or more of the following:

          (i) Any material misrepresentations made by the Servicer in this
     Agreement, or in any schedule, exhibit, or certificate furnished pursuant
     hereto;

          (ii) Any material breach of any of the representations and warranties
     of the Servicer or the nonfulfillment of any term, covenant, condition or
     obligation of the Servicer set forth in this Agreement or in any schedule,
     statement, exhibit, or certificate furnished pursuant hereto, or any
     default or failure to perform by the Servicer hereunder;

          (iii) Any failure of the Servicer to comply with Accepted Servicing
     Practices in connection with servicing the Mortgage Loans;

          (iv) Any liabilities or obligations, contingent or otherwise, of the
     Servicer of any nature whatsoever relating to the Servicer's obligations
     under this Agreement, to the extent that any related Loss to the Trustee,
     Trust Fund or Depositor is not increased by

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     negligence, bad faith or willful misconduct on the part of the Trustee,
     Trust Fund or Depositor; or

          (v) Any non-compliance with the terms of the powers of attorney or the
     use thereof that results in a Loss to the Trustee, Trust Fund or Depositor.

     The indemnity provided in this Section 9.15 shall remain in full force and
effect regardless of any investigation made by the Trustee, Trust Fund or
Depositor or its representatives. The provisions of this Section 9.15 shall
survive the termination of this Agreement and the payment of the outstanding
Certificates.

     Section 9.16. Non Solicitation.

     For as long as the Servicer services the Mortgage Loans, the Servicer
covenants that it will not, and that it will ensure that its affiliates and
agents, will not, directly solicit or provide information for any other party to
solicit for prepayment or refinancing of any of the Mortgage Loans by the
related Mortgagors. It is understood that the promotions undertaken by the
Servicer which are directed to the general public at large, or certain segments
thereof, shall not constitute solicitation as that term is used in this Section
9.16.

     Section 9.17. Successor to the Servicer.

     Simultaneously with the termination of the Servicer's responsibilities and
duties under this Agreement (a) the Trustee shall, in accordance with the
provisions of this Agreement (i) succeed to and assume all of the Servicer's
responsibilities, rights, duties and obligations under this Agreement, or (ii)
appoint a successor meeting the eligibility requirements set forth herein and
which shall succeed to all rights and assume all of the responsibilities, duties
and liabilities of the Servicer under this Agreement with the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement. If the
Trustee shall succeed to and assume the Servicer's responsibilities, rights,
duties and obligations under this Agreement, such succession shall not be
effective prior to 90 days after the Trustee's knowledge that the Servicer shall
be terminated hereunder. The Servicer shall not be removed hereunder prior to
the effectiveness of the assumption of its responsibilities, rights, duties and
obligations by the successor thereto. Any successor to the Servicer shall be
subject to the approval of the Depositor, the Trustee and each Rating Agency.
Each Rating Agency must deliver to the Trustee a letter to the effect that such
transfer of servicing will not result in a qualification, withdrawal or
downgrade of the then-current rating of any of the Certificates. In connection
with such appointment and assumption, the Trustee or the Depositor, as
applicable, may make such arrangements for the compensation of such successor
out of payments on the Mortgage Loans as it and such successor shall agree;
provided, however, that no such compensation shall be in excess of that
permitted the Servicer under this Agreement. In the event that the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to the aforementioned sections, the Servicer shall discharge
such duties and responsibilities during the period from the date it acquires
knowledge of such termination until the effective date thereof with the same
degree of diligence and prudence which it is obligated to exercise under this
Agreement, and shall take no action whatsoever that might impair or prejudice
the rights or financial condition of its successor. The resignation or removal
of the Servicer pursuant to the aforementioned sections shall not become
effective until a successor shall be appointed pursuant to this Section 9.17 and
shall in no event relieve the Servicer of the representations and warranties
made herein and the remedies available to the Trustee herein, it being
understood and agreed that the provisions of this Agreement

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regarding indemnification and nonsolicitation shall be applicable to the
Servicer notwithstanding any such resignation or termination of the Servicer, or
the termination of this Agreement.

     Section 9.18. Statements to the Trustee.

     (a) Not later than the 15th calendar day of each month (or if such calendar
day is not a Business Day, the immediately succeeding Business Day), the
Servicer shall furnish to the Trustee (i) a monthly remittance advice in the
format set forth in Exhibit D-1 hereto and a monthly defaulted loan report in
the format set forth in Exhibit D-2 hereto relating to the period ending on the
first day of the current calendar month and (ii) all such information required
on a magnetic tape or other similar media mutually agreed upon by the Trustee
and the Servicer.

     (b) The Servicer shall provide the Trustee with such information concerning
the Mortgage Loans as is necessary for the Trustee to prepare its federal income
tax return as the Trustee may reasonably request from time to time.

     Section 9.19. Merger or Consolidation of the Servicer.

     Any entity into which the Servicer may be merged or consolidated, or any
entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any corporation succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however that the successor Servicer shall satisfy all the requirements of
Section 9.17 with respect to the qualifications of a successor Servicer.

     Section 9.20. Limitation on Liability of the Servicer.

     Neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Certificateholders for any action
taken or for refraining from the taking of any action in good faith pursuant to
this Agreement, or for errors in judgment; provided, however, that this
provision shall not protect the Servicer or any such Person against any breach
of representations or warranties made by it herein or protect the Servicer or
any such Person from any liability which would otherwise be imposed by reasons
of willful misfeasance, bad faith or negligence in the performance of its duties
or by reason of reckless disregard of its obligations and duties hereunder. The
Servicer and any director, officer, employee or agent of the Servicer shall be
indemnified by the Trust Fund and held harmless against any loss, liability or
expense incurred in connection with any audit, controversy or judicial
proceeding relating to a governmental taxing authority or any legal action
relating to this Agreement or the Certificates or any other unanticipated or
extraordinary expense, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder and which in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may in its discretion undertake
any such action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties hereto and interests of the
Trustee and the Certificateholders hereunder. In such event, the legal expenses
and costs of such action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust Fund, and the Servicer shall be
entitled to be reimbursed therefor out of the Custodial Account.

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     Section 9.21. Periodic Filings.

          (i) Within four (4) Business Days after the occurrence of an event
     requiring disclosure on Form 8-K (each such event, a "Reportable Event"),
     and if directed by the Depositor and to the extent it receives the Form 8-K
     Disclosure Information described below, the Trustee shall prepare and file
     on behalf of the Issuing Entity a Form 8-K, as required by the Exchange
     Act, provided that the Depositor shall file the initial Form 8-K in
     connection with the issuance of the Certificates. Any disclosure or
     information related to a Reportable Event or that is otherwise required to
     be included on Form 8-K (other than the initial Form 8-K) ("Form 8-K
     Disclosure Information") shall, pursuant to the paragraph immediately
     below, be reported by the parties set forth on Exhibit W and directed and
     approved by the Depositor, and the Trustee will have no duty or liability
     for any failure hereunder to determine or prepare any Form 8-K Disclosure
     Information absent such reporting, direction and approval.

          (ii) For so long as the Issuing Entity is subject to the reporting
     requirements of the Exchange Act, following the occurrence of a Reportable
     Event (A) each party listed on Exhibit W hereto shall use commercially
     reasonable best efforts to provide immediate notice to the Trustee and the
     Depositor, by fax and by phone or by e-mail and by phone (using the contact
     information set forth in Section 11.07 or, in the case of the Trustee, set
     forth on Exhibit U), (B) each such party shall be required to provide to
     the Trustee and the Depositor, to the extent known, in EDGAR-compatible
     format or in such other format as agreed upon by the Trustee, the Depositor
     and such party, the Form 8-K Disclosure Information described on Exhibit W
     applicable to such party, together with the form set forth on Exhibit U
     (the "Additional Disclosure Notification") by Noon New York City time on
     the 2nd Business Day following the occurrence of such Reportable Event and
     (C) the Depositor, by the end of business New York City time on the 2nd day
     following such Reportable Event, shall approve, as to form and substance,
     or disapprove, as the case may be, the inclusion of the Form 8-K Disclosure
     Information on Form 8-K. The Trustee has no duty under this Agreement to
     monitor or enforce the performance by the parties listed on Exhibit W of
     their duties under this paragraph or proactively solicit or procure from
     such parties any Form 8-K Disclosure Information. The Depositor will be
     responsible for any reasonable fees and expenses assessed or incurred by
     the Trustee in connection with including any Form 8-K Disclosure
     Information on Form 8-K pursuant to this paragraph.

          (iii) After preparing the Form 8-K, the Trustee shall forward
     electronically, no later than Noon New York City time on the third Business
     Day after the Reportable Event (but in no event earlier than 24 hours after
     having received the Form 8-K Disclosure Information pursuant to the
     immediately preceding paragraph), a draft copy of the Form 8-K to the
     Depositor for review. No later than the close of business on the third
     Business Day after the Reportable Event, the Depositor shall notify the
     Trustee of any changes to or approval of such Form 8-K. No later than 12:00
     noon New York City time on the fourth Business Day after the Reportable
     Event, a senior officer of the Depositor shall sign the Form 8-K and return
     an electronic or fax copy of such signed Form 8-K (with an original
     executed hard copy to follow by overnight mail) to the Trustee. If a Form
     8-K cannot be filed on time or if a previously filed Form 8-K needs to be
     amended, the Trustee will follow the procedures set forth in Section
     9.21(xiv).

          (iv) Promptly (but no later than one Business Day) after filing with
     the Commission, the Trustee will make available on its internet website a
     final executed copy

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     of each Form 8-K prepared by the Trustee. The signing party at the
     Depositor can be contacted at (212) 449-1000. The parties to this Agreement
     acknowledge that the performance by the Trustee of its duties under this
     Section 9.21 related to the timely preparation, arrangement for execution
     and filing of Form 8-K is contingent upon the other parties hereto strictly
     observing all applicable deadlines in the performance of their duties under
     this Section 9.21. The Trustee shall not have any liability for any loss,
     expense, damage or claim arising out of or with respect to any failure to
     properly prepare, arrange for preparation and/or timely file such Form 8-K,
     where such failure results from the Trustee's inability or failure to
     receive, on a timely basis, any information from any other party hereto
     needed to prepare, arrange for execution or file such Form 8-K.

          (v) Within fifteen days after each Distribution Date (subject to
     permitted extensions under the Exchange Act), the Trustee shall, on behalf
     of the Issuing Entity and in accordance with industry standards, prepare
     and file with the Commission via the Electronic Data Gathering and
     Retrieval System (EDGAR), a Form 10-D with (1) a copy of the report to the
     Certificateholders for such Distribution Date as an exhibit thereto. Any
     necessary disclosure in addition to the Monthly Statement that is required
     to be included on Form 10-D ("Additional Form 10-D Disclosure") shall,
     pursuant to the paragraph immediately below, be reported by the parties set
     forth on Exhibit X to the Depositor and the Trustee and directed and
     approved by the Depositor, and the Trustee will have no duty or liability
     for any failure hereunder to determine or prepare any Additional Form 10-D
     Disclosure absent such reporting, direction and approval.

          (vi) As set forth in Exhibit X hereto, for so long as the Issuing
     Entity is subject to the reporting requirements of the Exchange Act, within
     five (5) calendar days after the related Distribution Date (i) each party
     listed on Exhibit X hereto shall be required to provide to the Depositor
     and the Trustee, to the extent known, in Edgar-compatible format or in such
     other format as agreed upon by the Trustee, the Depositor and such party,
     any Additional Form 10-D Disclosure (including any breaches of pool asset
     representations and warranties or transaction covenants of which the party
     has written notice and which has not been included on the monthly
     distribution report for the period), applicable to such party, and (ii) the
     Depositor will approve, as to form and substance, or disapprove, as the
     case may be, the inclusion of the Additional Form 10-D Disclosure and shall
     forward such Additional Form 10-D Disclosure to the Trustee in
     EDGAR-compatible format or in such other format as agreed by the Trustee
     and the Depositor, together with the Additional Disclosure Notification.
     The Trustee and the Servicer have no duty under this Agreement to monitor
     or enforce the performance by the parties listed on Exhibit X of their
     duties under this paragraph or proactively solicit or procure from such
     parties any Additional Form 10-D Disclosure Information. The Depositor will
     be responsible for any reasonable fees and expenses incurred by the Trustee
     in connection with including any Additional Form 10-D Disclosure on Form
     10-D pursuant to this paragraph.

          (vii) After preparing the Form 10-D at the direction of the Depositor,
     the Trustee will forward electronically a draft copy of the Form 10-D to
     the Depositor for review and execution. No later than two (2) Business Days
     prior to the 15th calendar day after the related Distribution Date, a duly
     authorized representative of the Depositor shall sign the Form 10-D and
     return an electronic or fax copy of such Form 10-D (with an original
     executed hard copy to follow by overnight mail) to the Trustee and the
     Trustee shall file such Form 10-D. If a Form 10-D cannot be filed on time
     or if a previously filed Form 10-D needs to be amended, the Trustee will
     follow the procedures set forth in

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     Section 9.21(xiv). Promptly (but not later than one Business Day) after
     filing with the Commission, the Trustee will make available on its internet
     website a final executed copy of each Form 10-D prepared and filed by the
     Trustee. The parties to this Agreement acknowledge that the performance by
     the Trustee of its duties under this Section 9.21 related to the timely
     preparation, arrangement for execution and filing of Form 10-D is
     contingent upon the other parties hereto strictly observing all applicable
     deadlines in the performance of their duties under this Section 9.21. The
     Trustee will not have any liability for any loss, expense, damage or claim
     arising out of or with respect to any failure to properly prepare, arrange
     for execution and/or timely file such Form 10-D resulting from the
     Trustee's inability or failure to receive any information needed to
     prepare, arrange for execution or file such Form 10-D on a timely basis.

          (viii) On or prior to the 90th calendar day after the end of the
     fiscal year for the Issuing Entity or such earlier date as may be required
     by the Exchange Act (the "10-K Filing Deadline") (it being understood that
     the fiscal year for the Issuing Entity ends on December 31st of each year)
     commencing in March 2007, the Trustee shall, on behalf of the Issuing
     Entity and in accordance with industry standards, prepare and file with the
     Commission via EDGAR a Form 10 -K with respect to the Issuing Entity. Such
     Form 10-K shall include the following items, in each case, as applicable,
     to the extent they have been delivered to the Trustee within the applicable
     time frames set forth in this Agreement, (i) an annual compliance statement
     for the Trustee, the Servicer and each Sub-Servicer, as described in
     Section 9.11 of the Agreement, (ii)(A) the annual reports on assessment of
     compliance with servicing criteria for the Trustee, the Servicer and each
     Sub-Servicer and Subcontractor (unless the Depositor has determined that
     such compliance statement is not required by Regulation AB), as described
     in Section 9.13 of the Agreement, and (B) if any such party's report on
     assessment of compliance with servicing criteria described in Section 9.13
     identifies any material instance of noncompliance, disclosure identifying
     such instance of noncompliance, or if any report on assessment of
     compliance with servicing criteria described in Section 9.13 of the
     Agreement is not included as an exhibit to such Form 10-K, disclosure that
     such report is not included and an explanation why such report is not
     included, (iii)(A) the registered public accounting firm attestation report
     for the Trustee, the Servicer and each Sub-Servicer and Subcontractor (if
     applicable), as described in Section 9.13 of this Agreement, and (B) if any
     registered public accounting firm attestation report described under
     Section 9.13 of this Agreement identifies any material instance of
     noncompliance, disclosure identifying such instance of noncompliance, or if
     any such registered public accounting firm attestation report is not
     included as an exhibit to such Form 10-K, disclosure that such report is
     not included and an explanation why such report is not included, and (iv) a
     Sarbanes-Oxley Certification in the form attached hereto as Exhibit T,
     executed by the senior officer in charge of securitizations of the
     Depositor. Any disclosure or information in addition to (i) through (iv)
     above that is required to be included on Form 10-K ("Additional Form 10-K
     Disclosure") shall be reported by the parties as set forth in Exhibit Y to
     the Depositor and the Trustee and directed and approved by the Depositor
     pursuant to the following paragraph and the Trustee will have no duty or
     liability for any failure hereunder to determine or prepare any Additional
     Form 10-K Disclosure absent such reporting, direction or approval.

          (ix) As set forth in Exhibit Y hereto, no later than March 1 of each
     year that the Issuing Entity is subject to the Exchange Act reporting
     requirements, commencing in March 2007, (i) the parties listed on Exhibit Y
     hereto shall be required to provide to the Depositor and the Trustee, to
     the extent known, in Edgar-compatible format or in such

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     other format as agreed upon by the Trustee, the Depositor and such party,
     any Additional Form 10-K Disclosure, applicable to such party, and (ii) the
     Depositor will approve, as to form and substance, or disapprove, as the
     case may be, the inclusion of the Additional Form 10-K Disclosure and shall
     forward such Additional Form 10-K Disclosure to the Trustee in
     EDGAR-compatible format or in such other format as agreed by the Trustee
     and the Depositor, together with the Additional Disclosure Notification.
     The Trustee has no duty under this Agreement to monitor or enforce the
     performance by the parties listed on Exhibit Y of their duties under this
     paragraph or proactively solicit or procure from such parties any
     Additional Form 10-K Disclosure Information. The Depositor will be
     responsible for any reasonable fees and expenses incurred by the Trustee in
     connection with including any Additional Form 10-K Disclosure on Form 10-K
     pursuant to this paragraph.

          (x) After preparing the Form 10-K, the Trustee shall forward
     electronically a draft copy of the Form 10-K to the Depositor for review.
     No later than the Business Day prior to the date specified in the next
     sentence, the Depositor shall notify the Trustee of any changes to or
     approval of such Form 10-K. No later than the end of business New York City
     time on the fourth Business Day after receipt thereof, a senior officer of
     the Depositor shall sign the Form 10-K and return an electronic or fax copy
     of such signed Form 10-K (with an original executed hard copy to follow by
     overnight mail) to the Trustee, and the Trustee shall file such Form 10-K.
     If a Form 10-K cannot be filed on time or if a previously filed Form 10-K
     needs to be amended, the Trustee will follow the procedures set forth in
     Section 9.21(xiv). Promptly (but no later than one Business Day) after
     filing with the Commission, the Trustee will, pursuant to the Agreement,
     make available on its internet website a final executed copy of each Form
     10-K prepared and filed by the Trustee. The parties to this Agreement
     acknowledge that the performance by the Trustee of its duties under this
     Section 9.21 related to the timely preparation, arrangement for execution
     and filing of Form 10-K is contingent upon such parties (and any
     Sub-Servicer or Subcontractor) strictly observing all applicable deadlines
     in the performance of their duties under this Section 9.21, Section 9.11
     and Section 9.13. The Trustee shall have no liability for any loss,
     expense, damage or claim arising out of or with respect to any failure to
     properly prepare, arrange for execution and/or timely file such Form 10-K
     resulting from the Trustee's inability or failure to receive any
     information needed to prepare, arrange for execution or file such Form 10-K
     on a timely basis.

          (xi) Each Form 10-K shall include a certification (the "Sarbanes-Oxley
     Certification"), which shall be in the form attached hereto as Exhibit T.
     The Depositor will cause its senior officer in charge of securitization to
     execute the Sarbanes-Oxley Certification required pursuant to Rule 13a -14
     under the Exchange Act and to deliver the original executed Certification
     to the Trustee by March 1 of each year in which the Issuing Entity is
     subject to the reporting requirements of the Exchange Act. In connection
     therewith, each of the Trustee, the Servicer and any Sub-Servicer, shall
     sign and provide, and each such party shall cause any Sub-Servicer (to the
     extent required by the Exchange Act and the rules and regulations of the
     Commission) engaged by it to sign and provide, to the Depositor by March 1
     of each year in which the Issuing Entity is subject to the reporting
     requirements of the Exchange Act and otherwise within a reasonable period
     of time upon request, a certification (a "Back-Up Certification") (in the
     form attached hereto as Exhibit Q and Exhibit R, respectively) for the
     benefit of the Depositor and its officers, directors and affiliates
     regarding certain aspects of the Form 10-K Certification. In the event the
     Servicer, any Sub-Servicer, the Trustee or any

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     Subcontractor engaged by any such party is terminated or resigns (to the
     extent the Servicer or Trustee, as applicable, can reasonably obtain such)
     pursuant to the terms of this Agreement, or any other applicable agreement,
     as the case may be, such party shall provide a Back-Up Certification to the
     Depositor pursuant to this Section 9.21 with respect to the period of time
     it was subject to this Agreement or any other applicable agreement, as the
     case may be.

          (xii) The Servicer agrees to furnish to the Trustee promptly, from
     time to time upon request, such further information and reports within its
     control related to this Agreement and the Mortgage Loans as the Depositor
     reasonably deems appropriate to prepare and file all necessary reports with
     the Commission. The Trustee shall have no responsibility to file any items
     with the Commission other than those specified in this section and the
     Depositor shall execute any and all Form 10-Ds, 8-Ks and 10-Ks required
     hereunder.

          (xiii) On or prior to January 30 of the first year in which the
     Trustee is able to do so under applicable law, the Trustee shall prepare
     and file a Form 15 Suspension Notification relating to the automatic
     suspension of reporting in respect of the Issuing Entity under the Exchange
     Act.

          (xiv) In the event that the Trustee is unable to timely file with the
     Commission all or any required portion of any Form 8-K, 10-D or 10-K
     required to be filed by this Agreement because required disclosure
     information was either not delivered to it or delivered to it after the
     delivery deadlines set forth in this Agreement or for any other reason, the
     Trustee will promptly notify the Depositor of such inability to make a
     timely filing with the Commission. In the case of Form 10-D and 10-K, the
     Depositor and Trustee will cooperate to prepare and file a Form 12b-25 and
     a 10-DA and 10KA, as applicable, pursuant to Rule 12b-25 of the Exchange
     Act. In the case of Form 8-K, the Trustee will, upon receipt of all
     required Form 8-K Disclosure Information and upon the approval and
     direction of the Depositor, include such disclosure information on the next
     succeeding Form 10-D to be filed for the Issuing Entity. In the event that
     any previously filed Form 8-K, 10-D or 10-K needs to be amended, the
     Trustee will notify the Depositor, and such parties agree to cooperate to
     prepare any necessary 8-K/A, 10-D/A or 10-K/A. Any Form 15, Form 12b-25 or
     any amendment to Form 8-K, 10-D or 10-K shall be signed by a senior officer
     of the Depositor. The Depositor and Servicer acknowledge that the
     performance by the Trustee of its duties under this Section 9.21 related to
     the timely preparation, arrangement for execution and filing of Form 15, a
     Form 12b-25 or any amendment to Form 8-K, 10-D or 10-K is contingent upon
     the Servicer and the Depositor performing their duties under this Section.
     The Trustee shall have no liability for any loss, expense, damage or claim
     arising out of or with respect to any failure to properly prepare, arrange
     for execution and/or timely file any such Form 15, Form 12b-25 or any
     amendments to Forms 8-K, 10-D or 10-K, where such failure results from the
     Trustee's inability or failure to receive, on a timely basis, any
     information from any other party hereto needed to prepare, arrange for
     execution or file such Form 15, Form 12b-25 or any amendments to Forms 8-K,
     10-D or 10-K.

          (xv) If the Commission issues additional interpretative guidance or
     promulgates additional rules or regulations with respect to Regulation AB
     or otherwise, or if other changes in applicable law occur, that would
     require the reporting arrangements, or the allocation of responsibilities
     with respect thereto, described in this Section 9.21, to be conducted
     differently than as described, the Depositor, the Servicer,

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     and the Trustee will reasonably cooperate to amend the provisions of this
     Section 9.21 in order to comply with such amended reporting requirements
     and such amendment of this Section 9.21. Any such amendment shall be made
     in accordance with Section 11.03 without the consent of the
     Certificateholders, and may result in a change in the reports filed by the
     Trustee on behalf of the Issuing Entity under the Exchange Act.
     Notwithstanding the foregoing, the Depositor, the Servicer and the Trustee
     shall not be obligated to enter into any amendment pursuant to this Section
     9.21 that adversely affects its obligations and immunities under this
     Agreement.

          (xvi) The Depositor, the Servicer and the Trustee agree to use their
     good faith efforts to cooperate in complying with the requirements of this
     Section 9.21.

     Section 9.22. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.

     (a) The Servicer shall cause to be maintained for each Mortgage Loan fire
insurance with extended coverage on the related Mortgaged Property in an amount
which is at least equal to the least of (i) the current principal balance of
such Mortgage Loan, (ii) the amount necessary to fully compensate for any damage
or loss to the improvements that are a part of such property on a replacement
cost basis and (iii) the maximum insurable value of the improvements which are a
part of such Mortgaged Property, in each case in an amount not less than such
amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also cause
to be maintained fire insurance with extended coverage on each REO Property in
an amount which is at least equal to the lesser of (w) the maximum insurable
value of the improvements which are a part of such property and (x) the
outstanding principal balance of the related Mortgage Loan at the time it became
an REO Property, plus accrued interest at the Loan Rate and related Servicing
Advances. The Servicer will comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any such hazard
policies. Any amounts to be collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
subject to the related Mortgage or amounts to be released to the Mortgagor in
accordance with the procedures that the Servicer would follow in servicing loans
held for its own account, subject to the terms and conditions of the related
Mortgage and Mortgage Note) shall be deposited in the Collection Account, within
two Business Days after receipt thereof, subject to withdrawal pursuant to
Section 4.01. Any cost incurred by the Servicer in maintaining any such
insurance shall not, for the purpose of calculating distributions to
Certificateholders, be added to the unpaid principal balance of the related
Mortgage Loan, notwithstanding that the terms of such Mortgage Loan so permit.
It is understood and agreed that no earthquake, windstorm or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal Register by the Federal
Emergency Management Agency as having special flood hazards, the Servicer will
cause to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (y) the unpaid principal
balance of the related Mortgage Loan and (z) the maximum amount of such
insurance available for the related Mortgaged Property under the national flood
insurance program (assuming that the area in which such Mortgaged Property is
located is participating in such program).

     (b) If the Servicer shall obtain and maintain a blanket fire insurance
policy with extended coverage insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of

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this Section 9.22, it being understood and agreed that such policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property or REO Property
a policy complying with the first two sentences of this Section 9.22, and there
shall have been one or more losses which would have been covered by such policy,
deposit to the Distribution Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Servicer agrees to prepare and present, on behalf of itself, the
Trustee and Certificateholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.

                                   ARTICLE X.

                              REMIC ADMINISTRATION

     Section 10.01. REMIC Administration.

     (a) REMIC elections as set forth in the Preliminary Statement shall be made
on Forms 1066 or other appropriate federal tax or information return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. The regular interests and residual interest in each
REMIC shall be as designated in the Preliminary Statement and Section

     (b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of section 860G(a)(9) of the Code. The latest possible
maturity date for purposes of Treasury Regulation 1.860G-1(a)(4) will be the
Latest Possible Maturity Date.

     (c) The Trustee shall represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The Trustee shall pay any and all
tax-related expenses (not including taxes) of each REMIC, including but not
limited to any professional fees or expenses related to audits or any
administrative or judicial proceedings with respect to such REMIC that involve
the Internal Revenue Service or state tax authorities, but only to the extent
that (i) such expenses are ordinary or routine expenses, including expenses of a
routine audit but not expenses of litigation (except as described in (ii)); or
(ii) such expenses or liabilities (including taxes and penalties) are
attributable to the negligence or willful misconduct of the Trustee in
fulfilling its duties hereunder (including its duties as tax return preparer).
The Trustee shall be entitled to reimbursement of expenses to the extent
provided in clause (i) above from the Distribution Account, provided, however,
the Trustee shall not be entitled to reimbursement for expenses incurred in
connection with the preparation of tax returns and other reports as required by
Section 6.19 and this Section.

     (d) The Trustee shall prepare, sign and file all of each REMIC's federal
and appropriate state tax and information returns as such REMIC's direct
representative. The expenses of preparing and filing such returns shall be borne
by the Trustee.

     (e) The Trustee or its designee shall perform on behalf of each REMIC all
reporting and other tax compliance duties that are the responsibility of such
REMIC under the Code, the REMIC Provisions, or other compliance guidance issued
by the Internal Revenue Service or any state or local taxing authority. Among
its other duties, if required by the Code, the REMIC Provisions, or other such
guidance, the Trustee shall provide, upon receipt of additional reasonable
compensation, to the Treasury or other governmental authority such information
as is necessary for the application of any tax relating to the transfer of a
Residual Certificate to any

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disqualified person or organization pursuant to Treasury Regulation
1.860E-2(a)(5) and any person designated in Section 860E(e)(3) of the Code.

     (f) The Trustee and the Holders of Certificates shall take any action or
cause any REMIC to take any action necessary to create or maintain the status of
any REMIC as a REMIC under the REMIC Provisions and shall assist each other as
necessary to create or maintain such status. Neither the Trustee nor the Holder
of any Residual Certificate shall knowingly take any action, cause any REMIC to
take any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could (i)
endanger the status of any REMIC as a REMIC or (ii) result in the imposition of
a tax upon any REMIC (including but not limited to the tax on prohibited
transactions as defined in Code Section 860F(a)(2) and the tax on prohibited
contributions set forth on Section 860G(d) of the Code) (either such event, an
"Adverse REMIC Event") unless the Trustee has received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition of
such a tax. In addition, prior to taking any action with respect to any REMIC or
the assets therein, or causing any REMIC to take any action, which is not
expressly permitted under the terms of this Agreement, any Holder of a Residual
Certificate will consult with the Trustee, in writing, with respect to whether
such action could cause an Adverse REMIC Event to occur with respect to any
REMIC, and no such Person shall take any such action or cause any REMIC to take
any such action as to which the Trustee has advised it in writing that an
Adverse REMIC Event could occur; provided, however, that if no Adverse REMIC
Event would occur but such action could result in the imposition of additional
taxes on the Residual Certificateholders, no such Person shall take any such
action, or cause any REMIC to take any such action without the written consent
of the Residual Certificateholders.

     (g) Each Holder of a Residual Certificate shall pay when due any and all
taxes imposed on the related REMIC by federal or state governmental authorities.
To the extent that such taxes are not paid by a Residual Certificateholder, the
Trustee or the Paying Agent shall pay any remaining REMIC taxes out of current
or future amounts otherwise distributable to the Holder of the Residual
Certificate in any such REMIC or, if no such amounts are available, out of other
amounts held in the Collection Account, and shall reduce amounts otherwise
payable to holders of regular interests in any such REMIC, as the case may be.

     (h) The Trustee shall, for federal income tax purposes, maintain books and
records with respect to each REMIC on a calendar year and on an accrual basis.

     (i) No additional contributions of assets shall be made to any REMIC,
except as expressly provided in this Agreement.

     (j) The Trustee shall not enter into any arrangement by which any REMIC
will receive a fee or other compensation for services.

     (k) Reserved.

     (l) The Class A-R Holder shall act as "tax matters person" with respect to
each REMIC and irrevocably appoints the Trustee to act as its agent in such
roles.

     (m) Neither the Trustee nor the Depositor, as assignees under this
Agreement, shall provide any consent pursuant to this Agreement or knowingly
take any action under this Agreement that would conflict with or violate the
provisions of this Article X.

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     Section 10.02. Prohibited Transactions and Activities.

     Neither the Depositor nor the Trustee shall sell, dispose of, or substitute
for any of the Mortgage Loans, except in a disposition pursuant to (i) the
foreclosure of a Mortgage Loan, (ii) the bankruptcy of the Trust Fund, (iii) the
termination of each REMIC pursuant to Article VII of this Agreement, (iv) a
substitution pursuant to Article II of this Agreement or (v) a repurchase of
Mortgage Loans pursuant to Article II of this Agreement, nor acquire any assets
for any REMIC, nor sell or dispose of any investments in the Distribution
Account for gain, nor accept any contributions to any REMIC after the Closing
Date, unless it has received an Opinion of Counsel (at the expense of the party
causing such sale, disposition, or substitution) that such disposition,
acquisition, substitution, or acceptance will not (a) affect adversely the
status of any such REMIC as a REMIC or of the interests therein other than the
Residual Certificate as the regular interests therein, (b) affect the
distribution of interest or principal on the Certificates, (c) result in the
encumbrance of the assets transferred or assigned to the Trust Fund (except
pursuant to the provisions of this Agreement) or (d) cause any such REMIC to be
subject to any tax including a tax on prohibited transactions or prohibited
contributions pursuant to the REMIC Provisions.

     Section 10.03. Indemnification with Respect to Prohibited Transactions or
Loss of REMIC Status.

     In the event that a REMIC fails to qualify as a REMIC, loses its status as
a REMIC, or incurs federal, state or local taxes as a result of a prohibited
transaction or prohibited contribution under the REMIC Provisions due to the
negligent performance by the Trustee of its duties and obligations set forth
herein, the Trustee shall indemnify the Certificateholders of the related
Residual Certificate against any and all losses, claims, damages, liabilities or
expenses ("Losses") resulting from such negligence; provided, however, that the
Trustee shall not be liable for any such Losses attributable to the action or
inaction of the Depositor or the Holder of the Residual Certificate, nor for any
such Losses resulting from misinformation provided by any of the foregoing
parties on which the Trustee has relied. Notwithstanding the foregoing, however,
in no event shall the Trustee have any liability (1) for any action or omission
that is taken in accordance with and in compliance with the express terms of, or
which is expressly permitted by the terms of, this Agreement or the Mortgage
Loan Sale and Assignment Agreement, (2) for any Losses other than arising out of
malfeasance, willful misconduct or negligent performance by the Trustee with
respect to its duties and obligations set forth herein, and (3) for any special
or consequential damages to Certificateholders of the related Residual
Certificate (in addition to payment of principal and interest on the
Certificates).

     Section 10.04. REO Property.

     (a) Notwithstanding any other provision of this Agreement, the Trustee
shall not, except to the extent provided in this Agreement, knowingly permit any
Servicer to rent, lease, otherwise earn income or take any other action on
behalf of any REMIC with respect to any REO Property which might cause such REO
Property to fail to qualify as "foreclosure property" within the meaning of
section 860G(a)(8) of the Code or result in the receipt by any REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" which is subject to tax
under the REMIC Provisions unless the Servicer has provided to the Trustee an
Opinion of Counsel concluding that, under the REMIC Provisions, such action
would not adversely affect the status of any REMIC as a REMIC and any income
generated for any REMIC by the REO Property would not result in the imposition
of a tax upon such REMIC.

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     (b) The Depositor shall cause the Servicer (to the extent provided in this
Agreement) to make reasonable efforts to sell any REO Property for its fair
market value. In any event, however, the Depositor shall, or shall cause the
Servicer (to the extent provided in this Agreement) to, dispose of any REO
Property within three years of its acquisition by the Trust Fund unless the
Depositor or the Servicer (on behalf of the Trust Fund) has received a grant of
extension from the Internal Revenue Service to the effect that, under the REMIC
Provisions and any relevant proposed legislation and under applicable state law,
the REMIC may hold REO Property for a longer period without adversely affecting
the REMIC status of such REMIC or causing the imposition of a Federal or state
tax upon such REMIC. If such an extension has been received, then the Depositor,
acting on behalf of the Trustee hereunder, shall, or shall cause the Servicer
to, continue to attempt to sell the REO Property for its fair market value for
such period longer than three years as such extension permits (the "Extended
Period"). If such an extension has not been received and the Depositor or the
Servicer, acting on behalf of the Trust Fund hereunder, is unable to sell the
REO Property within 33 months after its acquisition by the Trust Fund or if such
an extension, has been received and the Depositor or the Servicer is unable to
sell the REO Property within the period ending three months before the close of
the Extended Period, the Depositor shall cause the Servicer, before the end of
the three year period or the Extended Period, as applicable, to (i) purchase
such REO Property at a price equal to the REO Property's fair market value or
(ii) auction the REO Property to the highest bidder (which may be the Servicer)
in an auction reasonably designed to produce a fair price prior to the
expiration of the three-year period or the Extended Period, as the case may be.

                                  ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

     Section 11.01. Binding Nature of Agreement; Assignment.

     This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns.

     Section 11.02. Entire Agreement.

     This Agreement contains the entire agreement and understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducements and
conditions, express or implied, oral or written, of any nature whatsoever with
respect to the subject matter hereof. The express terms hereof control and
supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof.

     Section 11.03. Amendment.

     (a) This Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without notice to or the consent of any of the
Holders, (i) to cure any ambiguity or mistake, (ii) to cause the provisions
herein to conform to or be consistent with or in furtherance of the statements
made with respect to the Certificates, the Trust Fund or this Agreement in any
Offering Document, or to correct or supplement any provision herein which may be
inconsistent with any other provisions herein or with the provisions of this
Agreement, (iii) to add any other provisions with respect to matters or
questions arising under this Agreement, (iv) to modify alter, amend, add to or
rescind any of the terms or provisions contained in this Agreement or (v) to
add, delete, or amend any provisions to the extent necessary or desirable to
comply with any

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requirements imposed by the Code and the REMIC Provisions. No such amendment
effected pursuant to the preceding sentence shall, as evidenced by an Opinion of
Counsel, adversely affect the status of any REMIC created pursuant to this
Agreement, nor shall such amendment effected pursuant to clauses (iii) or (iv)
of such sentence adversely affect in any material respect the interests of any
Holder unless such Holder has consented thereto. Prior to entering into any
amendment without the consent of Holders pursuant to this paragraph, the Trustee
shall be provided with an Opinion of Counsel (at the expense of the party
requesting such amendment) to the effect that such amendment is permitted under
this Section. Any such amendment shall be deemed not to adversely affect in any
material respect any Holder, if the Trustee receives written confirmation from
each Rating Agency that such amendment will not cause such Rating Agency to
reduce the then current rating assigned to the Certificates. In addition, this
Agreement may be amended from time to time by the Sponsor, the Depositor, the
Servicer and the Trustee without the consent of any of the Certificateholders to
comply with the provisions of Regulation AB.

     (b) This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee, with the consent of the Holders of not less than
66-2/3% of the Class Principal Amount (or Percentage Interest) of each Class of
Certificates affected thereby for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders; provided, however, that no
such amendment shall be made unless the Trustee receives an Opinion of Counsel,
at the expense of the party requesting the change, that such change will not
adversely affect the status of any REMIC as a REMIC or cause a tax to be imposed
on such REMIC; and provided further, that no such amendment may (i) reduce in
any manner the amount of, or delay the timing of, payments received on Mortgage
Loans which are required to be distributed on any Certificate, without the
consent of the Holder of such Certificate or (ii) reduce the aforesaid
percentages of Class Principal Amount (or Percentage Interest) of Certificates
of each Class, the Holders of which are required to consent to any such
amendment without the consent of the Holders of 100% of the Class Principal
Amount (or Percentage Interest) of each Class of Certificates affected thereby.
For purposes of this paragraph, references to "Holder" or "Holders" shall be
deemed to include, in the case of any Class of Book-Entry Certificates, the
related Certificate Owners.

     (c) Promptly after the execution of any such amendment, the Trustee shall
furnish written notification of the substance of such amendment to each Holder,
the Depositor, the Servicer and the Rating Agencies.

     (d) It shall not be necessary for the consent of Holders under this Section
11.03 to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents and of evidencing the authorization of the execution
thereof by Holders shall be subject to such reasonable regulations as the
Trustee may prescribe.

     (e) Notwithstanding anything to the contrary in this Agreement, the Trustee
shall not consent to any amendment of this Agreement except pursuant to the
standards provided in this Section with respect to amendment of this Agreement.

     (f) Neither the Sponsor nor the Trustee shall consent to the assignment by
the Servicer of the Servicer's rights and obligations under this Agreement
without the prior written consent of the Depositor, which consent shall not be
unreasonably withheld.

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     (g) Notwithstanding anything to the contrary in this Section 11.03, the
Trustee, the Sponsor and the Servicer shall reasonably cooperate with the
Depositor and its counsel to enter into such amendments or modifications to the
Agreement as may be necessary to comply with Regulation AB and any
interpretation thereof by the Commission.

     Section 11.04. Voting Rights.

     Except to the extent that the consent of all affected Certificateholders is
required pursuant to this Agreement, with respect to any provision of this
Agreement requiring the consent of Certificateholders representing specified
percentages of aggregate outstanding Certificate Principal Amount (or Percentage
Interest), Certificates owned by the Depositor, the Trustee, the Servicer or any
Affiliates thereof are not to be counted so long as such Certificates are owned
by the Depositor, the Trustee, the Servicer or any Affiliate thereof.

     Section 11.05. Provision of Information.

     (a) For so long as any of the Certificates of any Series or Class are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, each of the Depositor, the Servicer and the Trustee agree to
cooperate with each other to provide to any Certificateholders and to any
prospective purchaser of Certificates designated by such holder, upon the
request of such holder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act. Any reasonable, out-of-pocket
expenses incurred by the Trustee or the Servicer in providing such information
shall be reimbursed by the Depositor.

     (b) The Trustee shall provide to any person to whom a Prospectus was
delivered, upon the request of such person specifying the document or documents
requested, (i) a copy (excluding exhibits) of any report on Form 8-K or Form
10-K filed with the Commission and (ii) a copy of any other document
incorporated by reference in the Prospectus. Any reasonable out-of-pocket
expenses incurred by the Trustee in providing copies of such documents shall be
reimbursed by the Depositor.

     (c) On each Distribution Date, the Trustee shall deliver or cause to be
delivered by first class mail or make available on its website to the Depositor,
a copy of the report delivered to Certificateholders pursuant to Section 4.02.

     Section 11.06. Governing Law.

     THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO CONFLICT OF
LAWS PRINCIPLES APPLIED IN NEW YORK.

     Section 11.07. Notices.

     All requests, demands, notices, authorizations, directions, consents,
waivers and communications hereunder shall be in writing and shall be deemed to
have been duly given when received by (a) in the case of the Depositor, Merrill
Lynch Mortgage Investors, Inc., 250 Vesey Street, 4 World Financial Center, 10th
Floor, New York, New York, 10080, telecopy number (212) 449-9015, Attention:
Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1, (b) in

                                      100

<PAGE>

the case of the Servicer, PHH Mortgage Corporation, 3000 Leadenhall Road, Mt.
Laurel New Jersey 08054, telecopy number (856) 917-6910, Attention: Robert E.
Groody, Chief Operating Officer, (c) in the case of the Sponsor, Merrill Lynch
Mortgage Lending, Inc., 250 Vesey Street, 4 World Financial Center, New York,
New York, 10080, telecopy number (212) 449-9015, Attention: Merrill Lynch
Mortgage Investors Trust Series MLCC 2006-1, and (d) with respect to the Trustee
or the Certificate Registrar, P.O. Box 98, Columbia, Maryland 21046, Attention:
Client Manager - MLMI Trust Series MLCC 2006-1, with a copy to it at its
respective Corporate Trust Office, or as to each party such other address as may
hereafter be furnished by such party to the other parties in writing. All
demands, notices and communications to a party hereunder shall be in writing and
shall be deemed to have been duly given when delivered to such party at the
relevant address, facsimile number or electronic mail address set forth above or
at such other address, facsimile number or electronic mail address as such party
may designate from time to time by written notice in accordance with this
Section 11.07.

     Section 11.08. Severability of Provisions.

     If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.

     Section 11.09. Indulgences; No Waivers.

     Neither the failure nor any delay on the part of a party to exercise any
right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any other
right, remedy, power or privilege, nor shall any waiver of any right, remedy,
power or privilege with respect to any occurrence be construed as a waiver of
such right, remedy, power or privilege with respect to any other occurrence. No
waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.

     Section 11.10. Headings Not To Affect Interpretation.

     The headings contained in this Agreement are for convenience of reference
only, and they shall not be used in the interpretation hereof.

     Section 11.11. Benefits of Agreement.

     Nothing in this Agreement or in the Certificates, express or implied, shall
give to any Person, other than the parties to this Agreement and their
successors hereunder and the Holders of the Certificates, any benefit or any
legal or equitable right, power, remedy or claim under this Agreement, except to
the extent specified in Section 11.15.

     Section 11.12. Special Notices to the Rating Agencies.

     (a) The Depositor shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has notice:

          (i) any amendment to this Agreement pursuant to Section 11.03;

                                      101

<PAGE>

          (ii) the occurrence of any Event of Default;

          (iii) any notice of termination given to the Servicer pursuant to
     Section 6.14 or any resignation of the Servicer pursuant to this Agreement;

          (iv) the appointment of any successor to the Servicer pursuant to
     Section 6.14; and

          (v) the making of a final payment pursuant to Section 7.02.

     (b) All notices to the Rating Agencies provided for this Section shall be
in writing and sent by first class mail, telecopy or overnight courier, as
follows:

If to Moody's, to:

          Moody's Investors Service, Inc.
          99 Church Street
          New York, New York 10007
          Attention: ABS Monitoring

          If to S&P, to:

          Standard & Poor's Ratings Service,
          a division of The McGraw-Hill Companies, Inc.
          55 Water Street
          New York, New York 10041
          Attention: Residential Mortgages

          If to Fitch Ratings, to:

          Fitch, Inc.
          One State Street Plaza
          30th Floor
          New York, New York 10004
          Attention: Surveillance Group

     (c) The Trustee shall provide or make available to the Rating Agencies
reports prepared pursuant to Section 4.02. In addition, the Trustee shall, at
the expense of the Trust Fund, make available to each Rating Agency such
information as such Rating Agency may reasonably request regarding the
Certificates or the Trust Fund, to the extent that such information is
reasonably available to the Trustee.

     Section 11.13. [RESERVED].

     Section 11.14. Counterparts.

     This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original, and all of which together shall constitute
one and the same instrument.

     Section 11.15. No Petitions.

                                      102

<PAGE>

     The Trustee and the Servicer, by entering into this Agreement, hereby
covenants and agrees that it shall not at any time institute against the
Depositor, or join in any institution against the Depositor of, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to this Agreement or any of the
documents entered into by the Depositor in connection with the transactions
contemplated by this Agreement.

     Section 11.16. Compliance with Regulation AB.

     Each of the parties hereto acknowledges and agrees that the purpose of
Sections 9.11, 9.13 and 9.21 of this Agreement is to facilitate compliance by
the Depositor with the provisions of Regulation AB, as such may be amended or
clarified from time to time. Therefore, each of the parties agrees that (a) the
obligations of the parties hereunder shall be interpreted in such a manner as to
accomplish compliance with Regulation AB, (b) the parties' obligations hereunder
will be supplemented and modified as necessary to be consistent with any such
amendments, interpretive advice or guidance, convention or consensus among
active participants in the asset-backed securities markets, advice of counsel,
or otherwise in respect of the requirements of Regulation AB and (c) the parties
shall comply with reasonable requests made by the Depositor for delivery of that
or different information as the Depositor may determine in good faith is
necessary to comply with the provisions of Regulation AB.

                                      103
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused their names to be signed
hereto by their respective officers hereunto duly authorized as of the day and
year first above written.

                                        MERRILL LYNCH MORTGAGE INVESTORS, INC.,
                                        as Depositor

                                        By:
                                            ------------------------------------
                                        Name: Matthew Whalen
                                        Title: President

                                        PHH MORTGAGE CORPORATION,
                                        as Servicer

                                        By:
                                            ------------------------------------
                                        Name: Richard Bradfield
                                        Title: Senior Vice President

                                        WELLS FARGO BANK, N.A.,
                                        as Trustee

                                        By:
                                            ------------------------------------
                                        Name: Sandra Whalen
                                        Title: Vice President

Solely for purposes of Section 2.04,
accepted and agreed to by:

MERRILL LYNCH MORTGAGE LENDING, INC.

By:
    ------------------------------------
Name:
      ----------------------------------
Title:
       ---------------------------------

                                       104

<PAGE>

                                    EXHIBIT A

                              FORMS OF CERTIFICATES

                             [INTENTIONALLY OMITTED]

                                       A-1

<PAGE>

                                    EXHIBIT B

          FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEREE)

STATE OF  ________________)
                          )   ss.:
COUNTY OF ________________)

     [NAME OF OFFICER], _________________ being first duly sworn, deposes and
     says:

     1.   That he [she] is [title of officer] ________________________ of [name
          of Purchaser] _________________________________________ (the
          "Purchaser"), a _______________________ [description of type of
          entity] duly organized and existing under the laws of the [State of
          __________] [United States], on behalf of which he [she] makes this
          affidavit.

     2.   That the Purchaser's Taxpayer Identification Number is [__________].

     3.   That the Purchaser is not a "disqualified organization" within the
          meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as
          amended (the "Code") and will not be a "disqualified organization" as
          of [date of transfer], and that the Purchaser is not acquiring a
          Residual Certificate (as defined in the Agreement) for the account of,
          or as agent (including a broker, nominee, or other middleman) for, any
          person or entity from which it has not received an affidavit
          substantially in the form of this affidavit. For these purposes, a
          "disqualified organization" means the United States, any state or
          political subdivision thereof, any foreign government, any
          international organization, any agency or instrumentality of any of
          the foregoing (other than an instrumentality if all of its activities
          are subject to tax and a majority of its board of directors is not
          selected by such governmental entity), any cooperative organization
          furnishing electric energy or providing telephone service to persons
          in rural areas as described in Code Section 1381(a)(2)(C), any
          "electing large partnership" within the meaning of Section 775 of the
          Code, or any organization (other than a farmers' cooperative described
          in Code Section 521) that is exempt from federal income tax unless
          such organization is subject to the tax on unrelated business income
          imposed by Code Section 511.

     4.   That the Purchaser is not, and on __________________ [date of
          transfer] will not be, an employee benefit plan subject to Title I of
          the Employee Retirement Income Security Act of 1974, as amended
          ("ERISA"), a plan subject to Section 4975 of the Code, or a plan
          subject to any provisions under any federal, state, local, non-U.S. or
          other laws or regulations that are substantively similar to foregoing
          provisions of ERISA or the Code (collectively, a "Plan"), and is not
          directly or indirectly acquiring a Residual Certificate for, on behalf
          of or with any assets of any such Plan.

                                       B-1

<PAGE>

     5.   That the Purchaser hereby acknowledges that under the terms of the
          Pooling and Servicing Agreement dated as of February 1, 2006 (the
          "Agreement"), among Merrill Lynch Mortgage Investors, Inc., as
          Depositor, PHH Mortgage Corporation, as Servicer and Wells Fargo Bank,
          N.A., as Trustee with respect to Merrill Lynch Mortgage Investors
          Trust Series MLCC 2006-1 Mortgage Pass-Through Certificates, no
          transfer of the Residual Certificates shall be permitted to be made to
          any person unless the Certificate Registrar and Trustee have received
          a certificate from such transferee containing the representations in
          paragraphs 3 and 4 hereof.

     6.   That the Purchaser does not hold REMIC residual securities as nominee
          to facilitate the clearance and settlement of such securities through
          electronic book-entry changes in accounts of participating
          organizations (such entity, a "Book-Entry Nominee").

     7.   That the Purchaser does not have the intention to impede the
          assessment or collection of any federal, state or local taxes legally
          required to be paid with respect to such Residual Certificate.

     8.   That the Purchaser will not transfer a Residual Certificate to any
          person or entity (i) as to which the Purchaser has actual knowledge
          that the requirements set forth in paragraph 3, paragraph 6 or
          paragraph 10 hereof are not satisfied or that the Purchaser has reason
          to believe does not satisfy the requirements set forth in paragraph 7
          hereof, and (ii) without obtaining from the prospective Purchaser an
          affidavit substantially in this form and providing to the Trustee and
          the Certificate Registrar a written statement substantially in the
          form of Exhibit C to the Agreement.

     9.   That the Purchaser understands that, as the holder of a Residual
          Certificate, the Purchaser may incur tax liabilities in excess of any
          cash flows generated by the interest and that it intends to pay taxes
          associated with holding such Residual Certificate as they become due.

     10.  That the Purchaser (i) is not a Non-U.S. Person or (ii) is a Non-U.S.
          Person that holds a Residual Certificate in connection with the
          conduct of a trade or business within the United States and has
          furnished the transferor, the Trustee and the Certificate Registrar
          with an effective Internal Revenue Service Form W-8ECI (Certificate of
          Foreign Person's Claim for Exemption From Withholding on Income
          Effectively Connected With the Conduct of a Trade or Business in the
          United States) or successor form at the time and in the manner
          required by the Code. "Non-U.S. Person" means an individual,
          corporation, partnership or other person other than (i) a citizen or
          resident of the United States; (ii) a corporation, partnership or
          other entity created or organized in or under the laws of the United
          States or any state thereof, including for this purpose, the District
          of Columbia; (iii) an estate that is subject to U.S. federal income
          tax regardless of the source of its income; (iv) a trust if a court
          within the United States is able to exercise primary supervision over
          the administration of the trust and one or more United States trustees
          have authority to control all substantial decisions of the trust; and,
          (v) to the extent provided in Treasury regulations, certain trusts in
          existence on August 20, 1996 that are treated as United States persons
          prior to such date and elect to continue to be treated as United
          States persons.

                                       B-2

<PAGE>

     11.  The Purchaser will not cause income from the Residual Certificate to
          be attributable to a foreign permanent establishment or fixed base
          (within the meaning of an applicable income tax treaty) of the
          Purchaser or another U.S. taxpayer.

     12.  That the Purchaser agrees to such amendments of the Agreement as may
          be required to further effectuate the restrictions on transfer of any
          Residual Certificate to such a "disqualified organization," an agent
          thereof, a Book-Entry Nominee, or a person that does not satisfy the
          requirements of paragraph 7 and paragraph 10 hereof.

     13.  That the Purchaser consents to the designation of the Trustee to act
          as agent for the "tax matters person" of each REMIC created by the
          Trust Fund pursuant to the Agreement.

     14.  That the Purchaser agrees to be bound by Section 3.03(f) of the
          Agreement.

                                       B-3

<PAGE>

     IN WITNESS WHEREOF, the Purchaser has caused this instrument to be executed
on its behalf, pursuant to authority of its Board of Directors, by its [title of
officer] this _____ day of __________, 20__.

                                        ----------------------------------------
                                        [Name of Purchaser]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

     Personally appeared before me the above-named [name of officer]
________________, known or proved to me to be the same person who executed the
foregoing instrument and to be the [title of officer] _________________ of the
Purchaser, and acknowledged to me that he [she] executed the same as his [her]
free act and deed and the free act and deed of the Purchaser.

     Subscribed and sworn before me this _____ day of __________ 20__.

NOTARY PUBLIC

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

COUNTY OF
          ---------------------------
STATE OF
         ----------------------------

My commission expires the _____ day of __________ 20__.

                                       B-4
<PAGE>

                                    EXHIBIT C

              RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)

                                                         _______________________
                                                                   Date

Re:  Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Mortgage
     Pass-Through Certificates

     _______________________ (the "Transferor") has reviewed the attached
affidavit of _____________________________ (the "Transferee"), and has no actual
knowledge that such affidavit is not true and has no reason to believe that the
information contained in paragraph 7 thereof is not true, and has no reason to
believe that the Transferee has the intention to impede the assessment or
collection of any federal, state or local taxes legally required to be paid with
respect to a Residual Certificate. In addition, the Transferor has conducted a
reasonable investigation at the time of the transfer and found that the
Transferee had historically paid its debts as they came due and found no
significant evidence to indicate that the Transferee will not continue to pay
its debts as they become due.

                                        Very truly yours,

                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                      C-1

<PAGE>

                                   EXHIBIT D-1

                  STANDARD LAYOUT FOR MONTHLY REMITTANCE ADVICE

                             [INTENTIONALLY OMITTED]

                                     D-1-1

<PAGE>

                                   EXHIBIT D-2

                STANDARD LAYOUT FOR MONTHLY DEFAULTED LOAN REPORT

                             [INTENTIONALLY OMITTED]

                                     D-2-1

<PAGE>

                                    EXHIBIT E

                    MORTGAGE LOAN SALE AND ASSIGNMENT AGREEMENT

                             [INTENTIONALLY OMITTED]

                                      E-1

<PAGE>

                                    EXHIBIT F

                      LIST OF LIMITED PURPOSE SURETY BONDS

     Ambac Assurance Corporation Surety Bond No. AB0039BE, issued February 26,
1996, for Merrill Lynch Credit Corporation.

                                      F-1

<PAGE>

                                    EXHIBIT G

                     FORM OF RULE 144A TRANSFER CERTIFICATE

Re:  Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Mortgage
     Pass-Through Certificates

     Reference is hereby made to the Pooling and Servicing Agreement, dated as
of February 1, 2006 (the "Agreement"), among Merrill Lynch Mortgage Investors,
Inc., as Depositor, PHH Mortgage Corporation, as Servicer and Wells Fargo Bank,
N.A., as Trustee. Capitalized terms used but not defined herein shall have the
meanings given to them in the Agreement.

     This letter relates to $__________ initial Certificate Balance of Class ___
Certificates which are held in the form of Definitive Certificates registered in
the name of ________ (the "Transferor"). The Transferor has requested a transfer
of such Definitive Certificates for Definitive Certificates of such Class
registered in the name of [insert name of transferee].

     In connection with such request, and in respect of such Certificates, the
Transferor hereby certifies that such Certificates are being transferred in
accordance with (i) the transfer restrictions set forth in the Agreement and the
Certificates and (ii) Rule 144A under the Securities Act to a purchaser that the
Transferor reasonably believes is a "qualified institutional buyer" within the
meaning of Rule 144A purchasing for its own account or for the account of a
"qualified institutional buyer," which purchaser is aware that the sale to it is
being made in reliance upon Rule 144A, in a transaction meeting the requirements
of Rule 144A and in accordance with any applicable securities laws of any state
of the United States or any other applicable jurisdiction.

     This certificate and the statements contained herein are made for your
benefit and the benefit of the Underwriters and the Depositor.

                                        ----------------------------------------
                                        [Name of Transferor]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

Dated:
       ------------------------------

                                       G-1

<PAGE>

                                    EXHIBIT H

                         FORM OF PURCHASER'S LETTER FOR
                        INSTITUTIONAL ACCREDITED INVESTOR

                                 Date _________

Dear Sirs:

     In connection with our proposed purchase of $______________ principal
amount of Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1 Mortgage
Pass-Through Certificates (the "Privately Offered Certificates") of Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), we confirm that:

     (1) We understand that the Privately Offered Certificates have not been,
and will not be, registered under the Securities Act of 1933, as amended (the
"Securities Act"), and may not be sold except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Privately Offered
Certificates within two years of the later of the date of original issuance of
the Privately Offered Certificates or the last day on which such Privately
Offered Certificates are owned by the Depositor or any affiliate of the
Depositor we will do so only (A) to the Depositor, (B) to "qualified
institutional buyers" (within the meaning of Rule 144A under the Securities Act)
in accordance with Rule 144A under the Securities Act ("QIBs"), (C) pursuant to
the exemption from registration provided by Rule 144 under the Securities Act,
or (D) to an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act that is not
a QIB (an "Institutional Accredited Investor") which, prior to such transfer,
delivers to the Certificate Registrar under the Pooling and Servicing Agreement,
dated as of February 1, 2006 (the "Agreement"), among Merrill Lynch Mortgage
Investors, Inc., as Depositor, PHH Mortgage Corporation, as Servicer and Wells
Fargo Bank, N.A., as Trustee, a signed letter in the form of this letter; and we
further agree, in the capacities stated above, to provide to any person
purchasing any of the Privately Offered Certificates from us a notice advising
such purchaser that resales of the Privately Offered Certificates are restricted
as stated herein.

     (2) We understand that, in connection with any proposed resale of any
Privately Offered Certificates to an Institutional Accredited Investor, we will
be required to furnish to the Certificate Registrar a certification from such
transferee in the form hereof to confirm that the proposed sale is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act. We further understand that the
Privately Offered Certificates purchased by us will bear a legend to the
foregoing effect.

     (3) We are acquiring the Privately Offered Certificates for investment
purposes and not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act. We have such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of our investment in the Privately Offered Certificates,

                                       H-1

<PAGE>

and we and any account for which we are acting are each able to bear the
economic risk of such investment.

     (4) We are an Institutional Accredited Investor and we are acquiring the
Privately Offered Certificates purchased by us for our own account or for one or
more accounts (each of which is an Institutional Accredited Investor) as to each
of which we exercise sole investment discretion.

     (5) We have received such information as we deem necessary in order to make
our investment decision.

     (6) If we are acquiring ERISA-Restricted Certificates, we are not a Plan
and we are not acquiring the ERISA-Restricted Certificates for, on behalf of or
with any assets of any such Plan except in accordance with Section 3.03(d) of
the Pooling and Servicing Agreement.

     Terms used in this letter which are not otherwise defined herein have the
respective meanings assigned thereto in the Agreement.

     You are entitled to rely upon this letter and are irrevocably authorized to
produce this letter or a copy hereof to any interested party in any
administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.

                                        Very truly yours,

                                        ----------------------------------------
                                        [Purchaser]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       H-2
<PAGE>

                                    EXHIBIT I

                        FORM OF ERISA TRANSFER AFFIDAVIT

STATE OF NEW YORK  )
                   )   ss.:
COUNTY OF NEW YORK )

     The undersigned, being first duly sworn, deposes and says as follows:

     1. The undersigned is the ______________________ of ______________ (the
"Investor"), a [corporation duly organized] and existing under the laws of
__________, on behalf of which he makes this affidavit.

     2. With respect to the transfer of an ERISA-Restricted Certificate, the
Investor (A) is not an employee benefit plan subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), a plan subject to
Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"), or a
plan or arrangement subject to any provisions under any federal, state, local,
non-U.S. or other laws or regulations that are substantively similar to
foregoing provisions of ERISA or the Code ("Similar Law") (collectively, a
"Plan"), and is not directly or indirectly acquiring the ERISA-Restricted
Certificate for, on behalf of or with any assets of any such Plan, (B) if the
Certificate has been the subject of an ERISA-Qualifying Underwriting, is an
insurance company that is acquiring the ERISA-Restricted Certificate with assets
contained in an "insurance company general account," as defined in Section V(E)
of Prohibited Transaction Class Exemption ("PTCE") 95-60, and the acquisition
and holding of the Certificate are covered and exempt under Sections I and III
of PTCE 95-60, or (C) solely in the case of a Definitive Certificate, shall
deliver herewith an Opinion of Counsel satisfactory to the Trustee and the
Depositor, and upon which the Trustee and the Depositor shall be entitled to
rely, to the effect that the acquisition and holding of such ERISA-Restricted
Certificate will not constitute or result in a nonexempt prohibited transaction
under ERISA or the Code, or a violation of Similar Law, and will not subject the
Trustee, the Certificate Registrar, the Servicer or the Depositor to any
obligation in addition to those expressly undertaken in the Agreement, which
Opinion of Counsel shall not be an expense of the Trustee, the Certificate
Registrar, the Servicer or the Depositor.

     3. The Investor hereby acknowledges that under the terms of the Pooling and
Servicing Agreement dated as of February 1, 2006 (the "Agreement"), among
Merrill Lynch Mortgage Investors, Inc., as Depositor, PHH Mortgage Corporation,
as Servicer and Wells Fargo Bank, N.A., as Trustee, no transfer of the
ERISA-Restricted Certificates shall be permitted to be made to any person unless
the Certificate Registrar has received a certificate from such transferee in the
form hereof.

                                       I-1

<PAGE>

     IN WITNESS WHEREOF, the Investor has caused this instrument to be executed
on its behalf, pursuant to proper authority, by its duly authorized officer,
duly attested, this ____ day of _______________ 20___.

                                        ----------------------------------------
                                        [Investor]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

ATTEST:

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

STATE OF  ________________)
                          )   ss.:
COUNTY OF ________________)

     Personally appeared before me the above-named ________________, known or
proved to me to be the same person who executed the foregoing instrument and to
be the ____________________ of the Investor, and acknowledged that he executed
the same as his free act and deed and the free act and deed of the Investor.

     Subscribed and sworn before me this _____ day of _________ 20___.

                                        ----------------------------------------
                                        NOTARY PUBLIC

                                        My commission expires the
                                        _____ day of __________, 20___.

                                       I-2

<PAGE>

                                    EXHIBIT J

                        FORM OF LETTER OF REPRESENTATIONS
                        WITH THE DEPOSITORY TRUST COMPANY

                             [INTENTIONALLY OMITTED]

                                       J-1

<PAGE>

                                    EXHIBIT K

                          FORM OF INITIAL CERTIFICATION
            MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1

                                ___________, 2006

To:  Merrill Lynch Mortgage Investors, Inc.
     250 Vesey Street
     4 World Financial Center, 10th Floor
     New York, New York 10080

     PHH Mortgage Corporation
     3000 Leadenhall Road
     Mt. Laurel, New Jersey 08054

     Merrill Lynch Mortgage Lending, Inc.
     250 Vesey Street
     4 World Financial Center, 10th Floor
     New York, New York 10080

     Reference is made to the Pooling and Servicing Agreement among Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), PHH Mortgage Corporation (the
"Servicer") and Wells Fargo Bank, N.A., as trustee (the "Trustee"), dated as of
February 1, 2006 (the "Agreement"), pursuant to which the Depositor has
delivered to the Trustee, with respect to each Mortgage Loan set forth on
Schedule A hereto (the "Mortgage Loan Schedule"), the documents set forth in
Section 2.01 of the Agreement.

     With respect to each Mortgage Loan listed on the Mortgage Loan Schedule and
except as otherwise noted on the Schedule of Exceptions set forth on Schedule B
hereto, the Trustee confirms that (1) the Trustee has received all of the
documents required to be delivered to the Trustee pursuant to Section 2.01 of
the Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2.02(a) of the Agreement, and the documents contained in
each Trustee's Mortgage File conform to the requirements set forth in such
Section 2.02(a), and (3) the Trustee has physical possession of the documents in
each Trustee's Mortgage File. The Trustee has not independently verified the
validity, enforceability, sufficiency, recordability, due authorization or
genuineness or any document in any Trustee's Mortgage File or any related
Mortgage Loan, nor the collectibility, insurability, effectiveness or
suitability of any related Mortgage Loan.

     All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.

                                        WELLS FARGO BANK, N.A.,
                                        as Trustee

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       K-1

<PAGE>

                                    EXHIBIT L

                           FORM OF FINAL CERTIFICATION
            MERRILL LYNCH MORTGAGE INVESTORS TRUST SERIES MLCC 2006-1

                               _____________, 2006

To:  Merrill Lynch Mortgage Investors, Inc.
     250 Vesey Street
     4 World Financial Center, 10th Floor
     New York, New York 10080

     PHH Mortgage Corporation
     3000 Leadenhall Road
     Mt. Laurel, New Jersey 08054

     Merrill Lynch Mortgage Lending, Inc.
     250 Vesey Street
     4 World Financial Center, 10th Floor
     New York, New York 10080

     Reference is made to the Pooling and Servicing Agreement among Merrill
Lynch Mortgage Investors, Inc. (the "Depositor"), PHH Mortgage Corporation (the
"Servicer") and Wells Fargo Bank, N.A., as Trustee (the "Trustee"), dated as of
February 1, 2006 (the "Agreement"), pursuant to which the Depositor has
delivered to the Trustee, with respect to each Mortgage Loan set forth on
Schedule A hereto (the "Mortgage Loan Schedule"), the documents set forth in
Section 2.01 of the Agreement.

     With respect to each Mortgage Loan listed on the Mortgage Loan Schedule and
except as otherwise noted on the Schedule of Exceptions set forth on Schedule B
hereto, the Trustee confirms that (1) the Trustee has received all of the
documents required to be delivered to it pursuant to Section 2.01 of the
Agreement, (2) the Trustee has reviewed each Trustee's Mortgage File in
accordance with Section 2.01 of the Agreement, and the documents contained in
each Trustee's Mortgage File conform to the requirements set forth in such
Section 2.01; provided, however, that notwithstanding anything to the contrary
contained herein the Trustee shall not be required to confirm the information
contained in item (viii) of the Mortgage Loan Schedule with respect to any
Mortgage Loan, and (3) the Trustee has physical possession of the documents in
each Trustee's Mortgage File. The Trustee has not independently verified the
validity, enforceability, sufficiency, recordability, due authorization or
genuineness or any document in any Trustee's Mortgage File or any related
Mortgage Loan, nor the collectibility, insurability, effectiveness or
suitability of any related Mortgage Loan.

     All terms used herein and not otherwise defined herein shall have the
respective meaning ascribed to such term in the Agreement.

                                        WELLS FARGO BANK, N.A.,
                                        as Trustee

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       L-1

<PAGE>

                                    EXHIBIT M

                           LIST OF SERVICING OFFICERS

                             [INTENTIONALLY OMITTED]

                                       M-1

<PAGE>

                                    EXHIBIT N

                               REQUEST FOR RELEASE

To:  Wells Fargo Bank, N.A.
     1015 10th Avenue S.E.
     Minneapolis, Minnesota  55414
     (Attention: Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1)

     Re:  Pooling and Servicing Agreement, dated as of February 1, 2006, among
          Merrill Lynch Mortgage Investors, Inc., as Depositor, PHH Mortgage
          Corporation, as Servicer and Wells Fargo Bank, N.A., as Trustee

     In connection with the administration of the pool of Mortgage Loans held by
you as Trustee for the benefit of Certificateholders, we request the release of
the (Trustee's Mortgage File/[specify documents]) for the Mortgage Loan
described below, for the reason indicated.

File/document to be sent to:

          [Company]
          [Address]
          [Attn:]
          [Telephone Number ____]

Mortgagor's Name, Address & Zip Code: __________________________________________

Mortgage Loan Number: __________________

Reason for Requesting Documents (check one)

______ 1.   Mortgage Loan Paid in Full

            ([Sponsor/Depositor] [Servicer], hereby certifies that all amounts
            received in connection therewith have been credited to the Custodial
            Account or the Distribution Account, as applicable.)

______ 2.   Mortgage Loan in Foreclosure

______ 3.   Mortgage Loan Repurchased or Substituted For

            ([Sponsor/Depositor] [Servicer], hereby certifies that any
            applicable repurchase price or substitution shortfall amount has
            been credited to the Custodial Account or the Distribution Account,
            as applicable.)

______ 4.   Mortgage Loan Liquidated

            ([Sponsor/Depositor] [Servicer], hereby certifies that all proceeds
            of foreclosure, insurance or other liquidation have been finally
            received and credited to the Custodial Account or the Distribution
            Account, as applicable.)

______ 5.   Other (explain) ____________________________________________________
            If box 1, 2 or 3 above is checked, and if all or part of the
            Trustee's Mortgage File

                                       N-1

<PAGE>

            was previously released to us, please release to us our previous
            receipt on file with you, as well as any additional documents in
            your possession relating to the above specified Mortgage Loan.

            If box 4 or 5 above is checked, upon our return of all of the above
            documents to you as Trustee, please acknowledge your receipt by
            signing in the space indicated below, and returning this form.

                                        [SPONSOR/DEPOSITOR]

                                        [SERVICER]

                                        By:
                                            ------------------------------------
                                        Date:
                                              ----------------------------------

Documents returned to Trustee:

_____________________________________
as Trustee

By:
    ---------------------------------
Date:
      -------------------------------

                                       N-2

<PAGE>

                                    EXHIBIT O

                                   [RESERVED]

                                       O-1

<PAGE>

                                    EXHIBIT P

                                   [RESERVED]

                                       P-1

<PAGE>

                                    EXHIBIT Q

                      FORM OF TRUSTEE BACK-UP CERTIFICATION

Re:  The [____________] agreement dated as of [___________ l, 200[__] (the
     "Agreement"), among [IDENTIFY PARTIES]

          I, ____________________________, the _______________________ of [NAME
     OF COMPANY] (the "Company"), certify to [the Depositor] and their officers,
     with the knowledge and intent that they will rely upon this certification,
     that:

          I have reviewed the annual compliance statement of the Company
     provided in accordance with Item 1123 of Regulation AB (the "Compliance
     Statement"), the report on assessment of the Company's compliance with the
     servicing criteria set forth in Item 1122(d) of Regulation AB (the
     "Servicing Criteria"), provided in accordance with Rules 13a-18 and 15d-18
     under Securities Exchange Act of 1934, as amended (the "Exchange Act") and
     Item 1122 of Regulation AB (the "Servicing Assessment"), the registered
     public accounting firm's attestation report provided in accordance with
     Rules 13a-18 and 15d-18 under the Exchange Act and Section 1122(b) of
     Regulation AB (the "Attestation Report"), and all servicing reports,
     officer's certificates and other information relating to the servicing of
     the Mortgage Loans by the Company during 200[_], or any portion thereof,
     that were delivered by the Company to the [Depositor] pursuant to the
     Agreement (collectively, the "Company Servicing Information");

          Based on my knowledge, the Company Servicing Information, taken as a
     whole, does not contain any untrue statement of a material fact or omit to
     state a material fact necessary to make the statements made, in the light
     of the circumstances under which such statements were made, not misleading
     with respect to the period of time covered by the Company Servicing
     Information;

          Based on my knowledge, all of the Company Servicing Information
     required to be provided by the Company under the Agreement has been
     provided to the [Depositor];

          I am responsible for reviewing the activities performed by the Company
     as servicer under the Agreement, and based on my knowledge and the
     compliance review conducted in preparing the Compliance Statement and
     except as disclosed in the Compliance Statement, the Servicing Assessment
     or the Attestation Report, the Company has fulfilled its obligations under
     the Agreement in all material respects; and

          The Compliance Statement required to be delivered by the Company
     pursuant to this Agreement, and the Servicing Assessment and Attestation
     Report required to be provided by the Company and by any Subservicer and
     Subcontractor pursuant to the Agreement, have been provided to the
     [Depositor]. Any material instances of noncompliance described in such
     reports have been disclosed to the [Depositor]. Any material instance of
     noncompliance with the Servicing Criteria has been disclosed in such
     reports.

                                        Date:
                                              ----------------------------------

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------

                                       Q-1

<PAGE>

                                        Title:
                                               ---------------------------------

                                       Q-2
<PAGE>

                                    EXHIBIT R

                    FORM OF OFFICER'S CERTIFICATE OF SERVICER

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Re: Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1

     The undersigned, the [____________] of PHH Mortgage Corporation (the
"Servicer") certifies to the Depositor and the Trustee, and their officers,
directors and affiliates, and with the knowledge and intent that they will rely
upon this certification, that:

          (1) I am responsible for reviewing the activities performed by the
Servicer under the Pooling and Servicing Agreement and I have reviewed, or
persons under my supervision have reviewed, the servicer compliance statement of
the Servicer and the compliance statements of each Sub-Servicer, if any, engaged
by the Servicer provided to the Depositor and the Trustee for the Trust's fiscal
year [___] in accordance with Item 1123 of Regulation AB (each a "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria") and reports on assessment of compliance with servicing criteria for
asset-backed securities of the Servicer and of each Sub-Servicer [or
Subcontractor], if any, engaged or utilized by the Servicer provided to the
Depositor and the Trustee for the Trust's fiscal year [___] in accordance with
Rules 13a-18 and 15d-18 under Securities Exchange Act of 1934, as amended (the
"Exchange Act") and Item 1122 of Regulation AB (each a "Servicing Assessment"),
the registered public accounting firm's attestation report provided in
accordance with Rules 13a-18 and 15d-18 under the Exchange Act and Section
1122(b) of Regulation AB related to each Servicing Assessment (each a
"Attestation Report"), and all servicing reports, officer's certificates and
other information relating to the servicing of the Mortgage Loans by the
Servicer during 200[_] that were delivered or caused to be delivered by the
Servicer pursuant to the Agreement (collectively, the "Servicing Information");

          (2) Based on my knowledge, the Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Servicing Information;

          (3) Based on my knowledge, the Servicing Information required to be
provided to the Trustee by the Servicer pursuant to the Pooling and Servicing
Agreement has been provided to the Trustee;

          (4) I am responsible for reviewing the activities performed by the
Servicer under the Agreement and based on my knowledge and the compliance review
conducted in preparing each Compliance Statement of the Servicer and, if
applicable, reviewing each Compliance Statement of each Sub-Servicer, if any,
engaged by the Servicer, and except as disclosed in such Compliance
Statement[(s)], the Servicer [(directly and through its Sub-

                                       R-1

<PAGE>

Servicers, if any)] has fulfilled its obligations under the Pooling and
Servicing Agreement in all material respects.

          (5) Each Servicing Assessment of the Servicer and of each Sub-Servicer
[or Subcontractor], if any, engaged or utilized by the Servicer and its related
Attestation Report required to be included in the Annual Report in accordance
with Item 1122 of Regulation AB and Exchange Act Rules 13a-18 and 15d-18 has
been provided to the Depositor and the Trustee. Any material instances of
non-compliance are described in any such Servicing Assessment or Attestation
Report.

Date:                                   PHH Mortgage Corporation, as Servicer
      -------------------------------

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       R-2

<PAGE>

                                   EXHIBIT S-1

                        FORM OF ASSESSMENT OF COMPLIANCE

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust
Series MLCC 2006-1

     Re:  Pooling and Servicing Agreement (the "Agreement"), dated as of
          February 1, 2006, among Merrill Lynch Mortgage Investors, Inc., as
          depositor, PHH Mortgage Corporation, as servicer, and Wells Fargo
          Bank, N.A., as trustee, relating to Merrill Lynch Mortgage Investors
          Trust, Series MLCC 2006-1 (the "Issuing Entity")

     For the calendar year ending December 31, [2006] or portion thereof, [PHH
Mortgage Corporation, as Servicer] [Wells Fargo Bank, N.A., as Trustee] for the
Issuing Entity has complied in all material respects with the Relevant Servicing
Criteria in Exhibit S-2 of the Agreement.

     All capitalized terms used herein but not defined herein shall have the
meanings assigned to them in the Agreement.

Date:
      -------------------------------

                                        [PHH MORTGAGE CORPORATION][WELLS FARGO
                                        BANK NATIONAL ASSOCIATION]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

          ACKNOWLEDGED AND AGREED:

[WELLS FARGO BANK NATIONAL ASSOCIATION][PHH MORTGAGE CORPORATION]

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

                                      S-1-1

<PAGE>

                     MERRILL LYNCH MORTGAGE INVESTORS, INC.

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

                                      S-1-2
<PAGE>

                                   EXHIBIT S-2

                       SERVICING CRITERIA TO BE ADDRESSED
                           IN ASSESSMENT OF COMPLIANCE
                          (RMBS UNLESS OTHERWISE NOTED)

DEFINITIONS

PRIMARY SERVICER - transaction party having borrower contact
TRUSTEE - fiduciary of the transaction

WHERE THERE ARE MULTIPLE CHECKS FOR CRITERIA THE ATTESTING PARTY WILL IDENTIFY
IN ITS MANAGEMENT ASSERTION THAT SUCH PARTY IS ATTESTING ONLY TO THE PORTION OF
THE DISTRIBUTION CHAIN IT IS RESPONSIBLE FOR IN THE RELATED TRANSACTION
AGREEMENTS.

<TABLE>
<CAPTION>
                                                        PHH MORTGAGE
                                                         CORPORATION   WELLS FARGO
REG AB REFERENCE           SERVICING CRITERIA            (SERVICER)     (TRUSTEE)           ADDITIONAL INFORMATION
----------------   ----------------------------------   ------------   -----------   ------------------------------------
<S>                <C>                                  <C>            <C>           <C>
                   GENERAL SERVICING CONSIDERATIONS

1122(d)(1)(i)      Policies and procedures are                X             X
                   instituted to monitor any
                   performance or other triggers and
                   events of default in accordance
                   with the transaction agreements.

1122(d)(1)(ii)     If any material servicing                  X             X
                   activities are outsourced to third
                   parties, policies and procedures
                   are instituted to monitor the
                   third party's performance and
                   compliance with such servicing
                   activities.

1122(d)(1)(iii)    Any requirements in the                   N/A           N/A
                   transaction agreements to maintain
                   a back-up servicer for the Pool
                   Assets are maintained.

1122(d)(1)(iv)     A fidelity bond and errors and             X
                   omissions policy is in effect on
                   the party participating in the
                   servicing function throughout the
                   reporting period in the amount of
                   coverage required by and otherwise
                   in accordance with the terms of
                   the transaction agreements.

                   CASH COLLECTION AND ADMINISTRATION

1122(d)(2)(i)      Payments on pool assets are                X             X
                   deposited into the appropriate
                   custodial bank accounts and
                   related bank clearing accounts no
                   more than two business days
                   following receipt, or such other
                   number of days specified in the
                   transaction agreements.

1122(d)(2)(ii)     Disbursements made via wire                X             X        Servicer disburses funds to
                   transfer on behalf of an obligor                                  trustee. Trustee disburses funds to
                   or to an investor are made only by                                certificateholders.
                   authorized personnel.

1122(d)(2)(iii)    Advances of funds or guarantees            X
                   regarding collections, cash flows
                   or distributions, and any interest
                   or other fees charged for such
                   advances, are made, reviewed and
                   approved as specified in the
                   transaction agreements.
</TABLE>

                                      S-2-1

<PAGE>

<TABLE>
<CAPTION>
                                                        PHH MORTGAGE
                                                         CORPORATION   WELLS FARGO
REG AB REFERENCE           SERVICING CRITERIA            (SERVICER)     (TRUSTEE)           ADDITIONAL INFORMATION
----------------   ----------------------------------   ------------   -----------   ------------------------------------
<S>                <C>                                  <C>            <C>           <C>
1122(d)(2)(iv)     The related accounts for the               X             X
                   transaction, such as cash reserve
                   accounts or accounts established
                   as a form of over
                   collateralization, are separately
                   maintained (e.g., with respect to
                   commingling of cash) as set forth
                   in the transaction agreements.

1122(d)(2)(v)      Each custodial account is                  X             X
                   maintained at a federally insured
                   depository institution as set
                   forth in the transaction
                   agreements. For purposes of this
                   criterion, "federally insured
                   depository institution" with
                   respect to a foreign financial
                   institution means a foreign
                   financial institution that meets
                   the requirements of Rule
                   13k-1(b)(1) of the Securities
                   Exchange Act.

1122(d)(2)(vi)     Unissued checks are safeguarded so         X             X
                   as to prevent unauthorized access.

1122(d)(2)(vii)    Reconciliations are prepared on a          X             X
                   monthly basis for all asset-backed
                   securities related bank accounts,
                   including custodial accounts and
                   related bank clearing accounts.
                   These reconciliations are (A)
                   mathematically accurate; (B)
                   prepared within 30 calendar days
                   after the bank statement cutoff
                   date, or such other number of days
                   specified in the transaction
                   agreements; (C) reviewed and
                   approved by someone other than the
                   person who prepared the
                   reconciliation; and (D) contain
                   explanations for reconciling
                   items.  These reconciling items
                   are resolved within 90 calendar
                   days of their original
                   identification, or such other
                   number of days specified in the
                   transaction agreements.

                   INVESTOR REMITTANCES AND REPORTING

1122(d)(3)(i)      Reports to investors, including            X             X
                   those to be filed with the
                   Commission, are maintained in
                   accordance with the transaction
                   agreements and applicable
                   Commission requirements.
                   Specifically, such reports (A) are
                   prepared in accordance with
                   timeframes and other terms set
                   forth in the transaction
                   agreements; (B) provide
                   information calculated in
                   accordance with the terms
                   specified in the transaction
                   agreements; (C) are filed with the
                   Commission as required by its
                   rules and regulations; and (D)
                   agree with investors' or the
                   trustee's records as to the total
                   unpaid principal balance and
                   number of Pool Assets serviced by
                   the Servicer.

1122(d)(3)(ii)     Amounts due to investors are               X             X        Servicer remits cash and loan level
                   allocated and remitted in                                         data to trustees based on timelines
                   accordance with timeframes,                                       established in the PSA. The trustee
                   distribution priority and other                                   is responsible for the allocation of
                   terms set forth in the transaction                                funds to certificateholders using
                   agreements.                                                       the appropriate distribution
                                                                                     priority as established by the PSA.
</TABLE>

                                      S-2-2

<PAGE>

<TABLE>
<CAPTION>
                                                        PHH MORTGAGE
                                                         CORPORATION   WELLS FARGO
REG AB REFERENCE           SERVICING CRITERIA            (SERVICER)     (TRUSTEE)           ADDITIONAL INFORMATION
----------------   ----------------------------------   ------------   -----------   ------------------------------------
<S>                <C>                                  <C>            <C>           <C>
1122(d)(3)(iii)    Disbursements made to an investor          X             X        Trustee disburses funds to
                   are posted within two business                                    certificateholders.
                   days to the Servicer's investor
                   records, or such other number of
                   days specified in the transaction
                   agreements.

1122(d)(3)(iv)     Amounts remitted to investors per          X             X        Servicer remits funds and provides
                   the investor reports agree with                                   certain investor reports to trustees
                   cancelled checks, or other form of                                within guidelines and timeframes
                   payment, or custodial bank                                        established in PSA. Trustee
                   statements.                                                       disburses funds to
                                                                                     certificateholders.

                   POOL ASSET ADMINISTRATION

1122(d)(4)(i)      Collateral or security on pool             X             X
                   assets is maintained as required
                   by the transaction agreements or
                   related pool asset documents.

1122(d)(4)(ii)     Pool assets and related documents          X             X
                   are safeguarded as required by the
                   transaction agreements

1122(d)(4)(iii)    Any additions, removals or                 X             X
                   substitutions to the asset pool
                   are made, reviewed and approved in
                   accordance with any conditions or
                   requirements in the transaction
                   agreements.

1122(d)(4)(iv)     Payments on pool assets, including         X
                   any payoffs, made in accordance
                   with the related pool asset
                   documents are posted to the
                   Servicer's obligor records
                   maintained no more than two
                   business days after receipt, or
                   such other number of days
                   specified in the transaction
                   agreements, and allocated to
                   principal, interest or other items
                   (e.g., escrow) in accordance with
                   the related pool asset documents.

1122(d)(4)(v)      The Servicer's records regarding           X
                   the pool assets agree with the
                   Servicer's records with respect to
                   an obligor's unpaid principal
                   balance.

1122(d)(4)(vi)     Changes with respect to the terms          X
                   or status of an obligor's pool
                   assets (e.g., loan modifications
                   or re-agings) are made, reviewed
                   and approved by authorized
                   personnel in accordance with the
                   transaction agreements and related
                   pool asset documents.

1122(d)(4)(vii)    Loss mitigation or recovery                X
                   actions (e.g., forbearance plans,
                   modifications and deeds in lieu of
                   foreclosure, foreclosures and
                   repossessions, as applicable) are
                   initiated, conducted and concluded
                   in accordance with the timeframes
                   or other requirements established
                   by the transaction agreements.
</TABLE>

                                      S-2-3

<PAGE>

<TABLE>
<CAPTION>
                                                        PHH MORTGAGE
                                                         CORPORATION   WELLS FARGO
REG AB REFERENCE           SERVICING CRITERIA            (SERVICER)     (TRUSTEE)           ADDITIONAL INFORMATION
----------------   ----------------------------------   ------------   -----------   ------------------------------------
<S>                <C>                                  <C>            <C>           <C>
1122(d)(4)(viii)   Records documenting collection             X
                   efforts are maintained during the
                   period a pool asset is delinquent
                   in accordance with the transaction
                   agreements. Such records are
                   maintained on at least a monthly
                   basis, or such other period
                   specified in the transaction
                   agreements, and describe the
                   entity's activities in monitoring
                   delinquent pool assets including,
                   for example, phone calls, letters
                   and payment rescheduling plans in
                   cases where delinquency is deemed
                   temporary (e.g., illness or
                   unemployment).

1122(d)(4)(ix)     Adjustments to interest rates or           X
                   rates of return for pool assets
                   with variable rates are computed
                   based on the related pool asset
                   documents.

1122(d)(4)(x)      Regarding any funds held in trust          X
                   for an obligor (such as escrow
                   accounts): (A) such funds are
                   analyzed, in accordance with the
                   obligor's pool asset documents, on
                   at least an annual basis, or such
                   other period specified in the
                   transaction agreements; (B)
                   interest on such funds is paid, or
                   credited, to obligors in
                   accordance with applicable pool
                   asset documents and state laws;
                   and (C) such funds are returned to
                   the obligor within 30 calendar
                   days of full repayment of the
                   related pool assets, or such other
                   number of days specified in the
                   transaction agreements.

1122(d)(4)(xi)     Payments made on behalf of an              X
                   obligor (such as tax or insurance
                   payments) are made on or before
                   the related penalty or expiration
                   dates, as indicated on the
                   appropriate bills or notices for
                   such payments, provided that such
                   support has been received by the
                   servicer at least 30 calendar days
                   prior to these dates, or such
                   other number of days specified in
                   the transaction agreements.

1122(d)(4)(xii)    Any late payment penalties in              X
                   connection with any payment to be
                   made on behalf of an obligor are
                   paid from the Servicer's funds and
                   not charged to the obligor, unless
                   the late payment was due to the
                   obligor's error or omission.

1122(d)(4)(xiii)   Disbursements made on behalf of an         X
                   obligor are posted within two
                   business days to the obligor's
                   records maintained by the
                   servicer, or such other number of
                   days specified in the transaction
                   agreements.

1122(d)(4)(xiv)    Delinquencies, charge-offs and             X             X
                   uncollectible accounts are
                   recognized and recorded in
                   accordance with the transaction
                   agreements.
</TABLE>

                                      S-2-4

<PAGE>

<TABLE>
<CAPTION>
                                                        PHH MORTGAGE
                                                         CORPORATION   WELLS FARGO
REG AB REFERENCE           SERVICING CRITERIA            (SERVICER)     (TRUSTEE)           ADDITIONAL INFORMATION
----------------   ----------------------------------   ------------   -----------   ------------------------------------
<S>                <C>                                  <C>            <C>           <C>
1122(d)(4)(xv)     Any external enhancement or other
                   support, identified in Item
                   1114(a)(1) through (3) or Item
                   1115 of Regulation AB, is
                   maintained as set forth in the
                   transaction agreements.
</TABLE>

                                      S-2-5
<PAGE>

                                    EXHIBIT T

                      FORM OF SARBANES-OXLEY CERTIFICATION

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

PHH Mortgage Corporation

[__________________]
[__________________]

Re: Merrill Lynch Mortgage Investors Trust Series MLCC 2006-1

     I, [identify the certifying individual], certify that:

          1. I have reviewed the report on Form 10-K and all reports on Form
10-D required to be filed in respect of the period covered by this report on
Form 10-K of [identify the issuing entity] (the "Exchange Act periodic
reports");

          2. Based on my knowledge, the Exchange Act periodic reports, taken as
a whole, do not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect
to the period covered by this report;

          3. Based on my knowledge, all of the distribution, servicing and other
information required to be provided under Form 10-D for the period covered by
this report is included in the Exchange Act periodic reports;

          4. [I am responsible for reviewing the activities performed by the
servicer(s) and based on my knowledge and the compliance review(s) conducted in
preparing the servicer compliance statement(s) required in this report under
Item 1123 of Regulation AB, and except as disclosed in the Exchange Act periodic
reports, the servicer(s) [has/have] fulfilled [its/their] obligations under the
servicing agreement(s); and]

          5. All of the reports on assessment of compliance with servicing
criteria for ABS and their related attestation reports on assessment of
compliance with servicing criteria for asset-backed securities required to be
included in this report in accordance with Item 1122 of Regulation AB and
Exchange Act Rules 13a-18 and 15d-18 have been included as an exhibit to this
report, except as otherwise disclosed in this report. Any material instances of
noncompliance described in such reports have been disclosed in this report on
Form 10-K.

     [In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated parties [name of
servicer, sub-servicer, co-servicer, depositor or trustee].]

                                       T-1

<PAGE>

Date:
      ------------------------

                                        ----------------------------------------
                                        [Signature]
                                        [Title]
                                                --------------------------------

                                       T-2

<PAGE>

                                    EXHIBIT U

                       ADDITIONAL DISCLOSURE NOTIFICATION

**SEND VIA FAX TO 410-715-2380 AND VIA EMAIL TO
CTS.SEC.NOTIFICATIONS@WELLSFARGO.COM AND VIA OVERNIGHT MAIL TO THE ADDRESS
IMMEDIATELY BELOW**

Wells Fargo Bank, N.A., as Trustee
Old Annapolis Road
Columbia, Maryland 21045

Attn: Corporate Trust Services- [DEAL NAME]--SEC REPORT PROCESSING

RE: **Additional Form [10-D][10-K][8-K] Disclosure** Required

Ladies and Gentlemen:

     In accordance with Section [_____] of the Pooling and Servicing Agreement,
dated as of February 1, 2006, among Merrill Lynch Mortgage Investors, Inc., as
Depositor, PHH Mortgage Corporation, as Servicer, and Wells Fargo Bank, National
Association, as Trustee, the undersigned, as [_______], hereby notifies you that
certain events have come to our attention that [will] [may] need to be disclosed
on Form [10-D][10-K][8-K].

     Description of Additional Form [10-D][10-K][8-K] Disclosure:

     List of any Attachments hereto to be included in the Additional Form
[10-D][10-K][8-K] Disclosure:

     Any inquiries related to this notification should be directed to
[_________], phone number: [_________]; email address: [__________________].

                                        [NAME OF PARTY],
                                        as [role]

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

                                       U-1

<PAGE>

                                    EXHIBIT V

              FORM OF OFFICER'S CERTIFICATE OF [SERVICER] [TRUSTEE]

                                     [DATE]

Merrill Lynch Mortgage Investors, Inc.
250 Vesey Street
4 World Financial Center, 10th Floor
New York, New York 10080

Wells Fargo Bank, N.A.
9062 Old Annapolis Road
Columbia, Maryland 21045

Attention: Corporate Trust Services - Merrill Lynch Mortgage Investors Trust
Series MLCC 2006-1

Re:  Pooling and Servicing Agreement (the "Agreement"), dated as of February 1,
     2006, among Merrill Lynch Mortgage Investors, Inc., as depositor, PHH
     Mortgage Corporation, as servicer, and Wells Fargo Bank, National
     Association, as trustee, relating to Merrill Lynch Mortgage Investors Trust
     Series MLCC 2006-1

I, [identify name of certifying individual], [title of certifying individual] of
[PHH Mortgage Corporation (the "Servicer")] [Wells Fargo Bank, N.A. (the
"Trustee")], hereby certify that:

          (1) A review of the activities of the [Servicer] [Trustee] during the
preceding calendar year, or portion thereof, and of the performance of the
[Servicer] [Trustee] under the Agreement has been made under my supervision; and

          (2) To the best of my knowledge, based on such review, the [Servicer]
[Trustee] has fulfilled all its obligations under the Agreement in all material
respects throughout such year or a portion thereof [, or, if there has been a
failure to fulfill any such obligation in any material respect, I have specified
below each such failure known to me and the nature and status thereof].

Date:
      ------------------

                                        [PHH Mortgage Corporation,
                                        as Servicer

                                        By:
                                            -----------------------------------
                                        Name:
                                              ---------------------------------
                                        Title:                                 ]
                                               --------------------------------

                                        [Wells Fargo Bank, N.A.,
                                        as Trustee

                                        By:
                                            -----------------------------------
                                        Name:
                                              ---------------------------------
                                        Title:                                 ]
                                               --------------------------------

                                       V-1
<PAGE>

                                    EXHIBIT W

<TABLE>
<CAPTION>
                      ITEM ON FORM 8-K                               PARTY RESPONSIBLE
                      ----------------                               -----------------
<S>                                                            <C>
Item 1.01 - Entry into a Material Definitive Agreement         All parties

Item 1.02 - Termination of a Material Definitive Agreement     All parties

Item 1.03 - Bankruptcy or Receivership                         Depositor

Item 2.04 - Triggering Events that Accelerate or Increase a    Depositor, Trustee, Servicer
Direct Financial Obligation or an Obligation under an Off-
Balance Sheet Arrangement

Item 3.03 - Material Modification to Rights of Security        Trustee
Holders

Item 5.03 - Amendments of Articles of Incorporation or         Depositor
Bylaws; Change of Fiscal Year

Item 6.01 - ABS Informational and Computational Material       Depositor

Item 6.02 - Change of Servicer or Trustee                      Servicer, Trustee

Item 6.03 - Change in Credit Enhancement or External Support   Depositor/Trustee

Item 6.04 - Failure to Make a Required Distribution            Trustee

Item 6.05 - Securities Act Updating Disclosure                 Depositor

Item 7.01 - Reg FD Disclosure                                  Depositor

Item 8.01                                                      Depositor

Item 9.01                                                      Depositor
</TABLE>

                                      W-1

<PAGE>

                                    EXHIBIT X

<TABLE>
<CAPTION>
                      ITEM ON FORM 10-D                                           PARTY RESPONSIBLE
                      -----------------                                           -----------------
<S>                                                            <C>
Item 1: Distribution and Pool Performance Information          Trustee, Depositor

Plus any information required by 1121 which is NOT             Servicer and Trustee (to the extent required by
included on the monthly statement to Certificateholders        Regulation AB)

Item 2: Legal Proceedings per Item 1117 of Reg AB              All parties to the PSA (as to themselves), the
                                                               depositor/trustee/servicer (to the extent known) as to
                                                               the issuing entity, the depositor as to the sponsor,
                                                               any 1110(b) originator, any 1100(d)(1) party

Item 3:  Sale of Securities and Use of Proceeds                Depositor

Item 4:  Defaults Upon Senior Securities                       Trustee

Item 5:  Submission of Matters to a Vote of Security Holders   Trustee

Item 6:  Significant Obligors of Pool Assets                   Depositor/Sponsor/ Servicer

Item 7:  Significant Enhancement Provider Information          Depositor/Sponsor

Item 8:  Other Information                                     Trustee and any other party responsible for disclosure
                                                               items on Form 8-K

Item 9:  Exhibits                                              Trustee/Depositor
</TABLE>

                                      X-1

<PAGE>

                                    EXHIBIT Y

<TABLE>
<CAPTION>
                 ITEM ON FORM 10-K                                     PARTY RESPONSIBLE
                 -----------------                                     -----------------
<S>                                                  <C>
Item 1B: Unresolved Staff Comments                   Depositor

Item 9B:  Other Information                          Trustee and any other party responsible for
                                                     disclosure items on Form 8-K

Item 15:  Exhibits, Financial Statement Schedules    Trustee/Sub-Servicers. Depositor

Additional Item:                                     All parties to the PSA (as to themselves), the
                                                     depositor/trustee/servicer (to the extent known) as
Disclosure per Item 1117 of Reg AB                   to the issuing entity, the depositor as to the
                                                     sponsor, any 1110(b) originator, any 1100(d)(1) party

Additional Item:                                     All parties to the PSA as to themselves, the
                                                     depositor as to the sponsor, originator, significant
Disclosure per Item 1119 of Reg AB                   obligor, enhancement or support provider

Additional Item:                                     Depositor/Sponsor/Mortgage Loan Sponsor/Servicer

Disclosure per Item 1112(b) of Reg AB

Additional Item:                                     Depositor/Sponsor

Disclosure per Items 1114(b) and 1115(b) of Reg AB
</TABLE>

                                       Y-1

<PAGE>

                                   SCHEDULE A

                             MORTGAGE LOAN SCHEDULE

                      On file at the offices of Dechert LLP
                                   Cira Centre
                                2929 Arch Street
                             Philadelphia, PA 19104
                                 (215) 994-4000
                          Attention: Steven J. Molitor

                                  Schedule A-1<PAGE>

                                                                   EXHIBIT 10.20

================================================================================

              ARBOR REALTY MORTGAGE SECURITIES SERIES 2005-1, LTD.,
                                   as Issuer,

               ARBOR REALTY MORTGAGE SECURITIES SERIES 2005-1 LLC,
                                  as Co-Issuer,

                             ARBOR REALTY SR, INC.,
                               as Advancing Agent

                                       AND

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

                                    INDENTURE

                          Dated as of January 11, 2006

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
                                    ARTICLE 1

                                   DEFINITIONS

Section 1.1     Definitions..............................................................      2
Section 1.2     Assumptions as to Pledged Obligations....................................     80
Section 1.3     Interest Calculation Convention..........................................     81
Section 1.4     Rounding Convention......................................................     81

                                    ARTICLE 2

                                    THE NOTES

Section 2.1     Forms Generally..........................................................     82
Section 2.2     Forms of Notes and Certificate of Authentication.........................     82
Section 2.3     Authorized Amount; Stated Maturity; and Denominations....................     83
Section 2.4     Execution, Authentication, Delivery and Dating...........................     84
Section 2.5     Registration, Registration of Transfer and Exchange......................     85
Section 2.6     Mutilated, Defaced, Destroyed, Lost or Stolen Note.......................     92
Section 2.7     Payment of Principal and Interest and Other Amounts; Principal and
                   Interest Rights Preserved.............................................     93
Section 2.8     Persons Deemed Owners....................................................    102
Section 2.9     Cancellation.............................................................    103
Section 2.10    Global Securities; Temporary Notes.......................................    103
Section 2.11    U.S. Tax Treatment of Notes and the Issuer...............................    104
Section 2.12    Authenticating Agents....................................................    105
Section 2.13    Forced Sale on Failure to Comply with Restrictions.......................    105

                                    ARTICLE 3

                    CONDITIONS PRECEDENT; PLEDGED OBLIGATIONS

Section 3.1     General Provisions.......................................................    106
Section 3.2     Security for Notes.......................................................    109
Section 3.3     Transfer of Pledged Obligations..........................................    111

                                    ARTICLE 4

                           SATISFACTION AND DISCHARGE

Section 4.1     Satisfaction and Discharge of Indenture..................................    117
</TABLE>

                                       -i-

<PAGE>

<TABLE>
<S>                                                                                         <C>
Section 4.2     Application of Trust Money...............................................    118
Section 4.3     Repayment of Monies Held by Paying Agent.................................    118

                                    ARTICLE 5

                                    REMEDIES

Section 5.1     Events of Default........................................................    119
Section 5.2     Acceleration of Maturity; Rescission and Annulment.......................    121
Section 5.3     Collection of Indebtedness and Suits for Enforcement by Trustee..........    124
Section 5.4     Remedies.................................................................    127
Section 5.5     Preservation of Assets...................................................    129
Section 5.6     Trustee May Enforce Claims Without Possession of Notes...................    130
Section 5.7     Application of Money Collected...........................................    130
Section 5.8     Limitation on Suits......................................................    130
Section 5.9     Unconditional Rights of Noteholders to Receive Principal and Interest....    131
Section 5.10    Restoration of Rights and Remedies.......................................    131
Section 5.11    Rights and Remedies Cumulative...........................................    132
Section 5.12    Delay or Omission Not Waiver.............................................    132
Section 5.13    Control by the Controlling Class.........................................    132
Section 5.14    Waiver of Past Defaults..................................................    132
Section 5.15    Undertaking for Costs....................................................    133
Section 5.16    Waiver of Stay or Extension Laws.........................................    133
Section 5.17    Sale of Assets...........................................................    134
Section 5.18    Action on the Notes......................................................    135

                                    ARTICLE 6

                                   THE TRUSTEE

Section 6.1     Certain Duties and Responsibilities......................................    135
Section 6.2     Notice of Default........................................................    137
Section 6.3     Certain Rights of Trustee................................................    137
Section 6.4     Not Responsible for Recitals or Issuance of Notes........................    139
Section 6.5     May Hold Notes...........................................................    139
Section 6.6     Money Held in Trust......................................................    139
Section 6.7     Compensation and Reimbursement...........................................    139
Section 6.8     Corporate Trustee Required; Eligibility..................................    141
Section 6.9     Resignation and Removal; Appointment of Successor........................    141
Section 6.10    Acceptance of Appointment by Successor...................................    143
Section 6.11    Merger, Conversion, Consolidation or Succession to Business of Trustee...    143
Section 6.12    Co-Trustees and Separate Trustee.........................................    144
Section 6.13    Certain Duties of Trustee Related to Delayed Payment of Proceeds.........    145
Section 6.14    Representations and Warranties of the Trustee............................    145
Section 6.15    Requests for Consents....................................................    146
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                                                                                         <C>
                                    ARTICLE 7

                                    COVENANTS

Section 7.1     Payment of Principal and Interest........................................    147
Section 7.2     Maintenance of Office or Agency..........................................    147
Section 7.3     Money for Note Payments to be Held in Trust..............................    148
Section 7.4     Existence of the Issuer and Co-Issuer....................................    150
Section 7.5     Protection of Assets.....................................................    151
Section 7.6     Notice of Any Amendments.................................................    153
Section 7.7     Performance of Obligations...............................................    153
Section 7.8     Negative Covenants.......................................................    153
Section 7.9     Statement as to Compliance...............................................    155
Section 7.10    Issuer and Co-Issuer May Consolidate or Merge Only on Certain Terms......    156
Section 7.11    Successor Substituted....................................................    159
Section 7.12    No Other Business........................................................    159
Section 7.13    Reporting................................................................    159
Section 7.14    Calculation Agent........................................................    160
Section 7.15    Certain Tax Forms and Treatment..........................................    161
Section 7.16    Maintenance of Listing...................................................    161
Section 7.17    Purchase of Assets.......................................................    162
Section 7.18    Effective Date Actions...................................................    162

                                    ARTICLE 8

                             SUPPLEMENTAL INDENTURES

Section 8.1     Supplemental Indentures Without Consent of Securityholders...............    163
Section 8.2     Supplemental Indentures with Consent of Securityholders..................    165
Section 8.3     Execution of Supplemental Indentures.....................................    168
Section 8.4     Effect of Supplemental Indentures........................................    168
Section 8.5     Reference in Notes to Supplemental Indentures............................    168

                                    ARTICLE 9

                 REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES

Section 9.1     Clean-up Call; Tax Redemption and Optional Redemption....................    169
Section 9.2     Auction Call Redemption..................................................    170
Section 9.3     Notice of Redemption.....................................................    171
Section 9.4     Notice of Redemption or Maturity by the Issuer...........................    172
Section 9.5     Notes Payable on Redemption Date.........................................    172
Section 9.6     Mandatory Redemption.....................................................    173
Section 9.7     Special Amortization.....................................................    173
</TABLE>

                                      -iii-

<PAGE>

<TABLE>
<S>                                                                                         <C>
                                   ARTICLE 10

                       ACCOUNTS, ACCOUNTINGS AND RELEASES

Section 10.1    Collection of Money; Custodial Account...................................    174
Section 10.2    Collection Accounts......................................................    174
Section 10.3    Payment Account..........................................................    176
Section 10.4    Unused Proceeds Account..................................................    177
Section 10.5    Delayed Funding Obligations Account......................................    178
Section 10.6    Expense Account..........................................................    179
Section 10.7    Defeased Collateral Accounts.............................................    180
Section 10.8    Interest Advances........................................................    181
Section 10.9    Reports by Parties.......................................................    185
Section 10.10   Reports; Accountings.....................................................    185
Section 10.11   Release of Pledged Collateral Debt Securities; Release of Assets.........    194
Section 10.12   Reports by Independent Accountants.......................................    195
Section 10.13   Reports to Rating Agencies...............................................    196
Section 10.14   Certain Procedures.......................................................    197

                                   ARTICLE 11

                              APPLICATION OF MONIES

Section 11.1    Disbursements of Monies from Payment Account.............................    198
Section 11.2    Trust Accounts...........................................................    209

                                   ARTICLE 12

                       SALE OF COLLATERAL DEBT SECURITIES

Section 12.1    Sales of Collateral Debt Securities......................................    209
Section 12.2    Reinvestment Criteria and Trading Restrictions...........................    213
Section 12.3    Conditions Applicable to all Transactions Involving Sale or Grant........    213
Section 12.4    Sale of Collateral Debt Securities with respect to an Auction Call
                   Redemption............................................................    214
Section 12.5    Modifications to Collateral Quality Tests or Coverage Tests..............    217
Section 12.6    ARMS Equity Contributions................................................    218

                                   ARTICLE 13

                             NOTEHOLDERS' RELATIONS

Section 13.1    Subordination............................................................    219
Section 13.2    Standard of Conduct......................................................    223
</TABLE>

                                      -iv-

<PAGE>

<TABLE>
<S>                                                                                         <C>
                                   ARTICLE 14

                                  MISCELLANEOUS

Section 14.1    Form of Documents Delivered to the Trustee...............................    223
Section 14.2    Acts of Securityholders..................................................    224
Section 14.3    Notices, etc., to the Trustee, the Issuer, the Co-Issuer, the
                   Advancing Agent, the Collateral Manager, the Initial Purchaser,
                   each Hedge Counterparty and each Rating Agency........................    225
Section 14.4    Notices to Noteholders; Waiver...........................................    227
Section 14.5    Effect of Headings and Table of Contents.................................    228
Section 14.6    Successors and Assigns...................................................    228
Section 14.7    Severability.............................................................    228
Section 14.8    Benefits of Indenture....................................................    228
Section 14.9    Governing Law............................................................    228
Section 14.10   Submission to Jurisdiction...............................................    229
Section 14.11   Counterparts.............................................................    229
Section 14.12   Liability of Co-Issuers..................................................    229

                                   ARTICLE 15

        ASSIGNMENT OF COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS AND
                         COLLATERAL MANAGEMENT AGREEMENT

Section 15.1    Assignment of Collateral Debt Securities Purchase Agreement and the
                   Collateral Management Agreements......................................    229

                                   ARTICLE 16

            HEDGE AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; SUBSEQUENT
                           COLLATERAL DEBT SECURITIES

Section 16.1    Issuer's Obligations under Hedge Agreement...............................    232
Section 16.2    Collateral Debt Securities Purchase Agreements...........................    236
Section 16.3    Cure Rights..............................................................    236
Section 16.4    Purchase Right; Holder of a Majority of the Preferred Shares.............    237
Section 16.5    Representations and Warranties Related to Subsequent Collateral Debt
                   Securities............................................................    238
Section 16.6    Operating Advisor; Additional Debt.......................................    239

                                   ARTICLE 17

                                 ADVANCING AGENT

Section 17.1    Liability of the Advancing Agent.........................................    240
Section 17.2    Merger or Consolidation of the Advancing Agent...........................    240
</TABLE>

                                       -v-

<PAGE>

<TABLE>
<S>                                                                                         <C>
Section 17.3    Limitation on Liability of the Advancing Agent and Others................    240
Section 17.4    Representations and Warranties of the Advancing Agent....................    241
Section 17.5    Resignation and Removal; Appointment of Successor........................    242
Section 17.6    Acceptance of Appointment by Successor Advancing Agent...................    243
</TABLE>

                                      -vi-

<PAGE>

          INDENTURE, dated as of January 11, 2006, by and between ARBOR REALTY
MORTGAGE SECURITIES SERIES 2005-1, LTD., an exempted company incorporated with
limited liability under the laws of the Cayman Islands (the "Issuer"), ARBOR
REALTY MORTGAGE SECURITIES SERIES 2005-1 LLC, a limited liability company formed
under the laws of Delaware (the "Co-Issuer"), LASALLE BANK NATIONAL ASSOCIATION,
a national banking association, as trustee, paying agent, calculation agent,
transfer agent, custodial securities intermediary, backup advancing agent and
notes registrar (herein, together with its permitted successors and assigns in
the trusts hereunder, called the "Trustee"), and ARBOR REALTY SR, INC. (the
"Arbor Parent"), a Maryland corporation, as advancing agent (herein, together
with its permitted successors and assigns in the trusts hereunder, called the
"Advancing Agent").

                              PRELIMINARY STATEMENT

          Each of the Issuer and the Co-Issuer is duly authorized to execute and
deliver this Indenture to provide for the Notes issuable as provided in this
Indenture. All covenants and agreements made by the Issuer and Co-Issuer herein
are for the benefit and security of the Secured Parties. The Issuer, the
Co-Issuer, LaSalle Bank National Association, in its capacities other than as
Trustee, and the Advancing Agent are entering into this Indenture, and the
Trustee is accepting the trusts created hereby, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged.

          All things necessary to make this Indenture a valid agreement of the
Issuer and Co-Issuer in accordance with this Indenture's terms have been done.

                                GRANTING CLAUSES

          The Issuer hereby Grants to the Trustee, for the benefit and security
of the Secured Parties, all of its right, title and interest in, to and under,
in each case, whether now owned or existing, or hereafter acquired or arising
(other than Excepted Assets), (a) the Collateral Debt Securities listed in the
Schedule of Closing Date Collateral Debt Securities which the Issuer purchases
on the Closing Date and causes to be delivered to the Trustee (directly or
through an agent or bailee) herewith, all payments thereon or with respect
thereto and all Collateral Debt Securities which are delivered to the Trustee
(directly or through an agent or bailee) after the Closing Date pursuant to the
terms hereof (including the Collateral Debt Securities listed, as of the
Effective Date, on the Schedule of Closing Date Collateral Debt Securities
delivered by the Issuer pursuant to Section 7.17) and all payments thereon or
with respect thereto, (b) the rights of the Issuer under each Hedge Agreement,
(c) the Collection Accounts, the Payment Account, the Expense Account, the
Unused Proceeds Account, the Delayed Funding Obligations Account, the Custodial
Account, each Hedge Termination Account, each Hedge Collateral Account and the
related security entitlements and all income from the investment of funds in any
of the foregoing, (d) the Eligible Investments, (e) the rights of the Issuer
under the Collateral Management Agreement, each Collateral Debt Securities
Purchase Agreement (including any Collateral Debt Securities Purchase Agreement
entered into after the Closing Date) and the Servicing Agreement, (f) all Cash
or Money delivered to the Trustee (or its bailee) (directly or through a
securities intermediary) (g) all other investment
<PAGE>

property, accounts, instruments and general intangibles in which the Issuer has
an interest, other than the Excepted Assets and (h) all proceeds with respect to
the foregoing clauses (a)-(g). The collateral described in the foregoing clauses
(a)-(h) is referred to herein as the "Assets." Such Grants are made, however, in
trust, to secure the Notes and each Hedge Agreement, subject to the Priority of
Payments, equally and ratably without prejudice, priority or distinction between
any Note and any other Note by reason of difference in time of issuance or
otherwise, except as expressly provided in this Indenture, and to secure (i) the
payment of all amounts due on and in respect of the Notes and each Hedge
Agreement in accordance with their terms, (ii) the payment of all other sums
payable under this Indenture and (iii) compliance with the provisions of this
Indenture, all as provided in this Indenture. For the avoidance of doubt, the
Assets shall not include the Excepted Assets. The foregoing Grant shall, for the
purpose of determining the property subject to the lien of this Indenture (but
not for the purpose of determining compliance with any of the Coverage Tests or
compliance by the Issuer with any of the other provisions hereof), be deemed to
include any securities and any investments granted by or on behalf of the Issuer
to the Trustee for the benefit of the Secured Parties, whether or not such
securities or such investments satisfy the criteria set forth in the definitions
of "Collateral Debt Security" or "Eligible Investment," as the case may be.

          Except to the extent otherwise provided in this Indenture, this
Indenture shall constitute a security agreement under the laws of the State of
New York applicable to agreements made and to be performed therein, for the
benefit of the Noteholders and each Hedge Counterparty. Upon the occurrence and
during the continuation of any Event of Default hereunder, and in addition to
any other rights available under this Indenture or any other Assets held for the
benefit and security of the Noteholders and each Hedge Counterparty or otherwise
available at law or in equity but subject to the terms hereof, the Trustee shall
have all rights and remedies of a secured party on default under the laws of the
State of New York and other applicable law to enforce the assignments and
security interests contained herein and, in addition, shall have the right,
subject to compliance with any mandatory requirements of applicable law and the
terms of this Indenture, to sell or apply any rights and other interests
assigned or pledged hereby in accordance with the terms hereof at public and
private sale.

          The Trustee acknowledges such Grants, accepts the trusts hereunder in
accordance with the provisions hereof, and agrees to perform the duties herein
in accordance with, and subject to, the terms hereof, in order that the
interests of the Noteholders and each Hedge Counterparty, as applicable, may be
adequately and effectively protected in accordance with this Indenture.

                                    ARTICLE 1

                                   DEFINITIONS

          Section 1.1 Definitions.

          Except as otherwise specified herein or as the context may otherwise
require, the following terms have the respective meanings set forth below for
all purposes of this Indenture, and the definitions of such terms are equally
applicable both to the singular and plural forms of such terms and to the
masculine, feminine and neuter genders of such terms. The word

                                      -2-

<PAGE>

"including" and its variations shall mean "including without limitation."
Whenever any reference is made to an amount the determination of which is
governed by Section 1.2 hereof, the provisions of Section 1.2 shall be
applicable to such determination or calculation, whether or not reference is
specifically made to Section 1.2, unless some other method of calculation or
determination is expressly specified in the particular provision. All references
in this Indenture to designated "Articles," "Sections," "Subsections" and other
subdivisions are to the designated Articles, Sections, Subsections and other
subdivisions of this Indenture as originally executed. The words "herein,"
"hereof," "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section, Subsection or other
subdivision.

          "10% Limit": The meaning specified in Section 12.1(b) hereof.

          "A Note": A promissory note secured by a mortgage on commercial real
estate property that is not subordinate in right of payment to any separate
promissory note secured by a direct or beneficial interest in the same property.

          "Above Cap Security": Any Collateral Debt Security, which initially
bore interest based upon a floating rate index subject to a cap (which, if
exceeded, would cause such Collateral Debt Security to bear interest at a fixed
rate) and which currently bears interest at a fixed rate as a result of such cap
being exceeded, but only for so long as such cap is exceeded.

          "Account": Any of the Interest Collection Account, the Principal
Collection Account, the Unused Proceeds Account, the Delayed Funding Obligations
Account, the Payment Account, the Expense Account, the Custodial Account, each
Defeased Collateral Account, each Hedge Termination Account, the Preferred
Shares Distribution Account and each Hedge Collateral Account, and any
subaccount thereof that the Trustee deems necessary or appropriate.

          "Accountants' Report": A report of a firm of Independent certified
public accountants of recognized national reputation appointed by the Issuer
pursuant to Section 10.12(a), which may be the firm of independent accountants
that reviews or performs procedures with respect to the financial reports
prepared by the Issuer or the Collateral Manager.

          "Accounts Receivable": The meaning specified in Section 3.3(a)(vi)
hereof.

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

          "Advancing Agent": Arbor Realty SR, Inc., unless a successor Person
shall have become the Advancing Agent pursuant to the applicable provisions of
this Indenture, and thereafter "Advancing Agent" shall mean such successor
Person.

          "Advancing Agent Fee": The fee payable quarterly in arrears on each
Payment Date to the Advancing Agent in accordance with the Priority of Payments,
equal to 0.07% per annum on the Aggregate Outstanding Amount of the Class A
Notes and the Class B Notes on such Payment Date prior to giving effect to
distributions with respect to such Payment Date.

          "Advisers Act": The Investment Advisers Act of 1940, as amended.

                                      -3-

<PAGE>

          "Advisory Committee": The meaning specified in the Collateral
Management Agreement.

          "Affiliate" or "Affiliated": With respect to a Person, (i) any other
Person who, directly or indirectly, is in control of, or controlled by, or is
under common control with, such Person or (ii) any other Person who is a
director, Officer or employee (a) of such Person, (b) of any subsidiary or
parent company of such Person or (c) of any Person described in clause (i)
above. For the purposes of this definition, control of a Person shall mean the
power, direct or indirect, (i) to vote more than 50% of the securities having
ordinary voting power for the election of directors of such Persons, or (ii) to
direct or cause the direction of the management and policies of such Person
whether by contract or otherwise; provided that neither the Company
Administrator nor any other company, corporation or person to which the Company
Administrator provides directors and/or administrative services and/or acts as
share trustee shall be an Affiliate of the Issuer or Co-Issuer and provided,
further, that neither the Collateral Manager, the Arbor Parent nor any of the
Arbor Parent's subsidiaries shall be deemed to be Affiliates of the Issuer.

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

          "Aggregate Collateral Balance": The aggregate Principal Balance of (i)
Collateral Debt Securities, (ii) Eligible Investments purchased with Principal
Proceeds and (iii) Eligible Investments purchased with monies on deposit in the
Unused Proceeds Account that have not been designated as Interest Proceeds by
the Collateral Manager pursuant to Section 10.4(c) hereof.

          "Aggregate Outstanding Amount": With respect to any Class or Classes
of the Notes, the aggregate principal balance (excluding any Class C Capitalized
Interest, Class D Capitalized Interest, Class E Capitalized Interest, Class F
Capitalized Interest, Class G Capitalized Interest and Class H Capitalized
Interest, as applicable) of such Class or Classes Outstanding at the date of
determination.

          "Aggregate Principal Balance": When used with respect to any Pledged
Collateral Debt Securities as of any date of determination, the sum of the
Principal Balances on such date of determination of all such Pledged Collateral
Debt Securities.

          "Applicable Recovery Rate": The lowest of the Moody's Recovery Rate,
the Fitch Applicable Recovery Rate and the S&P Recovery Rate, as applicable;
provided that the Applicable Recovery Rate for any Collateral Debt Security with
respect to which substitute or additional collateral (in the form of Cash or
Eligible Investments) in an amount at least equal to the sum of the principal
amount of such Collateral Debt Security and the aggregate of all remaining
scheduled interest payments thereon through the earliest permissible prepayment
date has been delivered by or on behalf of the related obligor to the Trustee
and deposited into a Defeased Collateral Account (or to the Servicer in
accordance with the Servicing Agreement and deposited into an Eligible Account)
(by defeasance or otherwise) shall be 100%.

          "Arbor Parent": The meaning specified in the first paragraph of this
Agreement.

                                      -4-

<PAGE>

          "ARD Loan": A Loan with an anticipated repayment date, after which (if
not repaid in full by such anticipated repayment date) the loan provides for
changes in payments and accrual of interest.

          "ARMS Equity": ARMS 2005-1 Equity Holdings LLC, a Delaware limited
liability company and a wholly-owned subsidiary of the Arbor Parent which is
disregarded as an entity separate from the Arbor Parent for U.S. federal income
tax purposes.

          "ARMS Equity Cash Contribution": Any Cash contributed by ARMS Equity
to the Issuer during the Reinvestment Period pursuant to Section 12.6 hereof.

          "ARMS Equity CDS Contribution": Any loan, security or other obligation
(other than Eligible Investments) contributed by ARMS Equity to the Issuer
during the Reinvestment Period in accordance with Section 12.6 hereof.

          "ARMS Equity Contribution": ARMS Equity Cash Contribution, ARMS Equity
EI Contribution and/or ARMS Equity CDS Contribution, as the context may require.

          "ARMS Equity EI Contribution": Any Eligible Investments contributed by
ARMS Equity to the Issuer during the Reinvestment Period pursuant to Section
12.6 hereof.

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

          "Asset Specific Hedge": Any agreement, in the form of an interest rate
exchange agreement, between the Issuer and a Hedge Counterparty that is entered
into by the Issuer in connection with the purchase or holding of (i) a Fixed
Rate Security or (ii) a Floating Rate Security that bears interest upon a
floating rate index other than LIBOR, and which, in each case, entitles the
Issuer to receive from the related Hedge Counterparty payments based on LIBOR at
prevailing market rates, as determined by the Collateral Manager at the date of
execution of such agreement. In addition to the foregoing, each Asset Specific
Hedge will be subject to the following conditions:

          (a) the notional balance of each Asset Specific Hedge shall be equal
to the scheduled principal amount of the Collateral Debt Security to which it is
related;

          (b) each Asset Specific Hedge (A) will amortize according to the same
schedule as, and terminate no earlier than the Initial Maturity Date (or, in the
case of an ARD Loan, on the anticipated repayment date) of, the Collateral Debt
Security to which it is related and (B) any such amounts so payable shall be
paid in accordance with the Priority of Payments;

          (c) the payment dates of the Asset Specific Hedge must match the
payment dates of the Collateral Debt Security to which it is related or
correspond to the Payment Dates for the Notes;

          (d) if the Collateral Debt Security related to an Asset Specific Hedge
(i) is a Defaulted Security, or (ii) is sold by the Issuer, such Asset Specific
Hedge shall be terminated; provided that if any unscheduled Hedge Payment Amount
is payable by the Issuer under the related Hedge Agreement solely as a result of
the early termination of such Asset Specific Hedge

                                      -5-

<PAGE>

and is not offset by any amount payable by the relevant Hedge Counterparty, (A)
such Asset Specific Hedge may only be terminated if the Rating Agency Condition
with respect to Moody's and S&P shall have been satisfied in connection with
such termination and if Fitch shall have been given notice of such termination;
and (B) such Hedge Payment Amount shall be paid in accordance with the Priority
of Payments;

          (e) if the Collateral Debt Security related to such Asset Specific
Hedge is not a Defaulted Obligation and such Collateral Debt Security is called
or prepaid, such Asset Specific Hedge shall be terminated; provided that if any
unscheduled Hedge Payment Amount is payable by the Issuer solely as a result of
the early termination of such Asset Specific Hedge and is not offset by any
amount payable by the relevant Hedge Counterparty, (A) such Asset Specific Hedge
may only be terminated if the Rating Agency Condition with respect to Moody's
and S&P shall have been satisfied in connection with such termination and if
Fitch shall have been given notice of such termination, (B) any such Hedge
Payment Amount shall first be paid from any call, redemption and prepayment
premiums received from such Collateral Debt Security, and (C) any remaining
amount so payable shall be paid in accordance with the Priority of Payments; and

          (f) each Asset Specific Hedge will contain appropriate limited
recourse and non-petition provisions equivalent (mutatis mutandis) to those
contained in this Indenture.

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

          "Assumed Portfolio": The portfolio with characteristics developed in
accordance with the Eligibility Criteria and Collateral Quality Tests for
purposes of determining the Class A-1 Break-Even Loss Rate, the Class A-2
Break-Even Loss Rate, the Class B Break-Even Loss Rate, the Class C Break-Even
Loss Rate, the Class D Break-Even Loss Rate, the Class E Break-Even Loss Rate,
the Class F Break-Even Loss Rate, the Class G Break-Even Loss Rate and the Class
H Break-Even Loss Rate.

          "Auction": Any auction conducted in connection with an Auction Call
Redemption.

          "Auction Bid Date": The meaning specified in Section 12.4(b)(ii)
hereof.

          "Auction Call Period": The meaning specified in Section 9.2(a) hereof.

          "Auction Call Redemption": The meaning specified in Section 9.2(a)
hereof.

          "Auction Call Redemption Date": The meaning specified in Section
9.2(a) hereof.

          "Auction Date": The meaning specified in Section 12.4(a)(i) hereof.

          "Auction Procedures": The required procedures with respect to an
Auction set forth in Section 12.4(b) hereof.

                                      -6-

<PAGE>

          "Auction Purchase Agreement": The meaning specified in Section
12.4(a)(iii) hereof.

          "Auction Purchase Closing Date": The meaning specified in Section
12.4(b)(v) hereof.

          "Authenticating Agent": With respect to the Notes or a Class of the
Notes, the Person designated by the Trustee to authenticate such Notes on behalf
of the Trustee pursuant to Section 2.12 hereof.

          "Authorized Officer": With respect to the Issuer or Co-Issuer, any
Officer (or attorney-in-fact appointed by the Issuer or the Co-Issuer) who is
authorized to act for the Issuer or Co-Issuer in matters relating to, and
binding upon, the Issuer or Co-Issuer. With respect to the Collateral Manager,
the persons listed on Schedule K hereto. With respect to the Trustee or any
other bank or trust company acting as trustee of an express trust or as
custodian, a Trust Officer. Each party may receive and accept a certification of
the authority of any other party as conclusive evidence of the authority of any
person to act, and such certification may be considered as in full force and
effect until receipt by such other party of written notice to the contrary.

          "Average Life": On any Measurement Date with respect to any Collateral
Debt Security (other than a Defaulted Security), the quotient obtained by
dividing (i) the summing of the products of (a) the number of years (rounded to
the nearest one tenth thereof) from such Measurement Date to the respective
dates of each successive expected distribution of principal of such Collateral
Debt Security and (b) the respective amounts of such expected distributions of
principal by (ii) the sum of all successive expected distributions of principal
on such Collateral Debt Security, calculated by the Collateral Manager.

          "B Note": A promissory note secured by a mortgage on commercial real
estate property that is subordinate in right of payment to one or more separate
promissory notes secured by a direct or beneficial interest in the same
property.

          "Backup Advancing Agent": LaSalle Bank National Association, a
national banking association, solely in its capacity as Backup Advancing Agent
hereunder, or any successor Backup Advancing Agent; provided that any such
successor Backup Advancing Agent must be a financial institution having a (i)
long-term debt rating from S&P at least equal to "A-" and a short-term debt
rating from S&P at least equal to "A-1," (ii) long-term debt rating from Moody's
at least equal to "A2" and a short-term debt rating from Moody's at least equal
to "P-1," and (iii) long-term debt rating from Fitch at least equal to "A-" and
a short-term debt rating from Fitch at least equal to "F1."

          "Backup Advancing Agent Fee": The fee payable quarterly in arrears on
each Payment Date to the Trustee, in its capacity as Backup Advancing Agent, in
accordance with the Priority of Payments, equal to 0.00125% per annum on the
Aggregate Outstanding Amount of the Class A Notes and the Class B Notes on such
Payment Date prior to giving effect to distributions with respect to such
Payment Date.

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

                                      -7-

<PAGE>

          "Bank": LaSalle Bank National Association, a national banking
association, in its individual capacity and not as Trustee and, if any Person is
appointed as a successor Trustee, such Person in its individual capacity and not
as Trustee.

          "Bankruptcy Code": The federal Bankruptcy Code, Title 11 of the United
States Code, as amended.

          "Bearer Securities": The meaning specified in Section 3.3(a)(iv)
hereof.

          "Benefit Plan": The meaning specified in Section 2.5(g)(vi) hereof.

          "Board of Directors": With respect to the Issuer, the directors of the
Issuer duly appointed in accordance with the Governing Documents of the Issuer
and, with respect to the Co-Issuer, the LLC Managers duly appointed by the sole
member of the Co-Issuer or otherwise.

          "Board Resolution": With respect to the Issuer, a resolution of the
Board of Directors of the Issuer and, with respect to the Co-Issuer, a
resolution or unanimous written consent of the LLC Managers or the sole member
of the Co-Issuer.

          "Business Day": Any day other than (i) a Saturday or Sunday and (ii) a
day on which commercial banks are authorized or required by applicable law,
regulation or executive order to close in New York, New York or the location of
the Corporate Trust Office; provided that, if any action is required of the
Irish Paying Agent, then, for purposes of determining when such Irish Paying
Agent action is required, Dublin, Ireland will be considered in determining
"Business Day."

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

          "Calculation Amount": With respect to any Collateral Debt Security, at
any time, the lesser of (a) the Market Value of such Collateral Debt Security
and (b) the Applicable Recovery Rate multiplied by the Principal Balance of such
Collateral Debt Security.

          "Cash": Such coin or currency of the United States of America as at
the time shall be legal tender for payment of all public and private debts.

          "Cash Flow Swap Agreement": Any Hedge Agreement entered into by the
Issuer with a Hedge Counterparty to manage potential mismatches between the
timing of receipts of interest on the Collateral Debt Securities and Eligible
Investments and the timing of interest payments due on the Notes, including an
agreement to convert the periodicity of payments on Collateral Debt Securities,
pursuant to which the Issuer shall be entitled to receive payments from the
related Hedge Counterparty on a certain date in exchange for the Issuer's
obligation to make payments to such Hedge Counterparty on one or more Payment
Dates to the extent that funds are available therefor pursuant to Section
11.1(a).

          "Cash Flow Swap Counterparty": Any Hedge Counterparty with whom the
Issuer enters into a Cash Flow Swap Agreement.

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

                                      -8-

<PAGE>

          "Certificated Notes": The meaning specified in Section 2.10(b) hereof.

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

          "Class": The Class A-1 Notes, the Class A-2 Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes or the Class H Notes, as applicable.

          "Class A Notes": The Class A-1 Notes and the Class A-2 Notes,
collectively.

          "Class A-1 Break-Even Loss Rate": At any time, the maximum percentage
of defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the timely payment of
interest on and the ultimate payment of principal of the Class A-1 Notes.

          "Class A-1 Defaulted Interest Amount": With respect to the Class A-1
Notes as of each Payment Date, the accrued and unpaid amount due to holders of
the Class A-1 Notes on account of any shortfalls in the payment of the Class A-1
Interest Distribution Amount with respect to any preceding Payment Date or
Payment Dates, together with interest accrued thereon (to the extent lawful).

          "Class A-1 Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class A-1 Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount of the Class A-1 Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class A-1 Rate.

          "Class A-1 Loss Differential": At any time, the rate calculated by
subtracting the Class A-1 Scenario Loss Rate from the Class A-1 Break-Even Loss
Rate at such time.

          "Class A-1 Notes": The Class A-1 Senior Secured Floating Rate Term
Notes Due 2038, issued by the Issuer and the Co-Issuer pursuant to this
Indenture.

          "Class A-1 Rate": With respect to any Class A-1 Note, the per annum
rate at which interest accrues on such Note for any Interest Accrual Period,
which shall be equal to (a) LIBOR for the related Interest Accrual Period plus
(b) 0.37% per annum.

          "Class A-1 Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class A-1 Notes by
S&P, determined by application of the S&P CDO Monitor at such time (which rate,
for the avoidance of doubt, will vary depending on the then current levels of
the other variables included in the S&P Matrix).

          "Class A-2 Break-Even Loss Rate": At any time, the maximum percentage
of defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient

                                      -9-

<PAGE>

funds remaining for the timely payment of interest on and the ultimate payment
of principal of the Class A-2 Notes.

          "Class A-2 Defaulted Interest Amount": With respect to the Class A-2
Notes as of each Payment Date, the accrued and unpaid amount due to holders of
the Class A-2 Notes on account of any shortfalls in the payment of the Class A-2
Interest Distribution Amount with respect to any preceding Payment Date or
Payment Dates, together with interest accrued thereon (to the extent lawful).

          "Class A-2 Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class A-2 Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount of the Class A-2 Notes with
respect to the related Interest Accrual Period, (ii) the actual number of days
in such Interest Accrual Period divided by 360 and (iii) the Class A-2 Rate.

          "Class A-2 Loss Differential": At any time, the rate calculated by
subtracting the Class A-2 Scenario Loss Rate from the Class A-2 Break-Even Loss
Rate at such time.

          "Class A-2 Notes": The Class A-2 Second Priority Senior Secured
Floating Rate Term Notes Due 2038, issued by the Issuer and the Co-Issuer
pursuant to this Indenture.

          "Class A-2 Rate": With respect to any Class A-2 Note, the per annum
rate at which interest accrues on such Note for any Interest Accrual Period,
which shall be equal to (a) LIBOR for the related Interest Accrual Period plus
(b) 0.45% per annum.

          "Class A-2 Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class A-2 Notes by
S&P, determined by application of the S&P CDO Monitor at such time (which rate,
for the avoidance of doubt, will vary depending on the then current levels of
the other variables included in the S&P Matrix).

          "Class A-2 Subordinate Interests": The meaning specified in Section
13.1(a) hereof.

          "Class A/B Coverage Tests": The Class A/B Par Value Test and the Class
A/B Interest Coverage Test.

          "Class A/B Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."

          "Class A/B Interest Coverage Test": The test that is met as of any
Measurement Date on which any Class A Notes or any Class B Notes remain
Outstanding if the Class A/B Interest Coverage Ratio as of such Measurement Date
is equal to or greater than 209.5%.

          "Class A/B Par Value Ratio": As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount of the Class A Notes and the Class B Notes and the amount of
any unreimbursed Interest Advances.

                                      -10-

<PAGE>

          "Class A/B Par Value Test": The test that will be met as of any
Measurement Date on which any Class A Notes or Class B Notes remain Outstanding
if the Class A/B Par Value Ratio on such Measurement Date is equal to or greater
than 169.5%.

          "Class B Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the timely payment of
interest on and the ultimate payment of principal of the Class B Notes.

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

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

          "Class B Loss Differential": At any time, the rate calculated by
subtracting the Class B Scenario Loss Rate from the Class B Break-Even Loss Rate
at such time.

          "Class B Notes": The Class B Third Priority Floating Rate Term Notes
Due 2038, issued by the Issuer and the Co-Issuer pursuant to this Indenture.

          "Class B Rate": With respect to any Class B Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
0.55% per annum.

          "Class B Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class B Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class B Subordinate Interests": The meaning specified in Section
13.1(b) hereof.

          "Class C Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class C Notes.

          "Class C Capitalized Interest": The meaning specified in Section
2.7(d) hereof.

                                      -11-

<PAGE>

          "Class C Defaulted Interest Amount": With respect to the Class C Notes
on or after any Payment Date on which no Class A Notes or Class B Notes are
Outstanding, any interest on the Class C Notes (other than Class C Capitalized
Interest) that is due and payable but is not punctually paid or duly provided
for on or prior to the due date therefor and which remains unpaid, together with
interest accrued thereon (to the extent lawful).

          "Class C Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class C Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class C Capitalized Interest) of the Class C Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class C Rate.

          "Class C Loss Differential": At any time, the rate calculated by
subtracting the Class C Scenario Loss Rate from the Class C Break-Even Loss Rate
at such time.

          "Class C Notes": The Class C Fourth Priority Floating Rate Capitalized
Interest Term Notes Due 2038, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.

          "Class C Rate": With respect to any Class C Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
0.85% per annum.

          "Class C Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class C Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class C Subordinate Interests": The meaning specified in Section
13.1(c) hereof.

          "Class C/D/E Coverage Tests": The Class C/D/E Par Value Test and the
Class C/D/E Interest Coverage Test.

          "Class C/D/E Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."

          "Class C/D/E Interest Coverage Test": The test that is met as of any
Measurement Date on which any Class C Notes, Class D Notes or Class E Notes
remain Outstanding if the Class C/D/E Interest Coverage Ratio as of such
Measurement Date is equal to or greater than 175.3%.

          "Class C/D/E Par Value Ratio": As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount (including any Class C Capitalized Interest, Class D
Capitalized Interest and Class E Capitalized Interest) of the Class A Notes, the
Class B Notes, the Class C Notes, the Class D and the Class E Notes and the
amount of any unreimbursed Interest Advances.

                                      -12-

<PAGE>

          "Class C/D/E Par Value Test": The test that is met as of any
Measurement Date on which any Class C Notes, Class D Notes or Class E Notes
remain Outstanding if the Class C/D/E Par Value Ratio on such Measurement Date
is equal to or greater than 145.3%.

          "Class D Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class D Notes.

          "Class D Capitalized Interest": The meaning specified in Section
2.7(e) hereof.

          "Class D Defaulted Interest Amount": With respect to the Class D Notes
on or after any Payment Date on which no Class A Notes, Class B Notes or Class C
Notes are Outstanding, any interest on the Class D Notes (other than Class D
Capitalized Interest) that is due and payable but is not punctually paid or duly
provided for on or prior to the due date therefor and which remains unpaid,
together with interest accrued thereon (to the extent lawful).

          "Class D Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class D Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class D Capitalized Interest) of the Class D Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class D Rate.

          "Class D Loss Differential": At any time, the rate calculated by
subtracting the Class D Scenario Loss Rate from the Class D Break-Even Loss Rate
at such time.

          "Class D Notes": The Class D Fifth Priority Floating Rate Capitalized
Interest Term Notes Due 2038, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.

          "Class D Rate": With respect to any Class D Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
0.95% per annum.

          "Class D Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class D Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class D Subordinate Interests": The meaning specified in Section
13.1(d) hereof.

          "Class E Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class E Notes.

          "Class E Capitalized Interest": The meaning specified in Section
2.7(f) hereof.

                                      -13-

<PAGE>

          "Class E Defaulted Interest Amount": With respect to the Class E Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes or Class D Notes are Outstanding, any interest on the Class E Notes (other
than Class E Capitalized Interest) that is due and payable but is not punctually
paid or duly provided for on or prior to the due date therefor and which remains
unpaid, together with interest accrued thereon (to the extent lawful).

          "Class E Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class E Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class E Capitalized Interest) of the Class E Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class E Rate.

          "Class E Loss Differential": At any time, the rate calculated by
subtracting the Class E Scenario Loss Rate from the Class E Break-Even Loss Rate
at such time.

          "Class E Notes": The Class E Sixth Priority Floating Rate Capitalized
Interest Term Notes due 2038, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.

          "Class E Rate": With respect to any Class E Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
1.05% per annum.

          "Class E Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class E Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class E Subordinate Interests": The meaning specified in Section
13.1(e) hereof.

          "Class F Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class F Notes.

          "Class F Capitalized Interest": The meaning specified in Section
2.7(g) hereof.

          "Class F Defaulted Interest Amount": With respect to the Class F Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes, Class D Notes or Class E Notes are Outstanding, any interest on the Class
F Notes (other than Class F Capitalized Interest) that is due and payable but is
not punctually paid or duly provided for on or prior to the due date therefor
and which remains unpaid, together with interest accrued thereon (to the extent
lawful).

          "Class F Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class F Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class F Capitalized Interest) of the

                                      -14-

<PAGE>

Class F Notes with respect to the related Interest Accrual Period, (ii) the
actual number of days in such Interest Accrual Period divided by 360 and (iii)
the Class F Rate.

          "Class F Loss Differential": At any time, the rate calculated by
subtracting the Class F Scenario Loss Rate from the Class F Break-Even Loss Rate
at such time.

          "Class F Notes": The Class F Seventh Priority Floating Rate
Capitalized Interest Term Notes due 2038, issued by the Issuer and the Co-Issuer
pursuant to this Indenture.

          "Class F Rate": With respect to any Class F Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
2.00% per annum.

          "Class F Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class F Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class F Subordinate Interests": The meaning specified in Section
13.1(f) hereof.

          "Class F/G/H Coverage Tests": The Class F/G/H Par Value Test and the
Class F/G/H Interest Coverage Test.

          "Class F/G/H Interest Coverage Ratio": The meaning specified in the
definition of "Interest Coverage Ratio."

          "Class F/G/H Interest Coverage Test": The test that is met as of any
Measurement Date on which any Class F Notes, Class G Notes or Class H Notes
remain Outstanding if the Class F/G/H Interest Coverage Ratio as of such
Measurement Date is equal to or greater than 147.3%.

          "Class F/G/H Par Value Ratio": As of any Measurement Date, the number
(expressed as a percentage) calculated by dividing (a) the Net Outstanding
Portfolio Balance on such Measurement Date by (b) the sum of the Aggregate
Outstanding Amount (including any Class C Capitalized Interest, Class D
Capitalized Interest, Class E Capitalized Interest, Class F Capitalized
Interest, Class G Capitalized Interest and Class H Capitalized Interest) of the
Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes and the Class H Notes and
the amount of any unreimbursed Interest Advances.

          "Class F/G/H Par Value Test": The test that is met as of any
Measurement Date on which any Class F Notes, Class G Notes or Class H Notes
remain Outstanding if the Class F/G/H Par Value Ratio on such Measurement Date
is equal to or greater than 127.3%.

          "Class G Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's

                                      -15-

<PAGE>

assumptions on recoveries and timing and to the Priority of Payments, will
result in sufficient funds remaining for the ultimate payment of interest on and
principal of the Class G Notes.

          "Class G Capitalized Interest": The meaning specified in Section
2.7(h) hereof.

          "Class G Defaulted Interest Amount": With respect to the Class G Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes or Class F Notes are Outstanding, any
interest on the Class G Notes (other than Class G Capitalized Interest) that is
due and payable but is not punctually paid or duly provided for on or prior to
the due date therefor and which remains unpaid, together with interest accrued
thereon (to the extent lawful).

          "Class G Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class G Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class G Capitalized Interest) of the Class G Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class G Rate.

          "Class G Loss Differential": At any time, the rate calculated by
subtracting the Class G Scenario Loss Rate from the Class G Break-Even Loss Rate
at such time.

          "Class G Notes": The Class G Eighth Priority Floating Rate Capitalized
Interest Term Notes due 2038, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.

          "Class G Rate": With respect to any Class G Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
2.30% per annum.

          "Class G Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class G Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class G Subordinate Interests": The meaning specified in Section
13.1(g), hereof.

          "Class H Break-Even Loss Rate": At any time, the maximum percentage of
defaults that the Assumed Portfolio should be able to sustain, which after
giving effect to S&P's assumptions on recoveries and timing and to the Priority
of Payments, will result in sufficient funds remaining for the ultimate payment
of interest on and principal of the Class H Notes.

          "Class H Capitalized Interest": The meaning specified in Section
2.7(i) hereof.

          "Class H Defaulted Interest Amount": With respect to the Class H Notes
on or after any Payment Date on which no Class A Notes, Class B Notes, Class C
Notes, Class D Notes, Class E Notes, Class F Notes or Class G Notes are
Outstanding, any interest on the Class H Notes (other than Class H Capitalized
Interest) that is due and payable but is not punctually

                                      -16-

<PAGE>

paid or duly provided for on or prior to the due date therefor and which remains
unpaid, together with interest accrued thereon (to the extent lawful).

          "Class H Interest Distribution Amount": On each Payment Date, the
amount due to Holders of the Class H Notes on account of interest equal to the
product of (i) the Aggregate Outstanding Amount (including the current balance
of any Class H Capitalized Interest) of the Class H Notes with respect to the
related Interest Accrual Period, (ii) the actual number of days in such Interest
Accrual Period divided by 360 and (iii) the Class H Rate.

          "Class H Loss Differential": At any time, the rate calculated by
subtracting the Class H Scenario Loss Rate from the Class H Break-Even Loss Rate
at such time.

          "Class H Notes": The Class H Ninth Priority Floating Rate Capitalized
Interest Term Notes due 2038, issued by the Issuer and the Co-Issuer pursuant to
this Indenture.

          "Class H Rate": With respect to any Class H Note, the per annum rate
at which interest accrues on such Note for any Interest Accrual Period, which
shall be equal to (a) LIBOR for the related Interest Accrual Period plus (b)
2.60% per annum.

          "Class H Scenario Loss Rate": At any time, an estimate of the
cumulative default rate for the Current Portfolio or the Proposed Portfolio, as
applicable, consistent with the then current rating of the Class H Notes by S&P,
determined by application of the S&P CDO Monitor at such time (which rate, for
the avoidance of doubt, will vary depending on the then current levels of the
other variables included in the S&P Matrix).

          "Class H Subordinate Interests": The meaning specified in Section
13.1(h) hereof.

          "Clean-up Call": The meaning specified in Section 9.1 hereof.

          "Clean-up Call Date": The meaning specified in Section 9.1 hereof.

          "Clearing Agency": An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act.

          "Clearing Corporation": The meaning specified in Section 8-102(a)(5)
of the UCC.

          "Clearing Corporation Security": A security subject to book-entry
transfers and pledges deposited with the Clearing Agency.

          "Clearstream, Luxembourg": Clearstream Banking, societe anonyme, a
limited liability company organized under the laws of the Grand Duchy of
Luxembourg.

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

          "Closing Date": January 11, 2006.

                                      -17-

<PAGE>

          "CMBS Conduit Securities": Collateral Debt Securities (A) issued by a
single-seller or multi-seller conduit under which the holders of such Collateral
Debt Securities have recourse to a specified pool of assets (but not other
assets held by the conduit that support payments on other series of securities)
and (B) that entitle the holders thereof to receive payments that depend (except
for rights or other assets designed to assure the servicing or timely
distribution of proceeds to holders of the Collateral Debt Securities) on the
cash flow from a pool of commercial mortgage loans generally having the
following characteristics: (i) the commercial mortgage loans have varying
contractual maturities; (ii) the commercial mortgage loans are secured by real
property purchased or improved with the proceeds thereof (or to refinance an
outstanding loan the proceeds of which were so used); (iii) the commercial
mortgage loans are obligations of a relatively limited number of obligors (with
the creditworthiness of individual obligors being less material than for CMBS
Large Loan Securities) and accordingly represent a relatively undiversified pool
of obligor credit risk; (iv) upon original issuance of such Collateral Debt
Securities no five commercial mortgage loans account for more than 20% of the
aggregate principal balance of the entire pool of commercial mortgage loans
supporting payments on such securities; and (v) repayment thereof can vary
substantially from the contractual payment schedule (if any), with early
prepayment of individual loans depending on numerous factors specific to the
particular obligors and upon whether, in the case of loans bearing interest at a
fixed rate, such loans or securities include an effective prepayment premium.

          "CMBS Large Loan Securities": Collateral Debt Securities (other than
CMBS Conduit Securities) that entitle the holders thereof to receive payments
that depend (except for rights or other assets designed to assure the servicing
or timely distribution of proceeds to holders of the Collateral Debt Securities)
on the cash flow from a pool of commercial mortgage loans made to finance the
acquisition, construction and improvement of properties. They generally have the
following characteristics: (i) the commercial mortgage loans have varying
contractual maturities; (ii) the commercial mortgage loans are secured by real
property purchased or improved with the proceeds thereof (or to refinance one or
more outstanding loans the proceeds of which were so used); (iii) the commercial
mortgage loans are obligations of a relatively limited number of obligors and
accordingly represent a relatively undiversified pool of obligor credit risk;
(iv) repayment thereof can vary substantially from the contractual payment
schedule (if any), with early prepayment of individual loans depending on
numerous factors specific to the particular obligors and upon whether, in the
case of loans bearing interest at a fixed rate, such loans or securities include
an effective prepayment premium; and (v) the valuation of individual properties
securing the commercial mortgage loans is the primary factor in any decision to
invest in those securities.

          "CMBS Security": A CMBS Conduit Security or a CMBS Large Loan
Security, as the case may be, but excluding any Single Asset Mortgage Security,
Single Borrower Mortgage Security or Rake Bond.

          "Co-Issuer": Arbor Realty Mortgage Securities Series 2005-1 LLC, a
limited liability company organized under the laws of the State of Delaware,
until a successor Person shall have become the Co-Issuer pursuant to the
applicable provisions of this Indenture, and thereafter "Co-Issuer" shall mean
such successor Person.

          "Co-Issuers": The Issuer and the Co-Issuer.

                                      -18-

<PAGE>

          "Code": The United States Internal Revenue Code of 1986, as amended.

          "Collateral Debt Securities Purchase Agreements": Any collateral debt
securities purchase agreements entered into on or about the Closing Date and any
other collateral debt securities purchase agreements entered into after the
Closing Date if a purchase agreement is necessary to comply with this Indenture,
which agreement is assigned to the Trustee pursuant to this Indenture.

          "Collateral Debt Security" and "Collateral Debt Securities": (i) Any
loan, security or other obligation (other than Eligible Investments) purchased
by the Issuer (including those acquired after the Closing Date) that complied
with the Eligibility Criteria at the time the Issuer entered into the commitment
to acquire such loan, security or obligation or (ii) any ARMS Equity CDS
Contribution.

          "Collateral Manager": Arbor Realty Collateral Management, LLC, each of
Arbor Realty Collateral Management, LLC's permitted successors and assigns or
any successor Person that shall have become the Collateral Manager pursuant to
the provisions of the Collateral Management Agreement and thereafter "Collateral
Manager" shall mean such successor Person.

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

          "Collateral Management Fee": The Senior Collateral Management Fee and
the Subordinate Collateral Management Fee.

          "Collateral Manager Servicing Standard": With respect to the
Collateral Manager, to manage the Collateral Debt Securities that such Person is
obligated to service and administer pursuant to this Indenture and the
Collateral Management Agreement (i) in accordance with (A) the higher of the
following standards of care: (1) customary and usual standards of practice of
prudent institutional commercial mortgage lenders servicing their own mortgage
loans and (2) the same manner in which, and with the same care, skill, prudence
and diligence with which, the Arbor Parent manages securities comparable to the
Collateral Debt Securities for its own account, (B) applicable law and (C) the
terms of this Indenture, the Collateral Management Agreement and the terms of
the Collateral Debt Security and the related Underlying Instruments and (ii)
without regard to (A) any relationship, including as lender on any other debt,
that the Collateral Manager or any Affiliate of the Collateral Manager, may have
with the underlying borrower, or any Affiliate of the borrower, or any other
party to this Indenture (or any agreements relating to the Indenture); (B) the
obligation of the Collateral Manager to make Cure Advances; (C) the right of the
Collateral Manager or any Affiliate thereof, to receive compensation or
reimbursement of costs hereunder generally or with respect to any particular
transaction (including, without limitation, any transaction related to the
Collateral Management Agreement); and (D) the ownership, servicing or management
for others of any security not subject to this Indenture by the Collateral
Manager or any Affiliate thereof or the obligation of any Affiliate of the
Collateral Manager to repurchase the Collateral Debt Security.

                                      -19-

<PAGE>

          "Collateral Quality Test Modification": The meaning specified in
Section 12.5 hereof.

          "Collateral Quality Tests": The tests that are satisfied if, as of any
Measurement Date, in the aggregate, the Collateral Debt Securities purchased or
irrevocably committed to be purchased (and not sold) comply with all of the
requirements set forth below:

               (i) not more than 5% of the Aggregate Collateral Balance of
          Collateral Debt Securities with payments less frequently than
          quarterly are not covered by a Cash Flow Swap Agreement obtained by
          the Collateral Manager for the Issuer;

               (ii) not more than 20% of the Aggregate Collateral Balance
          consists of Collateral Debt Securities (other than CRE CDO Securities
          and REIT Debt Securities) backed or otherwise invested in properties
          located in any single U.S. state, except that (A) up to 60% of the
          Aggregate Collateral Balance may consist of Collateral Debt Securities
          (other than CRE CDO Securities and REIT Debt Securities) backed or
          otherwise invested in properties located in the State of New York, (B)
          up to 45% of the Aggregate Collateral Balance may consist of
          Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) backed or otherwise invested in properties located in
          the State of California, (C) up to 35% of the Aggregate Collateral
          Balance may consist of Collateral Debt Securities (other than CRE CDO
          Securities and REIT Debt Securities) backed or otherwise invested in
          properties located in the northern region of the State of California,
          (D) up to 35% of the Aggregate Collateral Balance may consist of
          Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) backed or otherwise invested in properties located in
          the southern region of the State of California, (E) up to 25% of the
          Aggregate Collateral Balance may consist of Collateral Debt Securities
          (other than CRE CDO Securities and REIT Debt Securities) backed or
          otherwise invested in properties located in the District of Columbia
          and (F) up to 25% of the Aggregate Collateral Balance may consist of
          Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) backed or otherwise invested in properties located in
          the State of Florida; provided that, for purposes of this clause (ii),
          any Collateral Debt Security described in the proviso to the
          definition of "Applicable Recovery Rate" shall be treated as if such
          Collateral Debt Security were Cash or an Eligible Investment, as
          applicable, and not as a Collateral Debt Security backed or otherwise
          invested in properties;

               (iii) not more than 10% of the Aggregate Collateral Balance
          consists of CMBS Securities;

               (iv) not more than 5% of the Aggregate Collateral Balance
          consists of CRE CDO Securities;

               (v) not more than 10% of the Aggregate Collateral Balance
          consists of CMBS Securities and CRE CDO Securities;

                                      -20-

<PAGE>

               (vi) not more than 5% of the Aggregate Collateral Balance
          consists of REIT Debt Securities;

               (vii) the Aggregate Principal Balance of all Collateral Debt
          Securities issued by any single issuer does not exceed the greater of
          (A) $57,000,000 or (B) 12% of the Aggregate Collateral Balance
          (provided that, for avoidance of doubt, with respect to any Loan, the
          issuer of such Loan shall be deemed to be the borrower of such Loan);

               (viii) no more than 75% of the Aggregate Collateral Balance
          consists of CMBS Securities issued in any single calendar year;

               (ix) (A) not more than 50% of the Aggregate Collateral Balance
          may consist of Collateral Debt Securities (other than CRE CDO
          Securities and REIT Debt Securities) that are collateralized or backed
          by interests on any Urban Office Properties or Suburban Office
          Properties; (B) not more than 40% of the Aggregate Collateral Balance
          may consist of Collateral Debt Securities (other than CRE CDO
          Securities and REIT Debt Securities) that are collateralized or backed
          by interests on any Multi-Family Properties; (C) not more than 40% of
          the Aggregate Collateral Balance may consist of Collateral Debt
          Securities (other than CRE CDO Securities and REIT Debt Securities)
          that are collateralized or backed by interests on Retail Properties;
          (D) not more than 40% of the Aggregate Collateral Balance may consist
          of Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) that are collateralized or backed by interests on
          Industrial Properties; (E) not more than 20% of the Aggregate
          Collateral Balance may consist of Collateral Debt Securities (other
          than CRE CDO Securities and REIT Debt Securities) that are
          collateralized or backed by interests on Hospitality Properties; (F)
          not more than 35% of the Aggregate Collateral Balance may consist of
          Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) that are collateralized or backed by interests on
          Condo Conversion Properties; (G) not more than 20% of the Aggregate
          Collateral Balance may consist of Collateral Debt Securities (other
          than CRE CDO Securities and REIT Debt Securities) that are
          collateralized or backed by interest on Condo Conversion Properties
          with respect to which the aggregate purchase price relating to signed
          contracts is less than the outstanding principal amount of the related
          Collateral Debt Securities; (H) not more than 15% of the Aggregate
          Collateral Balance may consist of Collateral Debt Securities (other
          than CRE CDO Securities and REIT Debt Securities) that are
          collateralized or backed by interests in Mixed-Use Properties; (I) not
          more than 10% of the Aggregate Collateral Balance may consist of
          Collateral Debt Securities (other than CRE CDO Securities and REIT
          Debt Securities) that are collateralized or backed by interests in
          Warehouse Properties; and (J) not more than 10% of the Aggregate
          Collateral Balance consists of Collateral Debt Securities (other than
          CRE CDO Securities and REIT Debt Securities) that are collateralized
          or backed by interests on all Property Types not specifically listed
          in clauses (A) through (I) above; provided that, for purposes of this
          clause (ix), any Collateral Debt Security described in the proviso to
          the definition of "Applicable Recovery Rate" shall be

                                      -21-

<PAGE>

          treated as if such Collateral Debt Security were Cash or an Eligible
          Investment, as applicable, and not as a Collateral Debt Security
          collateralized or backed by any particular Property Type;

               (x) not more than 10% of the Aggregate Collateral Balance
          consists of Floating Rate Securities that bear interest based upon a
          floating rate index other than LIBOR and that are not subject to Asset
          Specific Hedges;

               (xi) not more than 15% of the Aggregate Collateral Balance
          consists of Fixed Rate Securities that are not subject to Asset
          Specific Hedges;

               (xii) not more than 5% of the Aggregate Collateral Balance
          consists of CMBS Securities and CRE CDO Securities that have a stated
          maturity later than the Stated Maturity; provided that such 5%
          limitation may be increased after the Closing Date if the Rating
          Agency Condition has been satisfied with respect thereto;

               (xiii) not more than 5% of the Aggregate Collateral Balance
          consists of CMBS Securities that have a stated maturity later than the
          Stated Maturity;

               (xiv) not more than 2% of the Aggregate Collateral Balance
          consists of CRE CDO Securities that have a stated maturity later than
          the Stated Maturity;

               (xv) not more than 3% of the Aggregate Collateral Balance
          consists of CRE CDO Securities for which the Collateral Manager or an
          affiliate thereof acts as a collateral manager for the related issuer;

               (xvi) the Moody's Maximum Tranched Rating Factor Test is
          satisfied;

               (xvii) the Moody's Weighted Average Extended Maturity Test is
          satisfied;

               (xviii) the Herfindahl Diversity Test is satisfied;

               (xix) the Minimum Weighted Average Coupon Test is satisfied;

               (xx) the Minimum Weighted Average Spread Test is satisfied;

               (xxi) the Weighted Average Life Test is satisfied;

               (xxii) the S&P CDO Monitor Test is satisfied;

               (xxiii) the S&P Recovery Test is satisfied;

               (xxiv) the Fitch Loan Diversity Index Test is satisfied; and

               (xxv) the Fitch Poolwide Expected Loss Test is satisfied.

                                      -22-

<PAGE>

          Notwithstanding the foregoing, during the Ramp-Up Period, the
Collateral Quality Tests need not be met.

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

          "Company Administration Agreement": The administration agreement dated
on or about the Closing Date by and among the Issuer and the Company
Administrator, as modified and supplemented and in effect from time to time.

          "Company Administrative Expenses": All fees, expenses and other
amounts due or accrued with respect to any Payment Date and payable by the
Issuer or the Co-Issuer to (i) the Trustee pursuant to Section 6.7 hereof or any
co-trustee appointed pursuant to this Indenture (including amounts payable by
the Issuer as indemnification pursuant to this Indenture), (ii) the Company
Administrator under the Company Administration Agreement (including amounts
payable by the Issuer as indemnification pursuant to the Company Administration
Agreement) and to provide for the costs of liquidating the Issuer following
redemption of the Notes, (iii) the LLC Managers (including indemnification),
(iv) the Independent accountants, agents and counsel of the Issuer for
reasonable fees and expenses (including amounts payable in connection with the
preparation of tax forms on behalf of the Issuer and the Co-Issuer) and any
registered office and government filing fees, (v) the Rating Agencies for fees
and expenses in connection with any rating (including the annual fee payable
with respect to the monitoring of any rating) of the Notes, including fees and
expenses due or accrued in connection with any credit estimate or rating of the
Collateral Debt Securities, (vi) the Collateral Manager under this Indenture and
the Collateral Management Agreement, (vii) the Collateral Manager or other
Persons as indemnification pursuant to the Collateral Management Agreement,
(viii) the Advancing Agent or other Persons as indemnification pursuant to
Section 17.3, (ix) each member of the Advisory Committee (including amounts
payable as indemnification) under each agreement between such Advisory Committee
member and the Issuer (and the amounts payable by the Issuer to each member of
the Advisory Committee as indemnification pursuant to each such agreement); (x)
the Preferred Shares Paying Agent and the Shares Registrar pursuant to the
Preferred Shares Paying Agency Agreement, (xi) any other Person in respect of
any governmental fee, charge or tax in relation to the Issuer or the Co-Issuer
(in each case as certified by an Authorized Officer of the Issuer or the
Co-Issuer to the Trustee), and (xii) any other Person in respect of any other
fees or expenses (including indemnifications) permitted under this Indenture and
the documents delivered pursuant to or in connection with this Indenture and the
Notes and any amendment or other modification of any such documentation, in each
case unless expressly prohibited under this Indenture (including, without
limitation, the payment of all transaction fees and all legal and other fees and
expenses required in connection with the purchase of any Collateral Debt
Securities or any other transaction authorized by this Indenture and any amounts
due in respect of the listing of any Notes on the Irish Stock Exchange);
provided that Company Administrative Expenses shall not include (a) amounts
payable in respect of the Notes, (b) amounts payable under any Hedge Agreement
and (c) any Collateral Management Fee payable pursuant to the Collateral
Management Agreement.

          "Company Administrator": Maples Finance Limited, as administrator
pursuant to the Company Administration Agreement, unless a successor Person
shall have become

                                      -23-

<PAGE>

administrator pursuant to the Company Administration Agreement, and thereafter,
Company Administrator shall mean such successor Person.

          "Controlling Class": The Class A-1 Notes, so long as any Class A-1
Notes are Outstanding, then the Class A-2 Notes, so long as any Class A-2 Notes
are Outstanding, then the Class B Notes, so long as Class B Notes are
Outstanding, then the Class C Notes, so long as any Class C Notes are
Outstanding, then the Class D Notes, so long as any Class D Notes are
Outstanding, then the Class E Notes, so long as any Class E Notes are
Outstanding, then the Class F Notes, so long as any Class F Notes are
Outstanding, then the Class G Notes, so long as any Class G Notes are
Outstanding, then the Class H Notes, so long as any Class H Notes are
Outstanding, and then the Preferred Shares.

          "Corporate Trust Office": The principal corporate trust office of the
Trustee, currently located at 135 South LaSalle Street, Suite 1511, Chicago, IL
60603, Attention: CDO Trust Services Group, Arbor Realty Mortgage Securities
Series 2005-1, or such other address as the Trustee may designate from time to
time by notice to the Noteholders, the Holder of the Preferred Shares, the
Collateral Manager, the Rating Agencies, the Issuer and each Hedge Counterparty
or the principal corporate trust office of any successor Trustee.

          "Coverage Test Modification": The meaning specified in Section 12.5
hereof.

          "Coverage Tests": The Class A/B Coverage Tests, the Class C/D/E
Coverage Tests and the Class F/G/H Coverage Tests.

          "Covered Fixed Rate Security": Any Fixed Rate Security (other than any
Fixed Rate Security included in the Initial Collateral Debt Securities)
(including any Above Cap Security) (i) for which the Issuer has entered into one
or more Interest Rate Swap Agreements (either individually or together with
other Collateral Debt Securities), which (A) is a market rate swap that does not
require the related Hedge Counterparty to make any upfront payments, (B) has a
term which is at least as long as the Initial Maturity Date of such Fixed Rate
Security, (C) requires the related Hedge Counterparty to make floating rate
payments to the Issuer based on the related notional amount based on the London
interbank offered rate for U.S. Dollar deposits in Europe and (D) requires the
Issuer to make fixed rate payments to the related Hedge Counterparty or (ii)
that is subject to an Asset-Specific Hedge. For the avoidance of doubt, any
Fixed Rate Security with respect to which the Issuer has entered into an
Interest Rate Swap Agreement that has a term expiring prior to the Initial
Maturity Date of such Fixed Rate Security will not be a Covered Fixed Rate
Security.

          "CRE CDO Securities": Collateralized debt obligations, collateralized
bond obligations or collateralized loan obligations (including, without
limitation, any synthetic collateralized debt obligations or synthetic
collateralized loan obligations) that entitle the holders thereof to receive
payments that depend (except for rights or other assets designed to assure the
servicing or timely distribution of proceeds to holders of such CRE CDO
Securities) on the cash flow from (and not the market value of) a portfolio of
securities related to commercial mortgage property.

                                      -24-

<PAGE>

          "Credit Risk/Defaulted Security Cash Purchase": The meaning specified
in Section 12.1(b) hereof.

          "Credit Risk Security": Any Collateral Debt Security that, in the
Collateral Manager's reasonable business judgment, has a significant risk of
declining in credit quality or, with a lapse of time, becoming a Defaulted
Security.

          "Cure Advance": An advance by the Collateral Manager, in connection
with the exercise of a cure right by the Issuer, as controlling holder or
directing holder or other similar function, with respect to a Collateral Debt
Security.

          "Current Portfolio": The portfolio of Collateral Debt Securities and
Eligible Investments prior to giving effect to a proposed reinvestment in a
Substitute Collateral Debt Security.

          "Custodial Account": An account at the Custodial Securities
Intermediary in the name of the Trustee pursuant to Section 10.1(b) hereof.

          "Custodial Securities Intermediary": The meaning specified in Section
3.3(a) hereof.

          "Default": Any Event of Default or any occurrence that is, or with
notice or the lapse of time or both would become, an Event of Default.

          "Defaulted Interest Amount": The Class A-1 Defaulted Interest Amount,
the Class A-2 Defaulted Interest Amount, the Class B Defaulted Interest Amount,
the Class C Defaulted Interest Amount, the Class D Defaulted Interest Amount,
the Class E Defaulted Interest Amount, the Class F Defaulted Interest Amount,
the Class G Defaulted Interest Amount and/or the Class H Defaulted Interest
Amount, as the context requires.

          "Defaulted Security": Any Collateral Debt Security or any other
security included in the Assets:

                    (1) with respect to a Preferred Equity Security (i) with
          respect to which there has occurred and is continuing a payment
          default (after giving effect to any applicable grace period but
          without giving effect to any waiver); provided, however, that
          notwithstanding the foregoing, a Preferred Equity Security shall not
          be deemed to be a Defaulted Security as a result of (A) the related
          issuer's failure to pay dividends or distributions on the initial due
          date therefor, if the Collateral Manager, on behalf of the Issuer,
          (subject to the applicable provisions of the Servicing Agreement)
          consents to extend the due date when such dividend or distribution is
          due and payable, and such dividend or distribution is paid on or
          before such extended due date (provided that such dividend or
          distribution is paid not more than 60 days (or 30 days if such
          dividend or distribution was previously paid 60 days after the initial
          date that it was due as a result of the Collateral Manager, on behalf
          of the Issuer, previously consenting to extend such due date) after
          the initial date that it was due), or (B) the failure of the issuer or
          affiliate of the issuer of the Preferred Equity Security to redeem or

                                      -25-

<PAGE>

          purchase such Preferred Equity Security on the date when such
          redemption or purchase is required pursuant to the terms of the
          agreement setting forth the rights of the holder of that Preferred
          Equity Security (after giving effect to all extensions of such
          redemption or purchase date that the issuer or affiliate of the issuer
          of the Preferred Equity Security had the right to elect and did elect
          under the terms of the agreement setting forth the rights of the
          holder of that Preferred Equity Security), if the Collateral Manager,
          on behalf of the Issuer, (subject to the applicable provisions of the
          Servicing Agreement) consents to extend such redemption or purchase
          date; provided that such consent does not extend the redemption or
          purchase date by more than two (2) years after the redemption or
          purchase date required under such agreement (that is, the original
          redemption or purchase date under such agreement as extended by all
          extensions of such date that the issuer or affiliate of the issuer of
          the Preferred Equity Security had the right to elect and did elect
          under the terms of such agreement) and the amount required to be paid
          in connection with such redemption or purchase is paid on or before
          such extended redemption or purchase date, or (ii) with respect to
          which there is known to the Issuer or the Collateral Manager a default
          (other than any payment default) which default entitles the holders
          thereof to accelerate the maturity of all or a portion of the
          principal amount of such obligation; provided, however, that, in each
          case, if such default is cured or waived then such asset shall no
          longer be a Defaulted Security or (iii) with respect to which it is
          known to the Collateral Manager that (A) any bankruptcy, insolvency or
          receivership proceeding has been initiated in connection with the
          issuer of such Preferred Equity Security, or (B) there has been
          proposed or effected any distressed exchange or other debt
          restructuring where the issuer of such Preferred Equity Security has
          offered the debt holders a new security or package of securities that
          either (x) amounts to a diminished financial obligation or (y) has the
          purpose of helping the issuer to avoid default, or (iv) that has been
          rated "CC," "D" or "SD" or below by S&P or "CC" or below by Fitch, or
          (v) there is known to the Collateral Manager that the issuer of such
          Preferred Equity Security is in default (without giving effect to any
          applicable grace period or waiver) as to payment of principal and/or
          interest on another obligation (and such default has not been cured or
          waived) which is senior or pari passu in right of payment to such
          Preferred Equity Security, except that a Preferred Equity Security
          will not constitute a "Defaulted Security" under this clause (v) if
          each of the Rating Agencies has confirmed in writing that such event
          shall not result in the reduction, qualification or withdrawal of any
          rating of the Notes;

                    (2) with respect to a Loan (other than a Single Asset
          Mortgage Security, a Single Borrower Mortgage Security or a Rake
          Bond), if a foreclosure or default (whether or not declared) with
          respect to the related commercial mortgage loan has occurred;
          provided, however, that notwithstanding the foregoing, a Loan shall
          not be deemed to be a Defaulted Security as a result of (i) the
          related borrower's failure to pay interest on such Loan or on the
          related commercial mortgage loan on the initial due date therefor, if
          the related lender or holder of such Loan or of the related commercial
          mortgage loan consents to extend the due date when such interest is
          due and payable, and such interest is

                                      -26-

<PAGE>

          paid on or before such extended due date (provided that such interest
          is paid not more than 60 days (or 30 days if such interest was
          previously paid 60 days after the initial date that it was due as a
          result of the Collateral Manager, on behalf of the Issuer, (subject to
          the applicable provisions of the Servicing Agreement) previously
          consenting to extend such due date after the initial date that it was
          due) after the initial date that it was due), or (ii) the related
          borrower's failure to pay principal on such Loan or the related
          commercial mortgage loan on the original maturity date thereof (as
          defined below), if the related lender or holder of such Loan or of the
          related commercial mortgage loan consents to extend such maturity date
          (so long as the Maturity Extension Requirements are met) and such
          principal is paid on or before such extended maturity date, or (iii)
          the occurrence of any default other than a payment default with
          respect to such Loan or the related commercial mortgage loan, unless
          and until the earlier of (A) the declaration of default and
          acceleration of the maturity of the Loan by the lender or holder
          thereof and (B) the continuance of such default uncured for 60 days
          after such default became known to the Collateral Manager or the
          Servicer or, subject to the satisfaction of the Rating Agency
          Condition, such longer period as the Collateral Manager (subject to
          the applicable provisions of the Servicing Agreement) determines. As
          used above, the term "original maturity date" means the maturity date
          of a Loan or the related commercial mortgage loan as extended by all
          extensions thereof which the related borrower had the right to elect
          and did elect under the terms of the instruments and agreements
          relating to such Loan or to the related commercial mortgage loan, but
          before taking into account any additional extensions thereof that are
          consented to by the lender or holder of such Loan or of the related
          commercial mortgage loan; and

                    (3) with respect to a CMBS Security, a CRE CDO Security, a
          REIT Debt Security, a Single Asset Mortgage Security, a Single
          Borrower Mortgage Security or a Rake Bond (i) as to which there has
          occurred and is continuing a principal payment default (without giving
          effect to any applicable grace period or waiver) or (ii) as to which
          there is known to the Collateral Manager a default (other than any
          payment default) which default entitles the holders thereof to
          accelerate the maturity of all or a portion of the principal amount of
          such obligation; provided, however, that, in each case, if such
          default is cured or waived then such asset shall no longer be a
          Defaulted Security, or (iii) as to which it is known to the Collateral
          Manager that (A) any bankruptcy, insolvency or receivership proceeding
          has been initiated in connection with the issuer of such security, or
          (B) there has been proposed or effected any distressed exchange or
          other debt re-structuring where the issuer of such security has
          offered the debt holders a new security or package of securities that
          either (x) amounts to a diminished financial obligation or (y) has the
          purpose of helping the issuer to avoid default, or (iv) that has been
          rated "CC," "D" or "SD" or below by S&P, "CC" or below by Fitch, or
          "Ca" or "C" by Moody's, or with respect to REIT Debt Securities, the
          issuer of which has a credit rating of "D" or "SD" or as to which S&P
          has withdrawn its rating, or (v) as to which it is known to the
          Collateral Manager that the issuer thereof is in default (without
          giving effect to any applicable grace period or waiver) as to payment
          of principal and/or interest

                                      -27-

<PAGE>

          on another obligation (and such default has not been cured or waived)
          which is senior or pari passu in right of payment to such security,
          except that any such security will not constitute a "Defaulted
          Security" under this clause (v) if each of the Rating Agencies has
          confirmed in writing that such event shall not result in the
          reduction, qualification or withdrawal of any rating of the Notes, or
          (vi)(A) as to which there has been a failure to pay interest in whole
          or in part for the lesser of (x) six months or (y) three payment
          periods (if such security is rated (or privately rated for purposes of
          the issuance of the Securities) below "Baa3" by Moody's or "BBB-" by
          S&P or Fitch); provided, however, that if the Rating Agency Condition
          for such security is satisfied with respect to S&P and Moody's, the
          Collateral Manager may choose not to treat such security as a
          Defaulted Security or (B) as to which there has been a failure to pay
          interest in whole or in part for the lesser of (x) one year or (y) six
          consecutive payment periods (if such security is rated (or privately
          rated for purposes of the issuance of the Securities) "BBB-" or higher
          by S&P or Fitch, or "Baa3" or higher by Moody's) even if by its terms
          it provides for the deferral and capitalization of interest thereon.

provided that any Collateral Debt Security which has sustained a write-down of
Principal Balance in accordance with its terms will not necessarily be
considered a Defaulted Security solely due to such writedown; provided, further,
that, for purposes of calculating the Par Value Ratios, any Collateral Debt
Security that has sustained an implied reduction of principal balance due to an
appraisal reduction will not necessarily be considered a Defaulted Security
solely due to such implied reduction.

For purposes of calculating the Par Value Ratios, an appraisal reduction of a
Collateral Debt Security will be assumed to result in an implied reduction of
principal balance for such Collateral Debt Security only if such appraisal
reduction is intended to reduce the interest payable on such Collateral Debt
Security and only in proportion to such interest reduction. The Collateral
Manager shall notify the Trustee of any appraisal reductions of Collateral Debt
Securities if the Collateral Manager has actual knowledge thereof.

For purposes of the definition of "Defaulted Security," the "Maturity Extension
Requirements" will be satisfied with respect to any extension if the maturity
date is extended (i) in the case of Loans other than ARD Loans, to a new
maturity date that is (A) not more than two years after the original maturity
date and (B) not less than 10 years prior to the Stated Maturity and (ii) in the
case of ARD Loans, such that (A) the anticipated repayment date will not be less
than 20 years prior to the Stated Maturity and (B) the new maturity date is not
less than three years prior to the Stated Maturity; provided, however, that
notwithstanding the requirements in the foregoing clauses (i) and (ii),
"Maturity Extension Requirements" will be deemed satisfied with respect to any
extensions as to which the Rating Agency Condition has been satisfied.

For the avoidance of doubt, the parties hereto understand and agree that any
initial permissible 60 day extension period described in paragraphs (1) and (2)
of this definition shall in no event be combined with any subsequent permissible
30 day extension period described in paragraphs (1) and (2) of this definition.

                                      -28-

<PAGE>

          "Deafeased Collateral Accounts": The trust accounts so designated and
established pursuant to Section 10.7(a) hereof.

          "Delayed Draw Term Loan": Any Loan that is fully committed on the
initial funding date of such Loan but is required to be fully funded in one or
more installments and which, once all such installments have been made, has the
characteristics of a term loan; provided that no Loan with respect to which the
additional funding obligation is held separately outside the Issuer by the
Seller or an affiliate of the Seller or by an unaffiliated third party shall be
deemed to be a "Delayed Draw Term Loan" under this Indenture; provided, further,
that for purposes of the Coverage Tests and the Collateral Quality Tests, the
principal balance of a Delayed Draw Term Loan, as of any date of determination,
refers to the sum of (i) the outstanding principal balance of such Delayed Draw
Term Loan and (ii) the amounts on deposit in the Delayed Funding Obligations
Account in respect of the unfunded portion of such Delayed Draw Term Loan.

          "Delayed Funding Obligations Account": The account established
pursuant to Section 10.5(a) hereof.

          "Deposit": Any Cash or money deposited with the Trustee by the Issuer
on the Closing Date for inclusion as Assets and deposited by the Trustee in the
Unused Proceeds Account on the Closing Date, which shall be equal to
$62,693,342.

          "Deposit Accounts": The meaning specified in Section 3.3(e)(xii)
hereof.

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

          "Determination Date": With respect to the initial Payment Date, April
15, 2006, and thereafter quarterly on each July 15, October 15, January 15, and
April 15 (or if such date is not a Business Day, then the next succeeding
Business Day).

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

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

          "Downgraded Indemnitor": Any Person providing the indemnification
described in subclause (c)(i) of clause (xxxiv) of the definition of
"Eligibility Criteria" or any bank or other financial institution providing a
Qualified Letter of Credit described in subclause (c)(ii) of clause (xxxiv) of
the definition of "Eligibility Criteria" who, in either case, is downgraded to
below "Baa3" by Moody's.

          "Due Date": Each date on which a Scheduled Distribution is due on a
Pledged Obligation.

          "Due Period": With respect to any Payment Date, the period commencing
on the day immediately succeeding the second preceding Determination Date (or
commencing on the Closing Date, in the case of the Due Period relating to the
first Payment Date) and ending on and including the Determination Date
immediately preceding such Payment Date.

                                      -29-

<PAGE>

          "Effective Date": The date which is the earlier of (i) the 270th day
after the Closing Date and (ii) the first date on which the Aggregate Principal
Balance of the Pledged Collateral Debt Securities is at least equal to the
Minimum Ramp-Up Amount.

          "Eligibility Criteria": The criteria set forth below, which if
satisfied with respect to a loan, security or other obligation at the time it is
purchased (or, in the case of any ARMS Equity CDS Contribution, contributed), as
evidenced by an Officer's Certificate of the Collateral Manager delivered to the
Trustee as of the date of such acquisition (or contribution), will make such
loan, security or other obligation eligible for purchase by (or contribution to)
the Issuer as a Collateral Debt Security:

               (i) it is a Loan or security related to commercial real estate;

               (ii) it is issued by an issuer incorporated or organized under
          the laws of the United States or a commonwealth, territory or
          possession of the United States;

               (iii) with respect to each CMBS Security, substantially all the
          loans backing such Collateral Debt Security are secured by collateral
          substantially all of which is located in the United States or a
          commonwealth, territory or possession of the United States and with
          respect to each REIT Debt Security, the issuer of such Collateral Debt
          Security is incorporated or organized under the laws of the United
          States or a commonwealth, territory or possession of the United
          States;

               (iv) it provides for periodic payments of interest (or, in the
          case of Preferred Equity Securities, dividends or other distributions)
          no less frequently than semi-annually;

               (v) it has a Moody's Rating, a Fitch Rating (except for Loans and
          Preferred Equity Securities) and a S&P Rating (and, unless otherwise
          agreed by S&P, such S&P Rating does not include the subscript "t");

               (vi) its acquisition would not cause the Issuer, the Co-Issuer or
          the pool of Pledged Obligations to be required to register as an
          investment company under the Investment Company Act; and if the issuer
          of such Collateral Debt Security is excepted from the definition of an
          "investment company" solely by reason of Section 3(c)(1) of the
          Investment Company Act, then either (a) such Collateral Debt Security
          does not constitute a "voting security" for purposes of the Investment
          Company Act or (b) the aggregate amount of such Collateral Debt
          Security held by the Issuer is less than 10% of the entire issue of
          such Collateral Debt Security;

               (vii) (a) if it is a Loan (including a Mezzanine Loan and a Rake
          Bond but excluding an ARD Loan), no commercial mortgage loan
          underlying, securing or constituting such Collateral Debt Security has
          a maturity date (including any extension option) that is later than 10
          years prior to the Stated Maturity, (b) if it is a REIT Debt Security,
          such REIT Debt Security (without regard to the maturities of any
          collateral underlying such REIT Debt Security) does not have a stated
          final maturity later than the Stated Maturity, (c) if it is an ARD
          Loan, (i) the anticipated

                                      -30-

<PAGE>

          repayment date of such ARD Loan is not later than 20 years prior to
          the Stated Maturity and (ii) the new maturity date is not less than
          three years prior to the Stated Maturity and (d) if it is a Preferred
          Equity Security, the date (after giving effect to all permissible
          extensions thereof) by which all distributions on such Preferred
          Equity Security attributable to the return of capital by its governing
          documents are required to be made is not later than the Stated
          Maturity (after giving effect to all anticipated settlement concerns
          in connection with such return of capital);

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

               (ix) it is not, and does not provide for conversion or exchange
          into, "margin stock" (as defined under Regulations T, U or X by the
          Board of Governors of the Federal Reserve System) at any time over its
          life;

               (x) it is not the subject of (a) any Offer by the issuer of such
          security or by any other person made to all of the holders of such
          security to purchase or otherwise acquire such security (other than
          pursuant to any redemption in accordance with the terms of the related
          Underlying Instruments) or to convert or exchange such security into
          or for Cash, securities or any other type of consideration or (b) any
          solicitation by an issuer of such security or any other person to
          amend, modify or waive any provision of such security or any related
          Underlying Instruments, and has not been called for redemption;

               (xi) it is not an Equity Security, Principal Only Security,
          Interest Only Security, Step-Up Security, Market Value Collateralized
          Debt Obligation security or any security the repayment of which is
          subject to substantial non-credit related risk, as determined by the
          Collateral Manager in its reasonable business judgment;

               (xii) except with respect to Preferred Equity Securities, it is
          not a security that by the terms of its Underlying Instruments
          provides for conversion or exchange (whether mandatory or at the
          option of the issuer or the holder thereof) into an Equity Security at
          any time prior to its maturity;

               (xiii) it is not a financing by a debtor-in-possession in any
          insolvency proceeding;

               (xiv) except with respect to Delayed Draw Term Loans, it will not
          require the Issuer to make any future payments after the initial
          purchase thereof;

               (xv) if it is a Delayed Draw Term Loan, an amount equal to the
          aggregate amount of the Issuer's remaining commitments with respect to
          such Delayed Draw Term Loan is deposited into the Delayed Draw Funding
          Obligations Account on the date such Delayed Draw Term Loan is
          acquired by the Issuer;

                                      -31-

<PAGE>

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

               (xvii) except with respect to Partially Deferred Loans, it does
          not have any outstanding deferred or capitalized interest; (xviii) it
          is not a security that, in the Collateral Manager's reasonable
          business judgment, has a significant risk of declining in credit
          quality or, with lapse of time or notice, becoming a Defaulted
          Security;

               (xix) it is not a Defaulted Security (as determined by the
          Collateral Manager after reasonable inquiry);

               (xx) if it is a Participation, (a) it is a real estate related
          Participation, that is subject to the Servicing Agreement, (b) either
          (i) the Underlying Term Loan, A Note or B Note has been included in a
          transaction that would be classified as a CMBS Conduit Security or a
          CMBS Large Loan Security or (ii) the Underlying Term Loan is serviced
          pursuant to a commercial mortgage servicing arrangement, which
          includes the standard servicing provisions found in CMBS Securities
          transactions, (c) the requirements regarding the representations and
          warranties with respect to the Underlying Term Loan, the Underlying
          Mortgage Property (as applicable) and the Participation set forth in
          Section 16.5 hereof have been met, (d) the terms of the Underlying
          Instruments are consistent with the terms of similar Underlying
          Instruments in the CMBS Securities industry and (e) except in the case
          of the Initial Collateral Debt Securities, the related Participating
          Institution is either "a special purpose entity" or it qualifies as a
          "qualified institutional lender" as typically defined in the
          Underlying Instruments related to Participations; provided that a
          securitization trust, a CDO issuer or a similar securitization vehicle
          and Arbor Realty Participation, LLC, a Delaware limited liability
          company, will be deemed a "special purpose entity" for purposes of the
          Eligibility Criteria for so long as the separateness provisions of its
          organizational documents have not been amended (unless the Rating
          Agency Condition was satisfied in connection with any such amendment);

               (xxi) if it is a B Note, (a) it is a real estate related B Note
          that is subject to the Servicing Agreement, (b) either (i) the related
          A Note has been included in a transaction that would be classified as
          a CMBS Conduit Security or a CMBS Large Loan Security or (ii) the B
          Note is serviced pursuant to a commercial mortgage servicing
          arrangement, which includes the standard servicing provisions found in
          CMBS Securities transactions, (c) the requirements regarding the
          representations and warranties with respect to the Underlying Term
          Loan, the Underlying Mortgage Property (as applicable) and the B Note
          set forth in Section 16.5 hereof have been met and (d) the terms of
          the Underlying Instruments are consistent with the terms of similar
          Underlying Instruments in the CMBS Securities industry;

                                      -32-

<PAGE>

               (xxii) if it is a Mezzanine Loan, (a) it is serviced pursuant to
          the Servicing Agreement, (b) the requirements regarding the
          representations and warranties with respect to the Underlying Term
          Loan, the Underlying Mortgage Property (as applicable) and the
          Mezzanine Loan set forth in Section 16.5 hereof have been met and (c)
          the terms of the Underlying Instruments are consistent with the terms
          of similar Underlying Instruments in the CMBS Securities industry with
          respect to Mezzanine Loans;

               (xxiii) if it is a Whole Loan, (a) it is a real estate related
          Whole Loan that is serviced pursuant to the Servicing Agreement and
          (b) the requirements regarding the representations and warranties with
          respect to the Loan and the Underlying Mortgage Property (as
          applicable) set forth in Section 16.5 hereof have been met;

               (xxiv) it is U.S. Dollar denominated and may not be converted
          into a security payable in any other currencies;

               (xxv) it is one of the Specified Types;

               (xxvi) if it is a Loan or CMBS Security, the principal balance of
          the Loan or CMBS Security has not been reduced by a realized loss,
          expected loss, appraisal event, appraisal reduction or similar item
          since initial issuance, other than a Loan as to which a workout or
          other restructuring has occurred but as to which no such reduction has
          occurred since the completion of such workout or restructuring;

               (xxvii) any requirements regarding opinions with respect to
          certain purchases of Collateral Debt Securities as provided in this
          Indenture have been met;

               (xxviii) if it is a CMBS Security or a CRE CDO Security, at the
          time of its acquisition by the Issuer, it was rated investment grade
          by at least one Rating Agency;

               (xxix) except with respect to CMBS Securities, CRE CDO Securities
          and REIT Debt Securities, it may not be collateralized or backed by
          interests on Healthcare Properties;

               (xxx) its acquisition will not cause the Issuer to fail to be a
          "qualified REIT subsidiary" (within the meaning of Section 856(i)(2)
          of the Code);

               (xxxi) if it is a CMBS Security or a CRE CDO Security, it does
          not have a stated maturity or a rated final distribution date
          scheduled to occur more than five (5) years later than the Stated
          Maturity; provided that, with respect to any such security that has a
          stated maturity or a rated final distribution date scheduled to occur
          later than the Stated Maturity, (a) if it is a CMBS Security, such
          CMBS Security is rated at least "A3" by Moody's (and, if rated "A3,"
          it is not on credit watch with negative implications), and (b) if it
          is a CRE CDO Security, such CRE

                                      -33-

<PAGE>

          CDO Security is rated at least "Aa2" by Moody's (and, if rated "Aa2,"
          it is not on credit watch with negative implications);

               (xxxii) if such Collateral Debt Security has attached reciprocal
          "buy/sell" rights as a dispute resolution mechanism, such rights in
          favor of the Issuer are freely assignable by the Issuer to any of its
          affiliates;

               (xxxiii) if it is a CRE CDO Security, (a) it is rated at least
          "AA" by S&P (and, if rated "AA," it is not on credit watch with
          negative implications) and (b) the Underlying Instruments related to
          such CRE CDO Security do not (1) permit the payment of interest
          thereon to be deferred or capitalized or (2) allow for the issuance of
          identical securities in place of payments of interest in Cash; and

               (xxxiv) if it is a Future Advance Loan, then either the Rating
          Agency Condition has been satisfied or all of the following conditions
          are satisfied: (a) the Issuer does not have any additional funding
          obligation under the related Other Loan by virtue of holding the
          Future Advance Loan; (b) the borrower under the Future Advance Loan
          has agreed (i) to request such advances from a Person other than the
          Issuer (so long as the Issuer does not own the related Other Loan) and
          (ii) not to assert any defense to, or any right of offset against,
          payment of the Future Advance Loan as the result of any breach by the
          maker or holder of the related Other Loan in connection with the
          future funding obligation, and unless the holder of the Future Advance
          Loan and the related Other Loan are then the same Person, not to
          assert any claim against the holder of the Future Advance Loan in
          connection with the future funding obligation under the related Other
          Loan; (c) an indemnitor has agreed to indemnify the Issuer with
          respect to any losses arising from the failure of such party to
          fulfill its future funding obligations under the related Other Loan;
          provided that such indemnitor (i) is rated at least "A-" by S&P and at
          least "A3" by Moody's, (ii) has obtained and delivered to the Issuer a
          Qualified Letter of Credit in an amount not less than the amount of
          the aggregate future funding obligation under the related Other Loan,
          or (iii) is the Arbor Parent; provided that, for so long as the Arbor
          Parent is not rated at least "A-" by S&P and at least "A3" by Moody's,
          the aggregate dollar amount of all such future funding obligations so
          indemnified by the Arbor Parent pursuant to clause (c) of this
          paragraph, which are then unfunded, shall be, as of any Measurement
          Date, equal to or less than 7.0% of the Aggregate Collateral Balance;
          and (d) the then remaining future funding obligations required under
          the related Other Loan is not required to finance ground-up
          construction. If, on any date (a "Downgrade Date") the Issuer (or the
          Collateral Manager on behalf of the Issuer) receives notice that an
          indemnitor providing the indemnification described in subclause (c)(i)
          above or a bank or other financial institution providing a Qualified
          Letter of Credit described in subclause (c)(ii) above has become a
          Downgraded Indemnitor, and on such Downgrade Date the then unfunded
          future funding obligations with respect to which the Issuer is
          indemnified by all Downgraded Indemnitors exceeds 3.5% of the
          Aggregate Collateral Balance, then 60 days after such Downgrade Date
          the Issuer shall treat all of the Future Advance Loans related to each
          Downgraded Indemnitor as to whom any one of the related unfunded
          future

                                      -34-

<PAGE>

          funding obligations for which such Downgraded Indemnitor has agreed to
          indemnify the Issuer or has provided a Qualified Letter of Credit as
          described in clauses (c)(i) or (c)(ii) above, as applicable, is not
          expected to be fully funded within 12 months after such Downgrade Date
          (each such Downgraded Indemnitor, a "Relevant Downgraded Indemnitor")
          as Defaulted Securities for purposes of determining compliance with
          the Moody's Maximum Tranched Rating Factor Test, the Moody's Minimum
          Weighted Average Coupon Test, the Moody's Minimum Weighted Average
          Spread Test and the Moody's Weighted Average Extended Maturity Test
          unless, within such 60 day period, the Issuer shall have either (1)
          entered into an indemnification agreement or received a Qualified
          Letter of Credit (with respect to each of the future funding
          obligations for which the Issuer was indemnified by each Relevant
          Downgraded Indemnitor) that satisfies the requirements of either
          subclause (c)(i), (c)(ii) or (c)(iii) above or (2) otherwise satisfied
          the Rating Agency Condition with respect to Moody's.

          Notwithstanding the foregoing provisions of this definition, with
respect to any Collateral Debt Security acquired by the Issuer on or prior to
the Closing Date, if any of the Eligibility Criteria above pertains to the
subject matter of a representation and warranty under the related Collateral
Debt Securities Purchase Agreement as to which an exception has been disclosed
in the related exception schedule, such Collateral Debt Security shall be deemed
to satisfy such criterion notwithstanding such exception.

          "Eligible Account": The meaning given to such term in the Servicing
Agreement.

          "Eligible Investments": Any Dollar-denominated investment that, at the
time it is Granted to the Trustee (directly or through a Securities Intermediary
or bailee), is Registered and is one or more of the following obligations or
securities:

               (i) direct obligations of, and obligations the timely payment of
          principal of and interest on which is fully and expressly guaranteed
          by, the United States, or any agency or instrumentality of the United
          States, the obligations of which are expressly backed by the full
          faith and credit of the United States;

               (ii) demand and time deposits in, certificates of deposit of,
          bankers' acceptances issued by, or federal funds sold by, any
          depository institution or trust company incorporated under the laws of
          the United States or any state thereof or the District of Columbia
          (including the Trustee or the commercial department of any successor
          Trustee, as the case may be; provided that such successor otherwise
          meets the criteria specified herein) and subject to supervision and
          examination by federal and/or state banking authorities so long as the
          commercial paper and/or the debt obligations of such depositary
          institution or trust company (or, in the case of the principal
          depositary institution in a holding company system, the commercial
          paper or debt obligations of such holding company) at the time of such
          investment or contractual commitment providing for such investment
          have a credit rating not less than "A1" by Moody's, "A+" by Fitch and
          "AA-" by S&P (or, in the case of LaSalle Bank National Association,
          "A+" by S&P for so long as LaSalle Bank National Association is the
          Trustee hereunder), in the case of

                                      -35-

<PAGE>

          long-term debt obligations, and "P-1" by Moody's, "F1" by Fitch and
          "A-1+" by S&P (or, in the case of LaSalle Bank National Association,
          "A-1" by S&P for so long as LaSalle Bank National Association is the
          Trustee hereunder) for Eligible Investments which have a maturity of
          30 days or less;

               (iii) unleveraged repurchase or forward purchase obligations with
          respect to (a) any security described in clause (i) above or (b) any
          other security issued or guaranteed by an agency or instrumentality of
          the United States of America, in either case entered into with a
          depository institution or trust company (acting as principal)
          described in clause (ii) above (including LaSalle Bank National
          Association or the commercial department of any successor Trustee, as
          the case may be; provided that such person otherwise meets the
          criteria specified herein) or entered into with a corporation (acting
          as principal) whose long-term rating is not less than "Aa2" by
          Moody's, "AA" by Fitch and "AAA" by S&P (for so long as any Notes
          rated by S&P are Outstanding) or whose short-term credit rating is not
          less than "P-1" by Moody's, "F1" by Fitch and "A-1+" by S&P for
          Eligible Investments which have a maturity of 30 days or less (for so
          long as any Notes rated by S&P are Outstanding); provided that the
          issuer thereof must also have at the time of such investment a
          long-term credit rating of not less than "Aa2" by Moody's, "A+" by
          Fitch and "AAA" by S&P (for so long as any Notes rated by S&P are
          Outstanding);

               (iv) registered securities bearing interest or sold at a discount
          issued by any corporation incorporated under the laws of the United
          States or any state thereof or the District of Columbia that has a
          credit rating of not less than "Aa2" by Moody's, "AA" by Fitch and
          "AAA" by S&P (for so long as any Notes rated by S&P are Outstanding)
          at the time of such investment or contractual commitment providing for
          such investment;

               (v) commercial paper or other similar short-term obligations
          (including that of the Trustee or the commercial department of any
          successor Trustee, as the case may be, or any affiliate thereof;
          provided that such person otherwise meets the criteria specified
          herein) having at the time of such investment a credit rating of "P-1"
          by Moody's, "F1+" by Fitch and "A-1+" by S&P (for so long as any Notes
          rated by S&P are Outstanding); provided that the issuer thereof must
          also have at the time of such investment a senior long-term debt
          rating of not less than "Aa3" by Moody's, "AA" by Fitch and "AA" by
          S&P (for so long as any Notes rated by S&P are Outstanding);

               (vi) a reinvestment agreement issued by any bank (if treated as a
          deposit by such bank), or a Registered guaranteed investment or
          reinvestment agreement issued by an insurance company or other
          corporation or entity, in each case that has a credit rating of not
          less than "P-1" by Moody's, "F1+" by Fitch and "A-1+" by S&P or "A-1"
          by S&P for Eligible Investments which have a maturity of 30 days or
          less (for so long as any Notes rated by S&P are Outstanding); provided
          that the issuer thereof must also have at the time of such investment
          a long-term credit rating of not less than "Aa2" by Moody's, "AA" by

                                      -36-

<PAGE>

          Fitch and "AAA" by S&P (for so long as any Notes rated by S&P are
          Outstanding); and

               (vii) any other investment similar to those described in clauses
          (i) through (vi) above that (1) each of Moody's and S&P has confirmed
          may be included in the portfolio of Pledged Obligations as an Eligible
          Investment without adversely affecting its then-current ratings on the
          Notes and (2) has a long-term credit rating of not less than "Aa2" by
          Moody's, "AA" by Fitch and "AAA" by S&P (for so long as any Notes
          rated by S&P are Outstanding) or a credit rating of not less than
          "P-1" by Moody's, "F1" by Fitch and "A-1+" by S&P or "A-1" by S&P for
          Eligible Investments which have a maturity of 30 days or less (for so
          long as any Notes rated by S&P are Outstanding);

provided that mortgage-backed securities and Interest Only Securities shall not
constitute Eligible Investments; and provided, further, that (a) Eligible
Investments acquired with funds in the Collection Accounts shall include only
such obligations or securities as mature no later than the Business Day prior to
the next Payment Date succeeding the acquisition of such obligations or
securities, (b) Eligible Investments shall not include obligations bearing
interest at inverse floating rates, (c) Eligible Investments shall not include
obligations the purchase of which would cause the Issuer to fail to be a
"qualified REIT subsidiary" (within the meaning of Section 856(i)(2) of the
Code), shall not have payments subject to foreign or United States withholding
tax, shall not be purchased for a price in excess of par, shall not have an S&P
rating which contains a subscript "r," "t," "p," "pi" or "q" and (iv) Eligible
Investments shall not include Margin Stock.

          For the avoidance of doubt, all credit ratings by Fitch required under
this definition shall be deemed to be Fitch Ratings for all purposes under this
Indenture.

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

          "Equity Security": Any security (other than any Preferred Equity
Security or any asset-backed security structured as a certificate or other form
of beneficial interest) that does not entitle the holder thereof to receive
periodic payments of interest and one or more installments of principal.

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

          "Euroclear": Euroclear Bank S.A./N.V., as operator of the Euroclear
System.

          "Event of Default": The meaning specified in Section 5.1 hereof.

          "Excepted Assets": (i) The U.S. $250 proceeds of share capital
contributed by ARMS Equity as the holder of the ordinary shares of the Issuer,
and any interest earned thereon and the bank account in which such monies are
held and the U.S. $250 transaction fee paid to the Issuer and (ii) the Preferred
Shares Distribution Account and all of the funds and other property from time to
time deposited in or credited to the Preferred Shares Distribution Account.

                                      -37-

<PAGE>

          "Exchange Act": The Securities Exchange Act of 1934, as amended.

          "Exchange Security": The meaning specified in Section 12.1(b) hereof.

          "Expense Account": The account established pursuant to Section 10.6(a)
hereof.

          "Extended Maturity Date": With respect to any Collateral Debt
Security, the maturity date of such Collateral Debt Security, assuming the
exercise of all extension options (if any) that are exercisable at the option of
the related borrower under the terms of such Collateral Debt Security.

          "Extended Weighted Average Maturity": As of any Measurement Date with
respect to the Collateral Debt Securities (other than Defaulted Securities), the
number obtained by (i) summing the products obtained by multiplying (a) the
remaining term to maturity (in years, rounded to the nearest one tenth thereof,
and based on the Extended Maturity Date) of each Collateral Debt Security (other
than Defaulted Securities) by (b) the outstanding Principal Balance at such time
of such Collateral Debt Security and (ii) dividing the sum by the Aggregate
Principal Balance at such time of all Collateral Debt Securities (other than
Defaulted Securities).

          "Financial Asset": The meaning specified in Section 8-102(a)(9) of the
UCC.

          "Financing Statements": Financing statements relating to the Assets
naming the Issuer as debtor and the Trustee on behalf of the Noteholders and
each Hedge Counterparty as secured party.

          "Fitch": Fitch Ratings and any successor or successors thereto.

          "Fitch Applicable Recovery Rate": With respect to any Collateral Debt
Security that is a CMBS Security, a CRE CDO Security or a REIT Debt Security on
any Measurement Date, an amount equal to the percentage corresponding to the
domicile and seniority of such Collateral Debt Security, as set forth in
Schedule H (the Fitch Recovery Matrix); provided that the applicable percentage
shall be the percentage corresponding to the rating of the most senior
Outstanding Class of Notes then rated by Fitch.

          "Fitch Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Fitch Weighted Average
Coupon for such Measurement Date over the percentage set forth in the Fitch
Weighted Average Coupon row in the applicable column of the Fitch Matrix (which
percentage, for the avoidance of doubt, will vary depending on the then current
levels of the other variables included in the Fitch Matrix) and (b) the
Aggregate Principal Balance of all Collateral Debt Securities that are Fixed
Rate Securities (excluding all Defaulted Securities and Written Down Securities)
and the denominator of which is the Aggregate Principal Balance of all
Collateral Debt Securities that are Floating Rate Securities (excluding all
Defaulted Securities and Written Down Securities), multiplying the resulting
figure by 360 and then dividing by 365. As used in this definition, "applicable
column" means the column corresponding to the numbered scenario in the Fitch
Matrix, the use of the applicable numbers or percentages set forth in which
would result in satisfaction of the related Collateral Quality Tests.

                                      -38-

<PAGE>

          "Fitch Loan Diversity Index Score": Except as provided below, the
amount, determined by the Collateral Manager on any Measurement Date, by adding
the series of products obtained for each Collateral Debt Security, by squaring
the quotient of (x) the Principal Balance on such Measurement Date of each such
Collateral Debt Security and (y) the Aggregate Principal Balance of all
Collateral Debt Securities on such Measurement Date, multiplied by 10,000. In
the event that Cash has been received in respect of Principal Proceeds since the
immediately preceding Measurement Date but has not been reinvested in additional
Collateral Debt Securities as of the current Measurement Date, the aggregate
amount then held in Cash will be divided into one or more "Cash Security
Exposures." Each Cash Security Exposure will be sized in an amount equal to the
result obtained by averaging the Principal Balance of all Collateral Debt
Securities on such Measurement Date; provided that, if the Cash position as of
such Measurement Date is less than such average, or if there is Cash remaining
in an amount less than such average, the Cash Security Exposure or the
additional Cash Security Exposure, as applicable, represented thereby will be
sized in the actual amount of such Cash position. "Fitch Loan Diversity Index
Score" will then mean the amount, determined by the Collateral Manager on any
Measurement Date, by adding the series of products obtained for each Collateral
Debt Security, by squaring the quotient of (x) the Principal Balance on such
Measurement Date of each such Collateral Debt Security and each Cash Security
Exposure and (y) the Aggregate Principal Balance of all Collateral Debt
Securities and all Cash Security Exposures on such Measurement Date, multiplied
by 10,000.

          "Fitch Loan Diversity Index Test": A test that will be satisfied if on
any Measurement Date the Fitch Loan Diversity Index Score for the Collateral
Debt Securities is less than or equal to 714.

          "Fitch Matrix": The matrix set forth in Schedule G hereto.

          "Fitch Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the Fitch Weighted Average Coupon as of
such Measurement Date is greater than or equal to the number set forth in the
Fitch Weighted Average Coupon row in the applicable column of the Fitch Matrix
(which number, for the avoidance of doubt, will vary depending on the then
current levels of the other variables included in the Fitch Matrix). As used in
this definition, "applicable column" means the column corresponding to the
numbered scenario in the Fitch Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

          "Fitch Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the Fitch Weighted Average Spread as of
such Measurement Date is greater than or equal to the number set forth in the
Fitch Weighted Average Spread row in the applicable column of the Fitch Matrix
(which number, for the avoidance of doubt, will vary depending on the then
current levels of the other variables included in the Fitch Matrix). As used in
this definition, "applicable column" means the column corresponding to the
numbered scenario in the Fitch Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

          "Fitch Poolwide Expected Loss": The output generated using Fitch's
modified CMBS multi-borrower model as applied to all Collateral Debt Securities
that are Loans.

                                      -39-

<PAGE>

          "Fitch Poolwide Expected Loss Test": A test that will be satisfied on
any Measurement Date if the Fitch Poolwide Expected Loss is equal to or less
than the percentage set forth in the Fitch Poolwide Expected Loss row in the
applicable column of the Fitch Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then current levels of the other variables
included in the Fitch Matrix). As used in this definition, "applicable column"
means the column corresponding to the numbered scenario in the Fitch Matrix, the
use of the applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.

          "Fitch Rating": With respect to any Collateral Debt Security,

          (a) if such Collateral Debt Security is rated by Fitch, the Fitch
Rating shall be such rating;

          (b) if such Collateral Debt Security is not rated by Fitch and a
rating is published by both S&P and Moody's, the Fitch Rating shall be the lower
of such ratings; and, except with respect to any Loan, if a rating is published
by only one of S&P and Moody's, the Fitch Rating shall be that published rating
by S&P or Moody's, as the case may be; or

          (c) if the Fitch Rating cannot be assigned in accordance with clauses
(a) or (b) above, the Issuer (or the Collateral Manager on behalf of the Issuer)
shall apply to Fitch for a credit assessment which thereafter shall be the Fitch
Rating;

          provided that (x) if such Collateral Debt Security has been put on
rating watch negative for possible downgrade by any Rating Agency, then the
rating used to determine the Fitch Rating under either of clauses (a) or (b)
above shall be one rating subcategory below such rating by that Rating Agency,
and (y) if such Collateral Debt Security has been put on rating watch positive
for possible upgrade by any Rating Agency, then the rating used to determine the
Fitch Rating under either of clauses (a) or (b) above shall be one rating
subcategory above such rating by that Rating Agency, and (z) notwithstanding the
rating definition described above, Fitch reserves the right to issue a rating
estimate for any Collateral Debt Security at any time.

          "Fitch Spread Excess": As of any Measurement Date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Fitch Weighted Average
Spread for such Measurement Date over the percentage set forth in the Fitch
Weighted Average Spread row in the applicable column of the Fitch Matrix (which
percentage, for the avoidance of doubt, will vary depending on the then current
levels of the other variables included in the Fitch Matrix) and (b) the
Aggregate Principal Balance of all Collateral Debt Securities that are Floating
Rate Securities (excluding all Defaulted Securities and Written Down Securities)
and the denominator of which is the Aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities), multiplying the resulting
figure by 365 and then dividing by 360. As used in this definition, "applicable
column" means the column corresponding to the numbered scenario in the Fitch
Matrix, the use of the applicable numbers or percentages set forth in which
would result in satisfaction of the related Collateral Quality Tests.

                                      -40-

<PAGE>

          "Fitch Weighted Average Coupon": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%) by (i) summing the products
obtained by multiplying (x) the current interest rate on each Collateral Debt
Security that is a Fixed Rate Security (excluding all Defaulted Securities and
Written Down Securities) by (y) the Principal Balance of each such Collateral
Debt Security and (ii) dividing such sum by the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) plus (b) if the amount
obtained pursuant to clause (a) is less than the percentage set forth in the
Fitch Weighted Average Coupon row in the applicable column of the Fitch Matrix
(which percentage, for the avoidance of doubt, will vary depending on the then
current levels of the other variables included in the Fitch Matrix), the Fitch
Spread Excess, if any, as of such Measurement Date. As used in this definition,
"applicable column" means the column corresponding to the numbered scenario in
the Fitch Matrix, the use of the applicable numbers or percentages set forth in
which would result in satisfaction of the related Collateral Quality Tests.

          "Fitch Weighted Average Spread": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%), by (i) summing the products
obtained by multiplying (x) the stated spread above LIBOR at which interest
accrues on each Collateral Debt Security that is a Floating Rate Security (other
than a Defaulted Security or Written Down Security) (or, in the case of any
Floating Rate Security (other than a Defaulted Security or Written Down
Security) which provides for a minimum interest rate payable thereunder, the
excess, if any, of the minimum interest rate applicable to such Collateral Debt
Security over LIBOR, if such result is greater than the related stated spread
above LIBOR) as of such date by (y) the Principal Balance of such Collateral
Debt Security as of such date, and (ii) dividing such sum by the Aggregate
Principal Balance of all Collateral Debt Securities that are Floating Rate
Securities (excluding all Defaulted Securities and Written Down Securities) plus
(b) if the amount obtained pursuant to clause (a) is less than the percentage
set forth in the Fitch Weighted Average Spread row in the applicable column of
the Fitch Matrix (which percentage, for the avoidance of doubt, will vary
depending on the then current levels of the other variables included in the
Fitch Matrix), the Fitch Fixed Rate Excess, if any, as of such Measurement Date.
For purposes of this definition, a Fixed Rate Security that is a Covered Fixed
Rate Security will be deemed to be a Floating Rate Security and the floating
rate applicable thereto will be the rate payable taking into account the related
Asset Specific Hedge. As used in this definition, "applicable column" means the
column corresponding to the numbered scenario in the Fitch Matrix, the use of
the applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.

          "Fixed Rate Excess": The Moody's Fixed Rate Excess, the S&P Fixed Rate
Excess or the Fitch Fixed Rate Excess, as the context requires.

          "Fixed Rate Security": Any Collateral Debt Security (including,
without limitation, an Above Cap Security) other than a Floating Rate Security.

          "Floating Rate Security": Any Collateral Debt Security which bears
interest based upon a floating rate index (including a floating rate index
subject to a cap but other than an Above Cap Security); provided that, for
purposes of calculating each Fixed Rate Excess, each Spread Excess, each
Weighted Average Coupon and each Weighted Average Spread, any

                                      -41-

<PAGE>

Covered Fixed Rate Security will be deemed to be a Floating Rate Security and
that, for purposes of calculating each Spread Excess and each Weighted Average
Spread, such Covered Fixed Rate Security shall be assumed to have a spread above
LIBOR equal to the spread over the London interbank offered rate for U.S. Dollar
deposits in Europe for the related swap agreement.

          "Future Advance Loan": Any Loan acquired by the Issuer by purchase or
by contribution from ARMS Equity (referred to solely for purposes of this
definition as the "Issuer's Loan") with respect to which, at the time of such
acquisition and for so long as the Issuer owns such Loan, there is outstanding
and owned by a Person other than the Issuer another Loan to the same borrower
that was made by the maker of the Issuer's Loan (the "Other Loan") if with
respect to the Other Loan both (i) either it (A) is secured by the same mortgage
or deed of trust on the same Underlying Mortgage Property as the Issuer's Loan
or (B) if the Issuer's Loan is a participation interest in a Mezzanine Loan, is
secured by the same pledged collateral, and (ii) there exists a continuing
obligation on the part of the holder of the Other Loan after the Closing Date to
provide additional funding to the borrower under the Other Loan, upon the terms
and conditions of the underlying loan documents for the Other Loan.

          "General Intangible": The meaning specified in Section 9-102(a)(42) of
the UCC.

          "Global Securities": The Rule 144A Global Securities and the
Regulation S Global Securities.

          "Governing Documents": With respect to (i) the Issuer, the memorandum
and articles of association of the Issuer, as amended and restated and/or
supplemented and in effect from time to time and certain resolutions of its
Board of Directors and (ii) all other Persons, the articles of incorporation,
certificate of incorporation, by-laws, certificate of limited partnership,
limited partnership agreement, limited liability company agreement, certificate
of formation, articles of association and similar charter documents, as
applicable to any such Person.

          "Government Items": A security (other than a security issued by the
Government National Mortgage Association) issued or guaranteed by the United
States of America or an agency or instrumentality thereof representing a full
faith and credit obligation of the United States of America and, with respect to
each of the foregoing, that is maintained in book-entry form on the records of a
Federal Reserve Bank.

          "Grant": To grant, bargain, sell, warrant, alienate, remise, demise,
release, convey, assign, transfer, mortgage, pledge, create and grant a security
interest in and right of set-off against, deposit, set over and confirm. A Grant
of the Pledged Obligations or of any other security or instrument shall include
all rights, powers and options (but none of the obligations) of the granting
party thereunder, including without limitation the immediate continuing right to
claim, collect, receive and take receipt for principal and interest payments in
respect of the Pledged Obligations (or any other security or instrument), and
all other Monies payable thereunder, to give and receive notices and other
communications, to make waivers or other agreements, to exercise all rights and
options, to bring Proceedings in the name of the granting party or otherwise,
and generally to do and receive anything that the granting party is or may be
entitled to do or receive thereunder or with respect thereto.

                                      -42-

<PAGE>

          "Hedge Agreement": Collectively, one or more interest rate cap
agreements, interest rate floor agreements, interest rate basis swap agreements,
Interest Rate Swap Agreements (including Asset Specific Hedges), Cash Flow Swap
Agreements or similar agreements, including any related ISDA Master Agreement
and hedge confirmations, entered into between the Issuer and one or more Hedge
Counterparties from time to time and any additional or replacement interest rate
cap or swap agreements or other agreements that address interest rate exposure,
basis risk or payment frequency exposure entered into from time to time between
the Issuer and each Hedge Counterparty in accordance with the terms hereof, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.

          "Hedge Collateral Account": Each trust account established pursuant to
Section 16.1(e) hereof.

          "Hedge Counterparty": Any institution or institutions with whom the
Issuer enters into any Hedge Agreements.

          "Hedge Counterparty Collateral Threshold Rating": With respect to a
person as an issuer or with respect to the debt of such person, as the case may
be, (i) with respect to a Person as an issuer or with respect to the long-term
senior unsecured debt of such Person, "A" and the short-term debt of such Person
is rated at least "F1", in each case by Fitch (for so long as any Notes are
Outstanding and are rated by Fitch); (ii) with respect to a Person as an issuer
or with respect to the long-term senior unsecured debt of such Person, "A1" and
not on "watch for downgrade" (and the short-term debt of such Person is rated
"P-1" and not on "watch for downgrade") or "Aa3" and not on "watch for
downgrade" (if only the long-term debt obligations of such Person are rated by
Moody's) (for so long as any Notes are Outstanding and rated by Moody's); and
(iii) a short-term debt rating of "A-1" by S&P, or, if such Person does not have
a short-term debt rating, with respect to such Person as an issuer or with
respect to the long-term senior unsecured debt of such Person, "A+" by S&P (for
so long as any Notes are Outstanding and are rated by S& P); provided that,
should a Rating Agency effect an overall downward adjustment of its short-term
or long-term ratings, then the applicable Hedge Counterparty Collateral
Threshold Rating shall be downwardly adjusted accordingly; provided, further,
that any such adjustment to a rating shall be subject to the prior written
consent of the applicable Rating Agency.

          "Hedge Counterparty Credit Support": With respect to a Hedge
Agreement, the agreement to provide collateral, if necessary, substantially in
the form of the ISDA Credit Support Annex attached to the related Hedge
Agreement.

          "Hedge Counterparty Credit Support Provider": The meaning specified in
Section 16.1(a) hereof.

          "Hedge Counterparty Required Rating": (i) with respect to a Person as
an issuer or with respect to long-term senior unsecured debt of such Person, (a)
"A1" by Moody's to the extent such Person has a long-term rating only (for so
long as any Notes are Outstanding under this Indenture and are rated by
Moody's); or (b) "A2" by Moody's to the extent such Person has both a long-term
and short-term rating and the short-term rating is "P-1" (for so long as any

                                      -43-

<PAGE>

Notes are Outstanding and are rated by Moody's); and (ii) with respect to a
Person as an issuer or with respect to long-term senior unsecured debt of such
Person, "BBB+" by Fitch (for so long as any Notes are Outstanding and are rated
by Fitch) and short-term rating of such Person, of at least "F2" (for so long as
any Notes are Outstanding and are rated by Fitch); and (iii) with respect to a
Person as an issuer or with respect to long-term senior unsecured debt of such
Person, "BBB-" by S&P (for so long as any Notes are Outstanding and are rated by
S&P), or short-term rating of such Person, of "A-3" by S&P (for so long as any
Notes are Outstanding and are rated by S&P); provided that should a Rating
Agency effect an overall downward adjustment of its short-term or long-term
ratings, then the applicable Hedge Counterparty Required Rating shall be
downwardly adjusted accordingly; provided, further, that any adjustment to a
rating shall be subject to the prior written consent of the applicable Rating
Agency.

          "Hedge Payment Amount": With respect to each Asset Specific Hedge, the
amount of any payment then due and payable thereunder by the Issuer to each
Hedge Counterparty, including without limitation any payments due and payable
upon a termination of such Hedge Agreement.

          "Hedge Termination Account": Each trust account established pursuant
to Section 16.1(g) hereof.

          "Herfindahl Diversity Test": A test that will be satisfied on any
Measurement Date if the Herfindahl Score for the Collateral Debt Securities on
such Measurement Date is greater than 14.5. In the event that Cash has been
received in respect of Principal Proceeds of the Collateral Debt Securities but
has not been reinvested in additional Collateral Debt Securities as of the
current Measurement Date, the Herfindahl Diversity Test also will be deemed
satisfied on the current Measurement Date notwithstanding a Herfindahl Score of
14.5 or less if (i) the Herfindahl Test was satisfied or deemed satisfied on the
Measurement Date immediately preceding the date on which such Cash was received
and (ii) the reason for the failure on the current Measurement Date is the
existence of such Cash. Similarly, if the Herfindahl Diversity Test was not
satisfied or deemed satisfied on the immediately preceding Measurement Date and
the Herfindahl Score has worsened as of the current Measurement Date, the
Herfindahl Score as of the immediately preceding Measurement Date will be deemed
to have been maintained on the current Measurement Date to the extent that the
reason for such worsened Herfindahl Score is the existence of such Cash.

          "Herfindahl Score": The amount determined by the Collateral Manager on
any Measurement Date, by dividing (i) one by (ii) the sum of the series of
products obtained for each Collateral Debt Security, by squaring the quotient of
(x) the Principal Balance on such Measurement Date of each such Collateral Debt
Security and (y) the Aggregate Principal Balance of all Collateral Debt
Securities on such Measurement Date.

          "Highest Auction Price": The meaning specified in Section 12.4(b)(iv)
hereof.

          "Holder" or "Securityholder": With respect to any Note, the Person in
whose name such Note is registered in the Notes Register. With respect to any
Preferred Share, the Person in whose name such Preferred Share is registered in
the register maintained by the Share Registrar.

                                      -44-

<PAGE>

          "Illinois Collateral": The meaning specified in Section 3.3(v) hereof.

          "Indenture": This instrument as originally executed and, if from time
to time supplemented or amended by one or more indentures supplemental hereto
entered into pursuant to the applicable provisions hereof, as so supplemented or
amended.

          "Independent": As to any Person, any other Person (including, in the
case of an accountant, or lawyer, a firm of accountants or lawyers and any
member thereof or an investment bank and any member thereof) who (i) does not
have and is not committed to acquire any material direct or any material
indirect financial interest in such Person or in any Affiliate of such Person,
and (ii) is not connected with such Person as an Officer, employee, promoter,
underwriter, voting trustee, partner, director or Person performing similar
functions. "Independent" when used with respect to any accountant may include an
accountant who audits the books of such Person if in addition to satisfying the
criteria set forth above the accountant is independent with respect to such
Person within the meaning of Rule 101 of the Code of Ethics of the American
Institute of Certified Public Accountants.

          Whenever any Independent Person's opinion or certificate is to be
furnished to the Trustee such opinion or certificate shall state that the signer
has read this definition and that the signer is Independent within the meaning
hereof.

          "Initial Collateral Debt Securities": The Collateral Debt Securities
listed on Schedule I hereto.

          "Initial Maturity Date": With respect to any Collateral Debt Security,
the maturity date of such Collateral Debt Security without giving effect to any
extension options available under the terms of such Collateral Debt Security.

          "Initial Purchaser": Wachovia Capital Markets, LLC, as initial
purchaser of the Notes.

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

          "Interest Accrual Period": With respect to the first Payment Date, the
period from and including the Closing Date to but excluding the initial Payment
Date in April 2006 and with respect to each successive Payment Date, the period
from and including the immediately preceding Payment Date to but excluding such
Payment Date.

          "Interest Advance": The meaning specified in Section 10.8(a) hereof.

          "Interest Collection Account": The trust account established pursuant
to Section 10.2(a) hereof.

          "Interest Coverage Ratio": With respect to the Class A Notes and the
Class B Notes (the "Class A/B Interest Coverage Ratio"), the Class C Notes, the
Class D Notes and the Class E Notes (the "Class C/D/E Interest Coverage Ratio")
or the Class F Notes, the Class G Notes and the Class H Notes (the "Class F/G/H
Interest Coverage Ratio") as of any Measurement Date, the ratio calculated by
dividing:

                                      -45-

<PAGE>

          (1)  (i) the sum of (A) Cash standing to the credit of the Expense
               Account, plus (B) the Scheduled Distributions of interest due
               (or, in the case of the Preferred Equity Securities, the
               scheduled payments of dividends or other distributions not
               attributable to the return of capital by their governing
               documents) due (in each case regardless of whether the due date
               for any such interest (or dividend or other distribution) payment
               has yet occurred) in the Due Period in which such Measurement
               Date occurs on (x) the Collateral Debt Securities (excluding
               accrued and unpaid interest on Defaulted Securities); provided
               that no interest (or dividends or other distributions) will be
               included with respect to any Collateral Debt Security (including,
               without limitation, the deferred or capitalized interest
               component of a Partially Deferred Loan) to the extent that such
               Collateral Debt Security does not provide for the scheduled
               payment of interest (or dividends or other distributions) in Cash
               and (y) the Eligible Investments held in the Payment Account, the
               Collection Accounts, the Delayed Funding Obligations Account and
               the Expense Account (whether purchased with Interest Proceeds or
               Principal Proceeds), plus (C) any net amount (other than any
               termination payments) scheduled to be received by the Issuer from
               any Hedge Counterparty under any related Hedge Agreement on or
               before the following Payment Date, plus (D) Interest Advances, if
               any, advanced by the Advancing Agent or the Trustee, in its
               capacity as Backup Advancing Agent, with respect to the related
               Payment Date, minus (ii) the sum of (A) any net amount (other
               than any termination payments) scheduled to be paid by the Issuer
               to any Hedge Counterparty under any related Hedge Agreement on or
               before the following Payment Date, plus, without duplication, (B)
               any amounts scheduled to be paid pursuant to Section
               11.1(a)(i)(1) through (5); by

          (2)  (i) in the case of the Class A/B Interest Coverage Ratio, the sum
               of the scheduled interest on the Class A-1 Notes, the Class A-2
               Notes and the Class B Notes payable on the Payment Date
               immediately following such Measurement Date plus any Class A-1
               Defaulted Interest Amount, any Class A-2 Defaulted Interest
               Amount and any Class B Defaulted Interest Amount payable on the
               Payment Date immediately following such Measurement Date; (ii) in
               the case of the Class C/D/E Interest Coverage Ratio, the amount
               determined by the foregoing clause (i) plus the scheduled
               interest on the Class C Notes, the Class D Notes and the Class E
               Notes payable on the Payment Date immediately following such
               Measurement Date (including interest on the Class C Capitalized
               Interest, the Class D Capitalized Interest and the Class E
               Capitalized Interest) plus, without duplication, any Class C
               Defaulted Interest Amount, Class D Defaulted Interest Amount and
               Class E Defaulted Interest Amount payable on the Payment Date
               immediately following such Measurement Date; or (iii) in the case
               of the Class F/G/H Interest Coverage Ratio, the amount determined
               by the foregoing clause (ii) plus the scheduled interest on the
               Class F Notes, the Class G Notes and the Class H Notes payable on
               the Payment Date immediately following such Measurement Date

                                      -46-

<PAGE>

               (including interest on the Class F Capitalized Interest, the
               Class G Capitalized Interest and the Class H Capitalized
               Interest) plus, without duplication, any Class F Defaulted
               Interest Amount, Class G Defaulted Interest Amount and Class H
               Defaulted Interest Amount payable on the Payment Date immediately
               following such Measurement Date.

          "Interest Coverage Test": Each of the Class A/B Interest Coverage
Test, the Class C/D/E Interest Coverage Test and the Class F/G/H Interest
Coverage Test.

          "Interest Distribution Amount": Each of the Class A-1 Interest
Distribution Amount, Class A-2 Interest Distribution Amount, Class B Interest
Distribution Amount, Class C Interest Distribution Amount, Class D Interest
Distribution Amount, Class E Interest Distribution Amount, Class F Interest
Distribution Amount, Class G Interest Distribution Amount and Class H Interest
Distribution Amount.

          "Interest Only Security": Any security that by its terms provides for
periodic payments of interest on a notional amount and does not provide for the
repayment of a principal amount.

          "Interest Proceeds": With respect to any Payment Date, (A) the sum of
(without duplication) (1) all Cash payments of interest (including any deferred
interest and any amount representing the accreted portion of a discount from the
face amount of an Eligible Investment) or dividends and other distributions (but
excluding distributions on Preferred Equity Securities attributable to the
return of capital by their governing documents) received during the related Due
Period on all Collateral Debt Securities other than Defaulted Securities) (net
of the Servicing Fee and other amounts payable in accordance with the Servicing
Agreement) and Eligible Investments, including, in the Collateral Manager's
commercially reasonable discretion (exercised as of the trade date), the accrued
interest received in connection with a sale of such Collateral Debt Securities
or Eligible Investments (to the extent such accrued interest was not applied to
the purchase of Substitute Collateral Debt Securities), in each case, excluding
any accrued interest included in Principal Proceeds pursuant to clause (A)(4),
(5) or (7) of the definition of Principal Proceeds, (2) all make whole premiums,
yield maintenance or any interest amount paid in excess of the stated interest
amount of a Collateral Debt Security received during the related Due Period, (3)
all amendment and waiver fees, late payment fees, commitment fees, exit fees,
extension fees and other fees and commissions received during such Due Period in
connection with such Collateral Debt Securities and Eligible Investments (other
than, in each such case, fees and commissions received in connection with the
restructuring of a Defaulted Security or default of Collateral Debt Securities
and Eligible Investments), (4) all payments pursuant to any Hedge Agreement for
the Payment Date immediately following such Due Period (excluding any amounts
payable upon a termination under any Hedge Agreement during such Due Period),
(5) funds in the Unused Proceeds Account designated as Interest Proceeds by the
Collateral Manager pursuant to Section 10.4(c), (6) funds in the Expense Account
designated as Interest Proceeds by the Collateral Manager pursuant to Section
10.6(a), (7) funds remaining on deposit in the Expense Account upon redemption
of the Notes in whole, pursuant to Section 10.6(a), (8) except for distributions
on Preferred Equity Securities attributable to the return of capital by their
governing documents and other than as specified in item (1) above, all proceeds
received in respect of equity features, if any, of the Collateral Debt
Securities, (9) Interest

                                      -47-

<PAGE>

Advances, if any, advanced by the Advancing Agent or the Trustee, in its
capacity as Backup Advancing Agent, with respect to such Payment Date, (10) all
payments of principal on Eligible Investments purchased with proceeds of items
(A)(1), (2) and (3) of this definition and (11) all amounts to be transferred by
the Trustee from each Defeased Collateral Account to the Interest Collection
Account in respect of such Payment Date as directed by the Issuer (or the
Collateral Manager on the Issuer's behalf); provided that Interest Proceeds will
in no event include any payment or proceeds specifically defined as "Principal
Proceeds" in the definition thereof, minus (B) (x) the aggregate amount of any
Nonrecoverable Interest Advances that were previously reimbursed to the
Advancing Agent or the Trustee, in its capacity as Backup Advancing Agent, and
the aggregate amount of any Nonrecoverable Cure Advances reimbursed to the
Collateral Manager during the related Due Period from Interest Proceeds and (y)
the aggregate amount of any Hedge Payment Amounts that were previously paid to
the applicable Hedge Counterparty from Interest Proceeds during the related Due
Period as a result of the early termination of the related Asset Specific Hedge
from any call, redemption and prepayment premiums in accordance with clause (e)
of the definition of Asset Specific Hedge.

          "Interest Rate Swap Agreement" means an interest rate swap agreement,
including any related ISDA Master Agreement and hedge confirmations, for
purposes of managing the Issuer's interest rate exposure related to the variable
rate of interest applicable to the Notes.

          "Interest Shortfall": The meaning set forth in Section 10.8(a) hereof.

          "Investment Company Act": The United States Investment Company Act of
1940, as amended.

          "Irish Paying Agent": J&E Davy, or any successor Irish Paying Agent
under the Irish Paying Agent Agreement.

          "Irish Paying Agent Agreement": The agreement between the Issuer and
J&E Davy that will be entered into in the event that the listing of the Notes on
the Irish Stock Exchange is obtained.

          "Irish Stock Exchange": The Irish Stock Exchange Limited.

          "ISDA": The International Swaps and Derivatives Association, Inc.

          "ISDA Credit Support Annex": The credit support annex to the ISDA
Master Agreement.

          "ISDA Master Agreement": The 1992 ISDA Master Agreement
(Multicurrency--Cross Border).

          "Issuer": Arbor Realty Mortgage Securities Series 2005-1, Ltd., an
exempted company incorporated with limited liability under the laws of the
Cayman Islands, until a successor Person shall have become the Issuer pursuant
to the applicable provisions of this Indenture, and thereafter "Issuer" shall
mean such successor Person.

                                      -48-

<PAGE>

          "Issuer Order" and "Issuer Request": A written order or request (which
may be in the form of a standing order or request) dated and signed in the name
of the Issuer and the Co-Issuer by an Authorized Officer of each of the Issuer
and the Co-Issuer, or by an Authorized Officer of the Collateral Manager.

          "LIBOR": The meaning set forth in Schedule J attached hereto.

          "LIBOR Determination Date": The meaning set forth in Schedule J
attached hereto.

          "List": The meaning specified in Section 12.4(a)(ii) hereof.

          "Listed Bidders": The meaning specified in Section 12.4(a)(ii) hereof.

          "LLC Managers": The managers of the Co-Issuer duly appointed by the
sole member of the Co-Issuer (or, if there is only one manager of the Co-Issuer
so duly appointed, such sole manager).

          "Loan": Any U.S. Dollar-denominated interest in a senior secured or
senior unsecured or senior or junior subordinated term loan (including, without
limitation, a mortgage loan, a Whole Loan, an ARD Loan, a Delayed Draw Term
Loan, or a B Note (or other interest in a split loan structure)) or any
Participation interest therein, or any Mezzanine Loan, Single Asset Mortgage
Security, Single Borrower Mortgage Security or Rake Bond.

          "London Banking Day": The meaning set forth in Schedule J attached
hereto.

          "Majority": With respect to:

          (i) any Class of Notes, the Holders of more than fifty percent (50%)
of the Aggregate Outstanding Amount of the Notes of such Class; and

          (ii) the Preferred Shares, the Preferred Shareholders representing
more than fifty percent (50%) of the aggregate Notional Amount of the
outstanding Preferred Shares.

          "Mandatory Redemption": The meaning specified in Section 9.6.

          "Margin Stock": As defined under Regulation U issued by the Board of
Governors of the Federal Reserve System.

          "Market Value": With respect to any date of determination and any
Collateral Debt Security or Eligible Investment, an amount equal to (i) the
median of the bona fide bids for such Collateral Debt Security obtained by the
Collateral Manager at such time from any three nationally recognized dealers,
which dealers are Independent from one another and from the Collateral Manager,
(ii) if the Collateral Manager is in good faith unable to obtain bids from three
such dealers, the lesser of the bona fide bids for such Collateral Debt Security
obtained by the Collateral Manager at such time from any two nationally
recognized dealers chosen by the Collateral Manager, which dealers are
Independent from each other and the Collateral Manager, or (iii) if the
Collateral Manager is in good faith unable to obtain bids from two such dealers,
the

                                      -49-

<PAGE>

bona fide bid for such Collateral Debt Security obtained by the Collateral
Manager at such time from any nationally recognized dealer chosen by the
Collateral Manager, which dealer is Independent from the Collateral Manager.

          "Market Value Collateralized Debt Obligation": Any collateralized debt
obligation that is valued on the basis of the market value of the underlying
debt obligations rather than the cash flow related to the underlying debt
obligations.

          "Maturity": With respect to any Note, the date on which the unpaid
principal of such Note becomes due and payable as therein or herein provided,
whether at the Stated Maturity or by declaration of acceleration or otherwise.

          "Measurement Date": Any of the following: (i) the Closing Date, (ii)
the date of acquisition or disposition of any Collateral Debt Security, (iii)
any date on which any Collateral Debt Security becomes a Defaulted Security,
(iv) each Determination Date, (v) the last Business Day of each calendar month
(other than any calendar month in which a Determination Date occurs) and (vi)
with reasonable notice to the Issuer and the Trustee, any other Business Day
that any Rating Agency or the Holders of at least 66-2/3% of the Aggregate
Outstanding Amount of any Class of Notes requests be a "Measurement Date";
provided that if any such date would otherwise fall on a day that is not a
Business Day, the relevant Measurement Date will be the immediately preceding
Business Day.

          "Mezzanine Loan": A Loan secured by one or more direct or indirect
ownership interests in a company, partnership or other entity owning, operating
or controlling, directly or through subsidiaries or affiliates, one or more
commercial properties, including a participation interest therein.

          "Minimum Ramp-Up Amount": An amount equal to $475,000,000.

          "Minimum Weighted Average Coupon Test": A test that will be satisfied
on any Measurement Date if each of the Moody's Minimum Weighted Average Coupon
Test, the S&P Minimum Weighted Average Coupon Test and the Fitch Minimum
Weighted Average Coupon Test is satisfied as of such Measurement Date.

          "Minimum Weighted Average Spread Test": A test that will be satisfied
as of any Measurement Date if each of the Moody's Minimum Weighted Average
Spread Test, the S&P Minimum Weighted Average Spread Test and the Fitch Minimum
Weighted Average Spread Test is satisfied as of such Measurement Date.

          "Money": The meaning specified in Section 1-201(24) of the UCC.

          "Monthly Report": The meaning specified in Section 10.10(c) hereof.

          "Moody's": Moody's Investors Service, Inc., and its successors in
interest.

          "Moody's Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Moody's Weighted Average
Coupon for such Measurement

                                      -50-

<PAGE>

Date over the percentage set forth in the Moody's Weighted Average Coupon row in
the applicable column of the Moody's Matrix (which percentage, for the avoidance
of doubt, will vary depending on the then current levels of the other variables
included in the Moody's Matrix) and (b) the Aggregate Principal Balance of all
Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 360 and then dividing by 365.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the Moody's Matrix, the use of the applicable
numbers or percentages set forth in which would result in satisfaction of the
related Collateral Quality Tests.

          "Moody's Matrix": The matrix set forth in Schedule A.

          "Moody's Maximum Tranched Rating Factor Test": A test that will be
satisfied on any Measurement Date if the Weighted Average Moody's Rating Factor
does not exceed the number set forth in the Weighted Average Moody's Rating
Factor row in the applicable column of the Moody's Matrix (which number, for the
avoidance of doubt, will vary depending on the then current levels of the other
variables included in the Moody's Matrix). As used in this definition,
"applicable column" means the column corresponding to the numbered scenario in
the Moody's Matrix, the use of the applicable numbers or percentages set forth
in which would result in satisfaction of the related Collateral Quality Tests.

          "Moody's Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the Moody's Weighted Average Coupon is
greater than or equal to the number set forth in the Moody's Weighted Average
Coupon row in the applicable column of the Moody's Matrix (which number, for the
avoidance of doubt, will vary depending on the then current levels of the other
variables included in the Moody's Matrix). As used in this definition,
"applicable column" means the column corresponding to the numbered scenario in
the Moody's Matrix, the use of the applicable numbers or percentages set forth
in which would result in satisfaction of the related Collateral Quality Tests.

          "Moody's Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the Moody's Weighted Average Spread as
of such Measurement Date is greater than or equal to the number set forth in the
Moody's Weighted Average Spread row in the applicable column of the Moody's
Matrix (which number, for the avoidance of doubt, will vary depending on the
then current levels of the other variables included in the Moody's Matrix). As
used in this definition, "applicable column" means the column corresponding to
the numbered scenario in the Moody's Matrix, the use of the applicable numbers
or percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

          "Moody's Rating": Of any Collateral Debt Security will be determined
as follows:

               (i) (x) if such Collateral Debt Security is publicly rated by
          Moody's, the Moody's Rating will be such rating, or, (y) if such
          Collateral Debt Security is not publicly rated by Moody's, but the
          Issuer has requested that Moody's assign a

                                      -51-

<PAGE>

          rating to such Collateral Debt Security, the Moody's Rating will be
          the rating so assigned by Moody's;

               (ii) with respect to a CMBS Security or REIT Debt Security, if
          such CMBS Security or REIT Debt Security is not rated by Moody's, then
          the Moody's Rating of such CMBS Security or REIT Debt Security may be
          determined using any one of the methods below:

                    (A) with respect to any REIT Debt Security not publicly
               rated by Moody's that is a REIT Debt Securities--Diversified;
               REIT Debt Securities--Health Care; REIT Debt Securities--Hotel;
               REIT Debt Securities--Industrial; REIT Debt
               Securities--Multi-Family; REIT Debt Securities--Office; REIT Debt
               Securities--Residential; REIT Debt Securities--Retail; or REIT
               Debt Securities--Storage, if such REIT Debt Security is publicly
               rated by S&P, then the Moody's Rating thereof will be (1) one
               subcategory below the Moody's equivalent rating assigned by S&P
               if the rating assigned by S&P is "BBB" or greater and (2) two
               rating subcategories below the Moody's equivalent rating assigned
               by S&P if the rating assigned by S&P is below "BBB-;"

                    (B) with respect to any CMBS Conduit Security not publicly
               rated by Moody's, (x) if Moody's has rated a tranche or class of
               CMBS Conduit Security senior to the relevant issue, then the
               Moody's Rating thereof will be one and one-half rating
               subcategories below the Moody's equivalent of the lower of the
               rating assigned by S&P and Fitch for purposes of determining the
               Moody's Rating Factor and one rating subcategory below the
               Moody's equivalent of the lower rating assigned by S&P and Fitch
               for all other purposes and (y) if Moody's has not rated any such
               tranche or class and S&P and Fitch have rated the subject CMBS
               Conduit Security, then the Moody's Rating thereof will be two
               rating subcategories below the Moody's equivalent of the lower of
               the rating assigned by S&P and Fitch;

                    (C) with respect to any CMBS Large Loan Security not rated
               by Moody's, the Issuer (or the Collateral Manager on behalf of
               the Issuer)will request Moody's to assign a rating to such CMBS
               Large Loan Security on a case-by-case basis; and

                    (D) with respect to any other type of CMBS Security or REIT
               Debt Securities of a Specified Type not referred to in clauses
               (A) through (C) above, will be determined pursuant to subclause
               (y) of clause (i) above;

               (iii) with respect to corporate guarantees on REIT Debt
          Securities, if such corporate guarantees are not publicly rated by
          Moody's but another security or obligation of the guarantor or obligor
          (an "other security") is publicly rated by

                                      -52-

<PAGE>

          Moody's, and no rating has been assigned in accordance with clause (i)
          above, the Moody's Rating of such Collateral Debt Security will be
          determined as follows:

                    (A) if the corporate guarantee is a senior secured
               obligation of the guarantor or obligor and the other security is
               also a senior secured obligation, the Moody's Rating of such
               Collateral Debt Security will be the rating of the other
               security;

                    (B) if the corporate guarantee is a senior unsecured
               obligation of the guarantor or obligor and the other security is
               a senior secured obligation, the Moody's Rating of such
               Collateral Debt Security will be one rating subcategory below the
               rating of the other security;

                    (C) if the corporate guarantee is a subordinated obligation
               of the guarantor or obligor and the other security is a senior
               secured obligation that is: (1) rated "Ba3" or higher by Moody's,
               the Moody's Rating of such corporate guarantee will be three
               rating subcategories below the rating of the other security; or
               (2) rated "B1" or lower by Moody's, the Moody's Rating of such
               corporate guarantee will be two rating subcategories below the
               rating of the other security;

                    (D) if the corporate guarantee is a senior secured
               obligation of the guarantor or obligor and the other security is
               a senior unsecured obligation that is: (1) rated "Baa3" or higher
               by Moody's, the Moody's Rating of such corporate guarantee will
               be the rating of the other security; or (2) rated "Ba1" or lower
               by Moody's, the Moody's Rating of such corporate guarantee will
               be one rating subcategory above the rating of the other security;

                    (E) if the corporate guarantee is a senior unsecured
               obligation of the guarantor or obligor and the other security is
               also a senior unsecured obligation, the Moody's Rating of such
               corporate guarantee will be the rating of the other security;

                    (F) if the corporate guarantee is a subordinated obligation
               of the guarantor or obligor and the other security is a senior
               unsecured obligation that is: (1) rated "B1" or higher by
               Moody's, the Moody's Rating of such corporate guarantee will be
               two rating subcategories below the rating of the other security;
               or (2) rated "B2" or lower by Moody's, the Moody's Rating of such
               corporate guarantee will be one rating subcategory below the
               rating of the other security;

                    (G) if the corporate guarantee is a senior secured
               obligation of the guarantor or obligor and the other security is
               a subordinated obligation that is: (1) rated "Baa3" or higher by
               Moody's, the Moody's Rating of such corporate guarantee will be
               one rating subcategory above the rating of the other security;
               (2) rated below "Baa3" but not rated "B3" by

                                      -53-

<PAGE>

               Moody's, the Moody's Rating of such corporate guarantee will be
               two rating subcategories above the rating of the other security;
               or (3) rated "B3" by Moody's, the Moody's Rating of such
               corporate guarantee will be "B2;"

                    (H) if the corporate guarantee is a senior unsecured
               obligation of the guarantor or obligor and the other security is
               a subordinated obligation that is: (1) rated "Baa3" or higher by
               Moody's, the Moody's Rating of such corporate guarantee will be
               one rating subcategory above the rating of the other security; or
               (2) rated "Ba1" or lower by Moody's, the Moody's Rating of such
               corporate guarantee will also be one rating subcategory above the
               rating of the other security; and

                    (I) if the REIT Debt Security is a subordinated obligation
               of the guarantor or obligor and the other security is also a
               subordinated obligation, the Moody's Rating of such corporate
               guarantee will be the rating of the other security; or

               (iv) if such Collateral Debt Security is a Mezzanine Loan or CRE
          CDO Security, no notching is permitted and the Moody's Rating will be
          the rating so assigned by Moody's;

provided that (x) the rating of either S&P or Fitch used to determine the
Moody's Rating pursuant to any of clauses (ii) or (iii) above will be (a) a
public rating that addresses the obligation of the obligor (or guarantor, where
applicable) to pay principal of and interest on the relevant Collateral Debt
Security in full and is monitored on an ongoing basis by the relevant Rating
Agency or (b) if no such public rating is available, a rating determined
pursuant to a method determined by Moody's on a case-by-case basis and (y) the
Aggregate Principal Balance of Collateral Debt Securities the Moody's Rating of
which is based on an S&P rating or a Fitch rating may not exceed 20% of the
Aggregate Principal Balance of all Collateral Debt Securities; provided,
further, that the Moody's Rating of any Collateral Debt Security will be reduced
one subcategory to the extent it is on credit watch with negative implications
and increased one subcategory to the extent it is on credit watch with positive
implications.

          "Moody's Rating Factor": Relating to any Collateral Debt Security is
the number set forth in the table below opposite the Moody's Rating of such
Collateral Debt Security:

<TABLE>
<CAPTION>
MOODY'S RATING   MOODY'S RATING FACTOR   MOODY'S RATING   MOODY'S RATING FACTOR
--------------   ---------------------   --------------   ---------------------
<S>              <C>                     <C>              <C>
      Aaa                   1                      Ba1               940
      Aa1                  10                      Ba2             1,350
      Aa2                  20                      Ba3             1,766
      Aa3                  40                       B1             2,220
       A1                  70                       B2             2,720
       A2                 120                       B3             3,490
       A3                 180                     Caa1             4,770
</TABLE>

                                      -54-

<PAGE>

<TABLE>
<CAPTION>
MOODY'S RATING   MOODY'S RATING FACTOR   MOODY'S RATING   MOODY'S RATING FACTOR
--------------   ---------------------   --------------   ---------------------
<S>              <C>                     <C>              <C>
     Baa1                 260                     Caa2             6,500
     Baa2                 360                     Caa3             8,070
     Baa3                 610              Ca or lower            10,000
</TABLE>

          "Moody's Recovery Rate": With respect to any Collateral Debt Security
on any Measurement Date, an amount equal to (A) if the Specified Type of
Collateral Debt Security is included in the table attached as Schedule B (the
Moody's Recovery Rate Assumptions) hereto, the percentage for such Collateral
Debt Security set forth in Schedule B (the Moody's Recovery Rate Assumptions)
hereto in (x) the table corresponding to the relevant Specified Type of
Collateral Debt Security, (y) the column in such table setting forth the Moody's
Rating of such Collateral Debt Security on such Measurement Date and (z) the row
in such table opposite the percentage of the issue of which such Collateral Debt
Security is a part relative to the total capitalization of (including both debt
and equity securities issued by) the relevant issuer of or obligor on such
Collateral Debt Security determined on the date on which such Collateral Debt
Security was originally issued or (B) if the Specified Type of Collateral Debt
Security is not included in the table set forth in Schedule B (the Moody's
Recovery Rate Assumptions) hereto, the Recovery Rate set forth following such
table with respect to the applicable Specified Type.

          "Moody's Special Amortization Pro Rata Condition": A condition that
will be satisfied with respect to any Payment Date if either (i)(a) the
Aggregate Principal Balance of the Collateral Debt Securities as of the related
Determination Date is greater than an amount equal to 50% of the Aggregate
Principal Balance of the Collateral Debt Securities on the Effective Date and
(b) the Collateral Quality Tests (other than the Minimum Weighted Average Coupon
Test, the Minimum Weighted Average Spread Test and the S&P CDO Monitor Test) are
satisfied as of the related Determination Date or (ii) the Rating Agency
Condition has been satisfied with respect to Moody's.

          "Moody's Spread Excess": As of any Measurement Date, a fraction
(expressed as a percentage), the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the Moody's Weighted Average
Spread for such Measurement Date over the percentage set forth in the Moody's
Weighted Average Spread row in the applicable column of the Moody's Matrix
(which percentage, for the avoidance of doubt, will vary depending on the then
current levels of the other variables included in the Moody's Matrix) and (b)
the Aggregate Principal Balance of all Collateral Debt Securities that are
Floating Rate Securities (excluding all Defaulted Securities and Written Down
Securities) and the denominator of which is the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities), multiplying the resulting
figure by 365 and then dividing by 360. As used in this definition, "applicable
column" means the column corresponding to the numbered scenario in the Moody's
Matrix, the use of the applicable numbers or percentages set forth in which
would result in satisfaction of the related Collateral Quality Tests.

                                      -55-

<PAGE>

          "Moody's Weighted Average Coupon": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%) by (i) summing the products
obtained by multiplying (x) the current interest rate on each Collateral Debt
Security that is a Fixed Rate Security (excluding all Defaulted Securities and
Written Down Securities) by (y) the Principal Balance of each such Collateral
Debt Security and (ii) dividing such sum by the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) plus (b) if the amount
obtained pursuant to clause (a) is less than the percentage set forth in the
Moody's Weighted Average Coupon row in the applicable column of the Moody's
Matrix (which percentage, for the avoidance of doubt, will vary depending on the
then current levels of the other variables included in the Moody's Matrix), the
Moody's Spread Excess, if any, as of such Measurement Date. As used in this
definition, "applicable column" means the column corresponding to the numbered
scenario in the Moody's Matrix, the use of the applicable numbers or percentages
set forth in which would result in satisfaction of the related Collateral
Quality Tests.

          "Moody's Weighted Average Extended Maturity Test": A test that will be
satisfied on any Measurement Date if the Extended Weighted Average Maturity of
the Collateral Debt Securities as of such Measurement Date is six years or less.

          "Moody's Weighted Average Spread": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%), by (i) summing the products
obtained by multiplying (x) the stated spread above LIBOR at which interest
accrues on each Collateral Debt Security that is a Floating Rate Security (other
than a Defaulted Security or Written Down Security) (or, in the case of any
Floating Rate Security (other than a Defaulted Security or Written Down
Security) which provides for a minimum interest rate payable thereunder, the
excess, if any, of the minimum interest rate applicable to such Collateral Debt
Security over LIBOR, if such result is greater than the related stated spread
above LIBOR) as of such date by (y) the Principal Balance of such Collateral
Debt Security as of such date, and (ii) dividing such sum by the Aggregate
Principal Balance of all Collateral Debt Securities that are Floating Rate
Securities (excluding all Defaulted Securities and Written Down Securities) plus
(b) if the amount obtained pursuant to clause (a) is less than the percentage
set forth in the Moody's Weighted Average Spread row in the applicable column of
the Moody's Matrix (which percentage, for the avoidance of doubt, will vary
depending on the then current levels of the other variables included in the
Moody's Matrix), the Moody's Fixed Rate Excess, if any, as of such Measurement
Date. For purposes of this definition, a Fixed Rate Security that is a Covered
Fixed Rate Security will be deemed to be a Floating Rate Security and the
floating rate applicable thereto will be the rate payable taking into account
the related Asset Specific Hedge. As used in this definition, "applicable
column" means the column corresponding to the numbered scenario in the Moody's
Matrix, the use of the applicable numbers or percentages set forth in which
would result in satisfaction of the related Collateral Quality Tests.

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

               (i) the Aggregate Principal Balance on such Measurement Date of
          the Collateral Debt Securities (other than Defaulted Securities);

                                      -56-

<PAGE>

               (ii) the Aggregate Principal Balance of all Principal Proceeds
          held as Cash and Eligible Investments, all Cash and Eligible
          Investments held in the Unused Proceeds Account that have not been
          designated as Interest Proceeds by the Collateral Manager with respect
          to the Effective Date and all Cash and Eligible Investments held in
          the Delayed Funding Obligations Account; and

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

provided, however, for purposes of any Par Value Test, any deferred or
capitalized interest component of a Partially Deferred Loan shall be excluded
from such calculation.

          "Non-Advancing Collateral Debt Security": Any Collateral Debt
Security, other than a CMBS Security, a CRE CDO Security or a REIT Debt
Security, with respect to which no servicer or other party is required under the
terms of the Underlying Instruments governing such Collateral Debt Security to
make any liquidity advances to ensure the timely receipt of interest by and for
the benefit of the holder of such Collateral Debt Security.

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

          "Nonrecoverable Interest Advance": Any Interest Advance previously
made or proposed to be made pursuant to Section 10.8 hereof that the Advancing
Agent or the Trustee, in its capacity as Backup Advancing Agent, as applicable,
has determined in its sole discretion, exercised in good faith, that the amount
so advanced or proposed to be advanced plus interest expected to accrue thereon,
will not be ultimately recoverable from subsequent payments or collections with
respect to the Collateral Debt Securities.

          "Nonrecoverable Cure Advance": Any Cure Advance previously made or
proposed to be made pursuant to Section 16.3 hereof with respect to any
Collateral Debt Security, which in the judgment of the Collateral Manager,
subject to the Collateral Manager Servicing Standard and to the applicable
provisions of the Servicing Agreement, will not be ultimately recoverable from
collections from such Collateral Debt Security.

          "Note Liquidation Event": The meaning specified in Section 12.1(f)
hereof.

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

          "Note Interest Rate": With respect to the Class A-1 Notes, the Class
A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes, the Class A-1
Rate, the Class A-2 Rate, the Class B Rate, the Class C Rate, the Class D Rate,
the Class E Rate, the Class F Rate, the Class G Rate and the Class H Rate,
respectively.

          "Notes": The Class A-1 Notes, the Class A-2 Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes, collectively, authorized by, and
authenticated and delivered under, this Indenture or any supplemental indenture.

                                      -57-

<PAGE>

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

          "Notes Valuation Report": The meaning specified in Section 10.10(e)
hereof.

          "Notional Amount": In respect of the Preferred Shares, the per share
notional amount of $1.00. The aggregate Notional Amount of the Preferred Shares
on the Closing Date will be $118,750,000.

          "Offer": With respect to any security, (i) any offer by the issuer of
such security or by any other person or entity made to all of the holders of
such security to purchase or otherwise acquire such security (other than
pursuant to any redemption in accordance with the terms of the related
Underlying Instruments) or to convert or exchange such security into or for
Cash, securities or any other type of consideration or (ii) any solicitation by
the issuer of such security or any other person or entity to amend, modify or
waive any provision of such security or any related Underlying Instrument.

          "Officer": With respect to any corporation or limited liability
company, including the Issuer, the Co-Issuer and the Collateral Manager, any
Director, the Chairman of the Board of Directors, the President, any Senior Vice
President any Vice President, the Secretary, any Assistant Secretary, the
Treasurer, any Assistant Treasurer, General Partner of such entity; and with
respect to the Trustee, any Trust Officer.

          "Officer's Certificate": With respect to the Issuer, the Co-Issuer and
the Collateral Manager, any certificate executed by an Officer thereof.

          "Operating Statement Analysis Report": The year-end report prepared by
the Issuer (or the Collateral Manager on behalf of the Issuer) for each
Collateral Debt Security.

          "Opinion of Counsel": A written opinion addressed to the Trustee and
each Rating Agency in form and substance reasonably satisfactory to the Trustee,
each Rating Agency and each Hedge Counterparty of an attorney at law admitted to
practice before the highest court of any state of the United States or the
District of Columbia (or the Cayman Islands, in the case of an opinion relating
to the laws of the Cayman Islands), which attorney may, except as otherwise
expressly provided in this Indenture, be counsel for the Issuer, and which
attorney shall be reasonably satisfactory to the Trustee. Whenever an Opinion of
Counsel is required hereunder, such Opinion of Counsel may rely on opinions of
other counsel who are so admitted and so satisfactory which opinions of other
counsel shall accompany such Opinion of Counsel and shall either be addressed to
the Trustee and each Rating Agency or shall state that the Trustee and each
Rating Agency shall be entitled to rely thereon.

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

          "Optional Redemption Date": Any Payment Date occurring on or after the
Payment Date occurring in April, 2009, where the Issuer and the Co-Issuer may
redeem the Notes and the Issuer may redeem the Preferred Shares in accordance
with Section 9.1(c) hereof.

          "Other Loan": The meaning specified in the definition of Future
Advance Loan.

                                      -58-

<PAGE>

          "Outstanding": With respect to the Notes, as of any date of
determination, all of the Notes or any Class of Notes, as the case may be,
theretofore authenticated and delivered under this Indenture except:

               (i) Notes theretofore canceled by the Notes Registrar or
          delivered to the Notes Registrar for cancellation;

               (ii) Notes or portions thereof for whose payment or redemption
          funds in the necessary amount have been theretofore irrevocably
          deposited with the Trustee or the Paying Agent in trust for the
          Holders of such Notes pursuant to Section 4.1(a)(ii); provided that,
          if such Notes or portions thereof are to be redeemed, notice of such
          redemption has been duly given pursuant to this Indenture or provision
          therefor satisfactory to the Trustee has been made;

               (iii) Notes in exchange for or in lieu of which other Notes have
          been authenticated and delivered pursuant to this Indenture, unless
          proof satisfactory to the Trustee is presented that any such Notes are
          held by a holder in due course; and

               (iv) Notes alleged to have been mutilated, destroyed, lost or
          stolen for which replacement Notes have been issued as provided in
          Section 2.6;

provided that in determining whether the Noteholders of the requisite Aggregate
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, (x) Notes owned by the Issuer, the
Co-Issuer or any Affiliate thereof shall be disregarded and deemed not to be
Outstanding and (y) in relation to (1) any amendment or other modification of,
or assignment or termination of, any of the express rights or obligations of the
Collateral Manager under the Collateral Management Agreement or this Indenture
(including the exercise of any rights to remove the Collateral Manager or
terminate the Collateral Management Agreement or approve or object to a
replacement for the Collateral Manager except as specifically provided in the
Collateral Management Agreement with respect to the termination of the
Collateral Manager without cause and with respect to the replacement of the
Collateral Manager in instances where the Collateral Manager has not been
terminated for cause or where such replacement is not an Affiliate of the
Collateral Manager) and (2) the exercise by the Noteholders of their right, in
connection with certain Events of Default, to accelerate amounts due under the
Notes, Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them, shall be disregarded and deemed not to be Outstanding.
In determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Trustee knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Trustee the pledgee's right so to
act with respect to such Notes and that the pledgee is not the Issuer, the
Collateral Manager or any other obligor upon the Notes or any Affiliate of the
Issuer, the Collateral Manager or such other obligor.

          "Par Value Ratio": Each of the Class A/B Par Value Ratio, the Class
C/D/E Par Value Ratio and the Class F/G/H Par Value Ratio.

                                      -59-

<PAGE>

          "Par Value Test": Each of the Class A/B Par Value Test, the Class
C/D/E Par Value Test and the Class F/G/H Par Value Test.

          "Partially Deferred Loan": A Loan which by its terms provides for the
payment of interest in two components, one of which is payable currently on each
due date under the Loan and the other of which is either deferred or capitalized
until maturity.

          "Participating Institution": An entity that creates a Participation.

          "Participation": An interest in all or part of a Loan acquired by a
participant from a Participating Institution, which participation may be
subordinate to other interests in such Loan and may be further participated into
sub-participations.

          "Paying Agent": Any Person authorized by the Issuer and the Co-Issuer
to pay the principal of or interest on any Notes on behalf of the Issuer and the
Co-Issuer as specified in Section 7.2 hereof.

          "Payment Account": The payment account of the Trustee in respect of
the Notes established pursuant to Section 10.3 hereof.

          "Payment Date": With respect to each Class of Notes, April 21, 2006,
and thereafter quarterly on each July 21, October 21, January 21 and April 21
(or if such day is not a Business Day, the next succeeding Business Day) to and
including the Stated Maturity related to such Class unless redeemed or repaid
prior thereto.

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

          "Plan Assets": The meaning specified in Section 2.5(g)(vi) hereof.

          "Pledged Collateral Debt Security": On any date of determination, any
Collateral Debt Security that has been Granted to the Trustee and not been
released from the lien of this Indenture pursuant to Section 10.11 hereof.

          "Pledged Obligations": On any date of determination, any Pledged
Collateral Debt Securities and the Eligible Investments that have been Granted
to the Trustee for the benefit of the Noteholders and each Hedge Counterparty
and which form part of the Assets.

          "Preferred Equity Security": A security, providing for regular
payments of dividends or other distributions, representing an equity interest in
an entity (including, without limitation, a partnership or a limited liability
company) that is a borrower under a mortgage loan secured by commercial
properties (or in an entity operating or controlling, directly or through
affiliates, such commercial properties), which is generally senior with respect
to the payments of dividends and other distributions, redemption rights and
rights upon liquidation to such entity's common equity.

                                      -60-

<PAGE>

          "Preferred Shareholder": A registered owner of Preferred Shares.

          "Preferred Shares": The preferred shares issued by the Issuer
concurrently with the issuance of the Notes.

          "Preferred Shares Distribution Account": A segregated account for the
benefit of the Issuer established and designated as such by the Preferred Shares
Paying Agent pursuant to the Preferred Shares Paying Agency Agreement.

          "Preferred Shares Paying Agency Agreement": The Preferred Shares
Paying Agency Agreement, dated as of the Closing Date, between the Issuer and
the Preferred Shares Paying Agent relating to the Preferred Shares, as amended
from time to time in accordance with the terms thereof.

          "Preferred Shares Paying Agent": The Bank, solely in its capacity as
Preferred Shares Paying Agent under the Preferred Shares Paying Agency Agreement
and not individually, unless a successor Person shall have become the Preferred
Shares Paying Agent pursuant to the applicable provisions of the Preferred
Shares Paying Agency Agreement, and thereafter Preferred Shares Paying Agent
shall mean such successor Person.

          "Principal Balance" or "par": With respect to any Collateral Debt
Security or Eligible Investment, as of any date of determination, the
outstanding principal amount of such Collateral Debt Security or Eligible
Investment; provided that:

               (i) the Principal Balance of a Collateral Debt Security received
          upon acceptance of an Offer for another Collateral Debt Security,
          which Offer expressly states that failure to accept such Offer may
          result in a default under the Underlying Instruments, will be deemed
          to be the Calculation Amount of such other Collateral Debt Security
          until such time as Interest Proceeds and Principal Proceeds, as
          applicable, are received when due with respect to such other
          Collateral Debt Security;

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

               (iii) the Principal Balance of any Preferred Equity Security will
          be equal to the component of the liquidation price thereof that is
          attributable to the return of capital by its governing documents; and

               (iv) the Principal Balance of any Written Down Security will
          exclude any portion of the principal balance of such security that (a)
          has been written down as a result of a "realized loss," "collateral
          support deficit," "additional trust fund expense" or other event that
          under the terms of such security results in a write-down of principal
          balance or (b) would be affected by an appraisal reduction.

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

                                      -61-

<PAGE>

          "Principal Only Security": Any security (other than a Step-Up
Security) that does not provide for payment of interest or provides that all
payments of interest will be deferred until the final maturity thereof.

          "Principal Proceeds": With respect to any Payment Date, (A) the sum
(without duplication) of (1) all principal payments (including prepayments and
Unscheduled Principal Payments) received during the related Due Period
(excluding those previously reinvested or designated by the Collateral Manager
for reinvestment in Collateral Debt Securities) on (a) Eligible Investments
(other than Eligible Investments purchased with Interest Proceeds, Eligible
Investments in the Expense Account, Eligible Investments in the Unused Proceeds
Account designated as Interest Proceeds by the Collateral Manager with respect
to the Effective Date and Eligible Investments in the Delayed Funding
Obligations Account and any amount representing the accreted portion of a
discount from the face amount of an Eligible Investment) and (b) Collateral Debt
Securities as a result of (i) a maturity, scheduled amortization, mandatory
prepayment or mandatory sinking fund payment on a Collateral Debt Security, (ii)
optional redemptions, prepayments, exchange offers or tender offers made at the
option of the issuer thereof, (iii) recoveries on Defaulted Securities or (iv)
any other principal payments with respect to Collateral Debt Securities (not
included in Sale Proceeds), (2) all distributions on Preferred Equity Securities
attributable to the return of capital by their governing documents, (3) all fees
and commissions received during such Due Period in connection with Defaulted
Securities and Eligible Investments and the restructuring or default of such
Defaulted Securities and Eligible Investments, (4) any interest received during
such Due Period on such Collateral Debt Securities or Eligible Investments to
the extent such interest constitutes proceeds from accrued interest purchased
with Principal Proceeds other than accrued interest purchased by the Issuer on
or prior to the Closing Date and interest included in clause (A)(1) of the
definition of Interest Proceeds, (5) Sale Proceeds received during such Due
Period in respect of sales (excluding those previously reinvested or currently
being reinvested in Collateral Debt Securities in accordance with the
Transaction Documents and excluding accrued interest included in Sale Proceeds
(unless such accrued interest was purchased with Principal Proceeds) that are
designated by the Collateral Manager as Interest Proceeds in accordance with
clause (A)(1) of the definition of Interest Proceeds), (6) all Cash payments of
interest or dividends received during such Due Period on Defaulted Securities,
(7) any interest received during such Due Period on a Written Down Security to
the extent such interest constitutes accrued interest on the excess of the
principal amount of such Written Down Security over the Principal Balance of
such Written Down Security, (8) any proceeds resulting from (a) the termination
(in whole or in part) of any Hedge Agreement during such Due Period to the
extent such proceeds are received from the related Hedge Counterparty and, to
the extent such proceeds exceed the cost of entering into a replacement Hedge
Agreement in accordance with the requirements set forth in Section 16.1(a)
hereof, (b) payments received from a replacement Hedge Counterparty to the
extent such proceeds exceed the amount owed to a previous Hedge Counterparty in
connection with the termination of the related Hedge Agreement and (c) all
amounts transferred from each Hedge Termination Account pursuant to Section
16.1(g) hereof, (9) during the Reinvestment Period, the Special Amortization
Amount, if any, (10) on the first Payment Date following the Effective Date, if
a Rating Confirmation Failure has not occurred, funds in the Unused Proceeds
Account to the extent the Collateral Manager has not designated such amounts as
Interest Proceeds pursuant to Section 10.4(c) hereof, (11) funds transferred to
the Principal Collection Account from the Delayed Funding Obligations Account in
respect of amounts previously held on deposit

                                      -62-

<PAGE>

in respect of unfunded commitments for Delayed Draw Term Loans that have been
sold or otherwise disposed before such commitments thereunder have been drawn or
as to which excess funds remain; (12) all ARMS Equity Cash Contributions and
ARMS Equity EI Contributions (excluding, in each case, those previously
reinvested or designated by the Collateral Manager for reinvestment in
Collateral Debt Securities), (13) all other payments received in connection with
the Collateral Debt Securities and Eligible Investments that are not included in
Interest Proceeds and (14) all amounts to be transferred by the Trustee from
each Defeased Collateral Account to the Principal Collection Account in respect
of such Payment Date as directed by the Issuer (or the Collateral Manager on the
Issuer's behalf); provided that in no event will Principal Proceeds include any
proceeds from the Excepted Assets minus (B) (x) the aggregate amount of any
Nonrecoverable Interest Advances that were previously reimbursed to the
Advancing Agent or the Trustee, in its capacity as Backup Advancing Agent, and
the aggregate amount of any Nonrecoverable Cure Advances reimbursed to the
Collateral Manager during the related Due Period from Principal Proceeds and
(ii) the aggregate amount of any Hedge Payment Amounts that were previously paid
to the applicable Hedge Counterparty from Principal Proceeds during the related
Due Period as a result of the early termination of the related Asset Specific
Hedge from any call, redemption and prepayment premiums in accordance with
clause (e) of the definition of Asset Specific Hedge.

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

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

          "Property Type": Each of the following types of mortgaged property
(each of which, for the avoidance of doubt, shall be considered commercial real
estate property for purposes of this Indenture):

               (i) "Condo Conversion Properties" means properties that have
          been, or are expected to be, converted to condominium form of
          ownership for the purpose of re-development as, in whole or in part,
          residential condominium apartments or time share units;

               (ii) "Diversified Properties" means properties used by businesses
          for diverse purposes and other similar property interests;

               (iii) "Healthcare Properties" means hospitals, clinics, sports
          clubs, spas and other health care facilities and other similar real
          property interests used in one or more similar businesses (but
          excluding medical offices);

               (iv) "Hospitality Properties" means hotels, motels, youth
          hostels, bed and breakfasts and other similar real property interests
          used in one or more similar businesses;

               (v) "Industrial Properties" means factories, refinery plants,
          breweries and other similar real property interests used in one or
          more similar businesses;

                                      -63-

<PAGE>

               (vi) "Mixed Use Properties" means real estate property used by
          businesses for diverse business purposes and any similar property
          interests;

               (vii) "Multi-Family Properties" means multi-family dwellings such
          as apartment blocks, condominiums and cooperative owned buildings;

               (viii) "Retail Properties" means retail stores, restaurants,
          bookstores, clothing stores and other similar real property interests
          used in one or more similar businesses;

               (ix) "Self-Storage Properties" means self-storage facilities and
          other similar real property interests used in one or more similar
          businesses;

               (x) "Suburban Office Properties" means office buildings
          (including medical offices), conference facilities and other similar
          real property interests used in the commercial real estate business in
          suburban areas;

               (xi) "Urban Office Properties" means office buildings (including
          medical offices), conference facilities and other similar real
          property interests used in the commercial real estate business in
          urban areas;

               (xii) "Warehouse Properties" means warehouse facilities and other
          similar real property interests; and

               (xiii) "Other Properties" means any other property other than
          Diversified Properties, Hospitality Properties, Industrial Properties,
          Multi-Family Properties, Urban Office Properties, Suburban Office
          Properties, Retail Properties, Self-Storage Properties, Healthcare
          Properties, Mixed Use Properties, Warehouse Properties and Condo
          Conversion Properties.

          "Proposed Portfolio": The portfolio of Collateral Debt Securities and
Eligible Investments resulting from the disposition of a Collateral Debt
Security or a proposed reinvestment of Principal Proceeds in a Substitute
Collateral Debt Security, as the case may be.

          "PTCE": The meaning specified in Section 2.5(g)(vi) hereof.

          "Purchase Agreement": The purchase agreement relating to the Notes
dated on or about the Closing Date by and among the Issuer, the Co-Issuer and
the Initial Purchaser.

          "Purchase Option Purchase Price": The meaning specified in Section
16.4 hereof.

          "Purchase Price": The purchase price identified for each Collateral
Debt Security against its name in Schedule I.

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

          "Qualified Hedge Party": A party that:

                                      -64-

<PAGE>

          (a) (i) at the time it becomes a Hedge Counterparty, will have with
     respect to itself as an issuer or with respect to its debt obligations
     ratings by Moody's, Fitch and S&P at least equal to the requirements set
     forth in the definition of "Hedge Counterparty Collateral Threshold
     Rating";

               (ii) legally and effectively accepts the rights and obligations
          of a Hedge Counterparty in respect of the related Hedge Agreement
          pursuant to a written agreement reasonably acceptable to the Issuer
          and the Trustee; and

               (iii) is a recognized dealer in over-the-counter derivatives
          organized under the laws of the United States of America or a
          jurisdiction located in the United States of America (or another
          jurisdiction reasonably acceptable to the Issuer, the Trustee and the
          Rating Agencies); or

          (b) (i) has, with respect to becoming a Hedge Counterparty, satisfied
     the Rating Agency Condition with respect to Moody's and S & P; and

               (ii) for so long as any Class of Notes is Outstanding under this
          Indenture and is rated by Fitch, (A) has posted collateral in an
          amount and manner that satisfies the Rating Agency Condition with
          respect to Fitch or (B) has caused an entity that satisfies the
          ratings criteria set forth in clause (a) of this definition to
          guarantee its obligations under the applicable Hedge Agreement.

          "Qualified Purchaser": A "qualified purchaser" within the meaning of
Section 2(a)(51) of the Investment Company Act.

          "Qualified Letter of Credit": A letter of credit issued by a bank or
other financial institution with a long term senior unsecured debt rating of at
least (i) "A-" by S&P, meeting S&P's published criteria found in Section One of
S&P's "U.S. CMBS Legal and Structured Finance Criteria," dated as of May 1, 2003
and (ii) "A3" by Moody's.

          "Rake Bond": A loan-specific commercial mortgage pass-through
certificate or similar security backed by only one of the mortgage loans
included in a pooled securitization transaction, typically representing a
non-pooled component of the related mortgage loan that is subordinate to the
pooled component with respect to the right to receive distributions of
collections on such mortgage loan.

          "Ramp-Up Period": The period commencing on the Closing Date and ending
on the Effective Date.

          "Rating Agency": Each of Moody's, Fitch and S&P and any successor
thereto, or, with respect to Pledged Obligations generally, if at any time
Moody's, Fitch or S&P or any such successor ceases to provide rating services
with respect to the Notes or certificates similar to the Notes, any other
nationally recognized investment rating agency selected by the Issuer and
reasonably satisfactory to each Hedge Counterparty and a Majority of the Notes
voting as a single Class.

                                      -65-

<PAGE>

          "Rating Agency Condition": With respect to any proposed action or
matter, the receipt by the Trustee of confirmation in writing from the
applicable Rating Agencies that the then current ratings on the Notes, as
applicable, shall not be reduced, qualified or withdrawn as a result of such
action or matter; provided, however, that, for purposes of this definition,
"Rating Agencies" shall be deemed not to include Fitch unless the proposed
action or matter relates to any amendment or modification, or any proposed
amendment or modification, to any Transaction Document, and in any such case
notification shall be made to Fitch within 30 days following such amendment or
modification.

          "Rating Confirmation Failure": The meaning specified in Section
7.18(b) hereof.

          "Record Date": The date on which the Holders of Notes entitled to
receive a payment in respect of principal or interest on the succeeding Payment
Date is determined, such date as to any Payment Date being the 15th day (whether
or not a Business Day) prior to the applicable Payment Date.

          "Redemption Date": Any Payment Date specified for a redemption of the
Securities pursuant to Section 9.1 or 9.2 hereof.

          "Redemption Date Statement": The meaning specified in Section 10.10(i)
hereof.

          "Redemption Price": The Redemption Price of each Class of Notes and
the Preferred Shares will be calculated as follows:

          Class A-1 Notes. The redemption price of the Class A-1 Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class A-1 Notes to be redeemed, together with the
Class A-1 Interest Distribution Amount (plus any Class A-1 Defaulted Interest
Amount) due on the applicable Redemption Date;

          Class A-2 Notes. The redemption price of the Class A-2 Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class A-2 Notes to be redeemed, together with the
Class A-2 Interest Distribution Amount (plus any Class A-2 Defaulted Interest
Amount) due on the applicable Redemption Date;

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

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

          Class D Notes. The redemption price of the Class D Notes will be
calculated on the related Determination Date and will be equal to the Aggregate
Outstanding Amount of the Class D Notes to be redeemed, together with the Class
D Interest Distribution Amount (plus any

                                      -66-

<PAGE>

Class D Capitalized Interest and any Class D Defaulted Interest Amount) due on
the applicable Redemption Date;

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

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

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

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

          Preferred Shares. The redemption price for the Preferred Shares will
be calculated on the related Determination Date and will be equal to the sum of
all net proceeds from the sale of the Collateral Debt Securities in accordance
with Article 12 hereof and Cash and proceeds from Eligible Investments (other
than the Issuer's rights, title and interest in the property described in clause
(i) of the definition of "Excepted Assets"), if any, remaining after payments of
all amounts and expenses, including payments made in respect of the Notes,
described under subclauses (1) through (23), (26), (27), and (28) of Section
11.1(a)(i) and subclauses (1) through (12) of Section 11.1(a)(ii); provided
that, if there are no such net proceeds, Cash or proceeds from Eligible
Investments remaining, the redemption price for the Preferred Shares shall be
equal to $0.

          "Reference Banks": The meaning set forth in Schedule J attached
hereto.

          "Registered": With respect to any debt obligation, a debt obligation
that is issued after July 18, 1984, and that is in registered form for purposes
of the Code.

          "Registered Security": The meaning specified in Section 3.3(a)(iii)
hereof.

          "Regulation S": Regulation S under the Securities Act.

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          "Regulation S Global Security": The meaning specified in Section
2.2(b)(ii) hereof.

          "Reimbursement Interest": Interest accrued on the amount of any
Interest Advance made by the Advancing Agent or the Trustee, in its capacity as
Backup Advancing Agent, for so long as it is outstanding, at the Reimbursement
Rate.

          "Reimbursement Rate": A rate per annum equal to the "prime rate" as
published in the "Money Rates" section of the Wall Street Journal, as such
"prime rate" may change from time to time. If more than one "prime rate" is
published in The Wall Street Journal for a day, the average of such "prime
rates" will be used, and such average will be rounded up to the nearest one
eighth of one percent (0.125%). If the "prime rate" contained in The Wall Street
Journal is not readily ascertainable, the Collateral Manager will select an
equivalent publication that publishes such "prime rate," and if such "prime
rates" are no longer generally published or are limited, regulated or
administered by a governmental authority or quasigovernmental body, then the
Collateral Manager will select, in its reasonable discretion, a comparable
interest rate index.

          "Reinvestment Criteria": The meaning specified in Section 12.2(a)
hereof.

          "Reinvestment Income": Any interest or other earnings on the funds on
deposit in the Unused Proceeds Account that have not been designated as Interest
Proceeds by the Collateral Manager with respect to the Effective Date.

          "Reinvestment Period": The period beginning on the Closing Date and
ending on and including the first to occur of the following events or dates: (i)
the end of the Due Period related to the Payment Date in April, 2011; (ii) the
end of the Due Period related to the Payment Date immediately following the date
on which the Collateral Manager (with the written consent of Holders of the
Majority of the Preferred Shares) notifies the Trustee that, in light of the
composition of Collateral Debt Securities, general market conditions and other
factors, investments in additional Collateral Debt Securities within the
foreseeable future would be either impractical or not beneficial to the Holder
of the Preferred Shares; (iii) the end of the Due Period related to the date on
which all of the Securities are redeemed as described herein under Section 9.1
and (iv) the date on which the principal of and accrued and unpaid interest on
the Notes are declared immediately due and payable following the occurrence of
an Event of Default which is neither cured nor waived.

          "REIT": A real estate investment trust under the Code.

          "REIT Debt Securities": REIT Debt Securities--Diversified, REIT Debt
Securities--Health Care, REIT Debt Securities--Hotel, REIT Debt
Securities--Industrial, REIT Debt Securities--Mortgage, REIT Debt
Securities--Multi-Family, REIT Debt Securities--Office, REIT Debt
Securities--Retail and REIT Debt Securities--Storage.

          "REIT Debt Securities--Diversified": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on a portfolio of diverse real
property interests, provided that (a) any Collateral Debt Security falling
within

                                      -68-

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this definition will be excluded from the definition of each other Specified
Type of Collateral Debt Security and (b) any Collateral Debt Security falling
within any other REIT Debt Security description set forth herein will be
excluded from this definition.

          "REIT Debt Securities--Health Care": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on hospitals, clinics, sport
clubs, spas and other health care facilities and other similar real property
interests used in one or more similar businesses, provided that any Collateral
Debt Security falling within this definition will be excluded from the
definition of each other Specified Type of Collateral Debt Security.

          "REIT Debt Securities--Hotel": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on hotels, motels, youth
hostels, bed and breakfasts and other similar real property interests used in
one or more similar businesses, provided that any Collateral Debt Security
falling within this definition will be excluded from the definition of each
other Specified Type of Collateral Debt Security.

          "REIT Debt Securities--Industrial": Collateral Debt Securities issued
by a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on factories, refinery plants,
breweries and other similar real property interests used in one or more similar
businesses, provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.

          "REIT Debt Securities--Mortgage": Collateral Debt Securities issued by
a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages, commercial mortgage backed
securities, collateralized mortgage obligations and other similar mortgage
related securities (including Collateral Debt Securities issued by a hybrid form
of such trust that invests in both commercial real estate and commercial
mortgages), provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.

          "REIT Debt Securities--Multi-Family": Collateral Debt Securities
issued by a real estate investment trust (as defined in Section 856 of the Code
or any successor provision) whose assets consist (except for rights or other
assets designed to assure the servicing or timely distribution of proceeds to
holders of the Collateral Debt Securities) of residential mortgages on
multi-family dwellings such as apartment blocks, condominiums and co-operative
owned buildings, provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.

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<PAGE>

          "REIT Debt Securities--Office": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on office buildings, conference
facilities and other similar real property interests used in the commercial real
estate business, provided that any Collateral Debt Security falling within this
definition will be excluded from the definition of each other Specified Type of
Collateral Debt Security.

          "REIT Debt Securities--Retail": Collateral Debt Securities issued by a
real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of mortgages on retail stores, restaurants,
bookstores, clothing stores and other similar real property interests used in
one or more similar businesses, provided that any Collateral Debt Security
falling within this definition will be excluded from the definition of each
other Specified Type of Collateral Debt Security.

          "REIT Debt Securities--Storage": Collateral Debt Securities issued by
a real estate investment trust (as defined in Section 856 of the Code or any
successor provision) whose assets consist (except for rights or other assets
designed to assure the servicing or timely distribution of proceeds to holders
of the Collateral Debt Securities) of storage facilities and other similar real
property interests used in one or more similar businesses, provided that any
Collateral Debt Security falling within this definition will be excluded from
the definition of each other Specified Type of Collateral Debt Security.

          "Repurchase Price": The meaning specified in Section 16.5(c) hereof.

          "Rule 144A": Rule 144A under the Securities Act.

          "Rule 144A Global Security": The meaning specified in Section
2.2(b)(i) hereof.

          "Rule 144A Information": The meaning specified in Section 7.13 hereof.

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

          "S&P CDO Monitor": A dynamic, analytical computer model provided prior
to the initial Payment Date by S&P to the Collateral Manager and the Trustee,
with written instructions and assumptions to be applied when running such
computer model, for the purpose of estimating the default risk of a pool of
Collateral Debt Securities.

          "S&P CDO Monitor Test": A test that will be satisfied on any
Measurement Date if, after giving effect to any purchase or sale of a Collateral
Debt Security (or both), as the case may be, (i) the Class A-1 Loss
Differential, the Class A-2 Loss Differential, the Class B Loss Differential,
the Class C Loss Differential, the Class D Loss Differential, the Class E Loss
Differential, the Class F Loss Differential, the Class G Loss Differential or
the Class H Loss Differential, as the case may be, of the Proposed Portfolio is
equal to or greater than zero or (ii) the Class A-1 Loss Differential, the Class
A-2 Loss Differential, the Class B Loss Differential, the Class C Loss
Differential, the Class D Loss Differential, the Class E Loss Differential, the

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the Class F Loss Differential, the Class G Loss Differential or the Class H Loss
Differential, as the case may be, of the Proposed Portfolio is greater than or
equal to the Class A-1 Loss Differential, the Class A-2 Loss Differential, the
Class B Loss Differential, the Class C Loss Differential, the Class D Loss
Differential, the Class E Loss Differential, the Class F Loss Differential, the
Class G Loss Differential or the Class H Loss Differential, as the case may be,
of the Current Portfolio.

          "S&P Fixed Rate Excess": As of any Measurement Date, a fraction
(expressed as a percentage) the numerator of which is equal to the product of
(a) the greater of zero and the excess, if any, of the S&P Weighted Average
Coupon for such Measurement Date over the percentage set forth in the S&P
Weighted Average Coupon row in the applicable column of the S&P Matrix (which
percentage, for the avoidance of doubt, will vary depending on the then current
levels of the other variables included in the S&P Matrix) and (b) the Aggregate
Principal Balance of all Collateral Debt Securities that are Fixed Rate
Securities (excluding all Defaulted Securities and Written Down Securities) and
the denominator of which is the Aggregate Principal Balance of all Collateral
Debt Securities that are Floating Rate Securities (excluding all Defaulted
Securities and Written Down Securities), multiplying the resulting figure by 360
and then dividing by 365. As used in this definition, "applicable column" means
the column corresponding to the numbered scenario in the S&P Matrix, the use of
the applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.

          "S&P Matrix": The matrix set forth in Schedule C.

          "S&P Minimum Weighted Average Coupon Test": A test that will be
satisfied on any Measurement Date if the S&P Weighted Average Coupon is greater
than or equal to the number set forth in the S&P Weighted Average Coupon row in
the applicable column of the S&P Matrix (which number, for the avoidance of
doubt, will vary depending on the then current levels of the other variables
included in the S&P Matrix). As used in this definition, "applicable column"
means the column corresponding to the numbered scenario in the S&P Matrix, the
use of the applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.

          "S&P Minimum Weighted Average Spread Test": A test that will be
satisfied as of any Measurement Date if the S&P Weighted Average Spread as of
such Measurement Date is greater than or equal to the number set forth in the
S&P Weighted Average Spread row in the applicable column of the S&P Matrix
(which number, for the avoidance of doubt, will vary depending on the then
current levels of the other variables included in the S&P Matrix). As used in
this definition, "applicable column" means the column corresponding to the
numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

          "S&P Rating": Of any Collateral Debt Security will be determined as
follows:

               (i) if S&P has assigned a rating to such Collateral Debt Security
          either publicly or privately (in the case of a private rating, with
          the appropriate consents for the use of such private rating), the S&P
          Rating shall be the rating assigned thereto by S&P (or, in the case of
          a REIT Debt Security, the issuer credit rating assigned by S&P),
          provided that, notwithstanding the foregoing, if any Collateral

                                      -71-

<PAGE>

          Debt Security shall, at the time of its purchase by the Issuer, be
          listed for a possible upgrade or downgrade on S&P's then current
          credit rating watch list, then the S&P Rating of such Collateral Debt
          Security shall be one subcategory above or below, respectively, the
          rating then assigned to such item by S&P, as applicable; provided
          that, if such Collateral Debt Security is removed from such list at
          any time, it shall be deemed to have its actual rating by S & P;

               (ii) if such Collateral Debt Security is not rated by S&P but the
          Issuer (or the Collateral Manager on behalf of the Issuer) has
          requested that S&P assign a rating to such Collateral Debt Security,
          the S&P Rating shall be the rating so assigned by S & P; provided
          that, pending receipt from S&P of such rating, if such Collateral Debt
          Security is of a type listed on Schedule E hereto or is not eligible
          for notching in accordance with Schedule D hereto, such Collateral
          Debt Security shall have an S&P Rating of "CCC-," otherwise such S&P
          Rating shall be the rating assigned according to Schedule F hereto
          until such time as S&P shall have assigned a rating thereto; or

               (iii) if any Collateral Debt Security is a Collateral Debt
          Security that has not been assigned a rating by S&P and is not a
          Collateral Debt Security listed in Schedule E hereto, as identified by
          the Collateral Manager, the S&P Rating shall be the rating assigned
          according to Schedule F hereto; provided that, if any Collateral Debt
          Security shall, at the time of its purchase by the Issuer, be listed
          for a possible upgrade or downgrade on either Moody's or Fitch's then
          current credit rating watch list, then the S&P Rating of such
          Collateral Debt Security shall be one subcategory above or below,
          respectively, the rating then assigned to such item in accordance with
          Schedule F hereto; provided, further, that the Aggregate Principal
          Balance that may be given a rating based on this paragraph (c) may not
          exceed 20%, of the Aggregate Principal Balance of all Collateral Debt
          Securities.

          "S&P Recovery Rate": With respect to any Collateral Debt Security on
any Measurement Date, an amount equal to the percentage for such Collateral Debt
Security set forth in Schedule D (the S&P Recovery Matrix) hereto (or, in the
case of a Defaulted Security under Clause A of Schedule D (the S&P Recovery
Matrix) hereto, corresponding to the S&P Rating at the time of issuance of such
Collateral Debt Security) or such lower percentage as may be expressly agreed to
by S&P and the Issuer (or the Collateral Manager on behalf of the Issuer) with
respect to such Collateral Debt Security; provided that, if the Issuer owns one
or more B Notes and the related A Note also is included in the Assets, the "S&P
Recovery Rate" for such B Note(s) shall be the rate applicable to the related A
Note, but only if S&P modeled such B Note(s) as a Whole Loan and provided to the
Issuer a private rating with respect to such B Note(s) on the basis thereof;
provided, further, that the S&P Recovery Rate for any Collateral Debt Security
with respect to which substitute or additional collateral (in the form of Cash
or Eligible Investments) in an amount at least equal to the sum of the principal
amount of such Collateral Debt Security and the aggregate of all remaining
scheduled interest payments thereon through the earliest permissible prepayment
date has been delivered by or on behalf of the related obligor to the Trustee
and deposited into a Defeased Collateral Account (or to the Servicer in
accordance with the Servicing Agreement and deposited into an Eligible Account)
(by defeasance or otherwise) shall be 100%.

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<PAGE>

          "S&P Recovery Test": A test that will be satisfied on any Measurement
Date if the S&P Weighted Average Recovery Rate (based upon the Principal Balance
of the Collateral Debt Securities) for each Class of Notes falls within one of
the permissible scenarios (which scenarios, for the avoidance of doubt, will
vary depending on the then current levels of the variables included in the S&P
Matrix) for each such Class; provided that, in the event Cash has been received
in respect of Principal Proceeds of any Collateral Debt Security in connection
with a prepayment or sale of such Collateral Debt Security, but such Cash has
not been reinvested in additional Collateral Debt Securities as of such
Measurement Date, such Cash will be included in calculating the S&P Weighted
Average Recovery Rate and the Principal Balance and Recovery Rate associated
with such Cash will be the Principal Balance and Recovery Rate of such
Collateral Debt Security immediately prior to prepayment or sale, as applicable;
provided, further, that, with respect to any such Collateral Debt Security that
was sold for less than its outstanding principal balance, the "Principal
Balance" associated with such Cash will equal the amount of Sale Proceeds
received by the Issuer in connection with such sale.

          "S&P Special Amortization Pro Rata Condition": A condition that will
be satisfied with respect to any Payment Date if either (i)(a) the Aggregate
Principal Balance of the Collateral Debt Securities as of the related
Determination Date is greater than an amount equal to 50% of the Aggregate
Principal Balance of the Collateral Debt Securities on the Effective Date and
the S&P CDO Monitor Test is satisfied as of such Determination Date and (b) no
Par Value Test has failed to be satisfied on more than two Determination Dates,
unless, subsequent to such failure, the Par Value Ratio related to such Par
Value Test has equaled or exceeded the Par Value Ratio in existence on the
Effective Date or (ii) the Rating Agency Condition has been satisfied with
respect to S&P.

          "S&P Spread Excess": As of any Measurement Date, a fraction (expressed
as a percentage), the numerator of which is equal to the product of (a) the
greater of zero and the excess, if any, of the S&P Weighted Average Spread for
such Measurement Date over the percentage set forth in the S&P Weighted Average
Spread row in the applicable column of the S&P Matrix (which percentage, for the
avoidance of doubt, will vary depending on the then current levels of the other
variables included in the S&P Matrix) and (b) the Aggregate Principal Balance of
all Collateral Debt Securities that are Floating Rate Securities (excluding all
Defaulted Securities and Written Down Securities) and the denominator of which
is the Aggregate Principal Balance of all Collateral Debt Securities that are
Fixed Rate Securities (excluding all Defaulted Securities and Written Down
Securities), multiplying the resulting figure by 365 and then dividing by 360.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

          "S&P Weighted Average Coupon": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%) by (i) summing the products
obtained by multiplying (x) the current interest rate on each Collateral Debt
Security that is a Fixed Rate Security (excluding all Defaulted Securities and
Written Down Securities) by (y) the Principal Balance of each such Collateral
Debt Security and (ii) dividing such sum by the Aggregate Principal Balance of
all Collateral Debt Securities that are Fixed Rate Securities (excluding all
Defaulted Securities and Written Down Securities) plus (b) if the amount
obtained pursuant to clause (a) is

                                      -73-

<PAGE>

less than the percentage set forth in the S&P Weighted Average Coupon row in the
applicable column of the S&P Matrix (which percentage, for the avoidance of
doubt, will vary depending on the then current levels of the other variables
included in the S&P Matrix), the S&P Spread Excess, if any, as of such
Measurement Date. As used in this definition, "applicable column" means the
column corresponding to the numbered scenario in the S&P Matrix, the use of the
applicable numbers or percentages set forth in which would result in
satisfaction of the related Collateral Quality Tests.

          "S&P Weighted Average Recovery Rate": With respect to the Collateral
Debt Securities, as of any Measurement Date, the number obtained by summing the
products obtained by multiplying the Principal Balance of each Collateral Debt
Security, other than a Defaulted Security, by its S&P Recovery Rate, and
dividing such sum by the Aggregate Principal Balance of all such Collateral Debt
Securities and rounding up to the first decimal place.

          "S&P Weighted Average Spread": As of any Measurement Date, (a) the
number obtained (rounded up to the next 0.001%), by (i) summing the products
obtained by multiplying (x) the stated spread above LIBOR at which interest
accrues on each Collateral Debt Security that is a Floating Rate Security (other
than a Defaulted Security or Written Down Security) (or, in the case of any
Floating Rate Security (other than a Defaulted Security or Written Down
Security) which provides for a minimum interest rate payable thereunder, the
excess, if any, of the minimum interest rate applicable to such Collateral Debt
Security over LIBOR, if such result is greater than the related stated spread
above LIBOR) as of such date by (y) the Principal Balance of such Collateral
Debt Security as of such date, and (ii) dividing such sum by the Aggregate
Principal Balance of all Collateral Debt Securities that are Floating Rate
Securities (excluding all Defaulted Securities and Written Down Securities) plus
(b) if the amount obtained pursuant to clause (a) is less than the percentage
set forth in the S&P Weighted Average Spread row in the applicable column of the
S&P Matrix (which percentage, for the avoidance of doubt, will vary depending on
the then current levels of the other variables included in the S&P Matrix), the
S&P Fixed Rate Excess, if any, as of such Measurement Date. For purposes of this
definition, a Fixed Rate Security that is a Covered Fixed Rate Security will be
deemed to be a Floating Rate Security and the floating rate applicable thereto
will be the rate payable taking into account the related Asset Specific Hedge.
As used in this definition, "applicable column" means the column corresponding
to the numbered scenario in the S&P Matrix, the use of the applicable numbers or
percentages set forth in which would result in satisfaction of the related
Collateral Quality Tests.

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

          "Sale Proceeds": All proceeds (including accrued interest) received
with respect to Collateral Debt Securities and Eligible Investments as a result
of sales of such Collateral Debt Securities and Eligible Investments, net of any
reasonable out-of-pocket expenses of the Collateral Manager or the Trustee in
connection with any such sale.

          "Schedule of Closing Date Collateral Debt Securities": The Collateral
Debt Securities listed on Schedule I hereto, which Schedule shall include the
Principal Balance, interest rate (if the security bears interest at a fixed
rate) or the spread and the relevant floating

                                      -74-

<PAGE>

reference rate (if the security bears interest at a floating rate), the maturity
date, the Moody's Rating, S&P Rating and Fitch Rating, if any, of each
Collateral Debt Security.

          "Scheduled Distribution": With respect to any Pledged Obligation, for
each Due Date, the scheduled payment of principal, interest or fee or any
dividend or premium payment due on such Due Date or any other distribution with
respect to such Pledged Obligation, determined in accordance with the
assumptions specified in Section 1.2 hereof.

          "Secured Parties": Collectively, the Trustee, the Noteholders, each
Hedge Counterparty and the Collateral Manager, each as their interests appear in
applicable Transaction Documents.

          "Securities": Collectively, the Notes and the Preferred Shares.

          "Securities Account": The meaning specified in Section 8-501(a) of the
UCC.

          "Securities Account Control Agreement": The meaning specified in
Section 3.3(a) hereof.

          "Securities Act": The Securities Act of 1933, as amended.

          "Securities Intermediary": The meaning specified in Section
8-102(a)(14) of the UCC.

          "Security Entitlement": The meaning specified in Section 8-102(a)(17)
of the UCC.

          "Seller": The meaning specified in the applicable Collateral Debt
Securities Purchase Agreement.

          "Senior Collateral Management Fee": The fee payable quarterly in
arrears on each Payment Date to the Collateral Manager pursuant to this
Indenture and the Collateral Management Agreement, equal to 0.10% per annum of
the Net Outstanding Portfolio Balance for such Payment Date, to the extent funds
are available for such purpose in accordance with the Priority of Payments.

          "Senior Tranche": (i) With respect to a Participation or B Note, any
senior interest in the same Underlying Term Loan as a Participation or any
senior debt secured by the same Underlying Mortgage Property as a B Note or
Participation and (ii) with respect to a Mezzanine Loan, any commercial mortgage
loan related to the same Underlying Mortgage Property or Properties as the
Mezzanine Loan.

          "Servicer": Arbor Commercial Mortgage, LLC, each of Arbor Commercial
Mortgage, LLC's permitted successors and assigns or any successor Person that
shall have become the Servicer pursuant to the provisions of the Servicing
Agreement.

                                      -75-

<PAGE>

          "Servicing Agreement": The Servicing Agreement, dated as of the
Closing Date, by and among the Issuer, the Trustee, the Collateral Manager and
the Servicer, as amended, supplemented or otherwise modified from time to time
in accordance with its terms.

          "Servicing Fee": With respect to each Due Period, the aggregate amount
of all servicing fees payable to the Servicer under the Servicing Agreement
during such Due Period.

          "Share Registrar": Maples Finance Limited, unless a successor Person
shall have become the Share Registrar pursuant to the applicable provisions of
the Preferred Shares Paying Agency Agreement, and thereafter "Share Registrar"
shall mean such successor Person.

          "Similar Law": The meaning specified in Section 2.5(g)(vi) hereof.

          "Single Asset Mortgage Security": A commercial mortgage pass-through
certificate or similar security backed primarily by a single mortgage loan on
one or more commercial properties included in a property-specific securitization
transaction.

          "Single Borrower Mortgage Security": A commercial mortgage
pass-through certificate or similar security backed primarily by one or more
mortgage loans to the same borrower (or affiliated borrowers) on one or more
commercial properties included in a securitization.

          "Special Amortization": The meaning specified in Section 9.7 hereof.

          "Special Amortization Amount": The meaning specified in Section 9.7
hereof.

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

          "Specified Type": Each of a Loan, CMBS Security, CRE CDO Security,
REIT Debt Security, and Preferred Equity Security.

          "Spread Excess": The Moody's Spread Excess, the S&P Spread Excess or
the Fitch Spread Excess, as the context requires.

          "Stated Maturity": The Payment Date occurring in April, 2038.

          "Step-Down Bond": A security which by the terms of the related
Underlying Instruments provides for a decrease, in the case of a Fixed Rate
Security, in the per annum interest rate on such security or, in the case of a
Floating Rate Security, in the spread over the applicable index or benchmark
rate, solely as a function of the passage of time; provided that, for purposes
of measuring compliance with the Collateral Quality Tests, the interest rate or
spread, as applicable, associated with any Step-Down Bond included in the Assets
shall be the lowest possible applicable interest rate or spread, as applicable,
as set forth in the related Underlying Instruments; provided, further, that the
term Step-Down Bond shall not include any such security providing for payment of
a constant rate of interest at all times after the date of acquisition by the
Issuer or any Loan or Preferred Equity Security.

                                      -76-

<PAGE>

          "Step-Up Security": A security with a current interest rate of zero
percent per annum at the time of purchase but which increases to predetermined
levels on specific dates; provided that the term Step-Up Security shall not
include any Loan or Preferred Equity Security.

          "Subordinate Collateral Management Fee": The fee payable quarterly in
arrears on each Payment Date to the Collateral Manager pursuant to this
Indenture and the Collateral Management Agreement, in an amount equal to 0.15%
per annum of the Net Outstanding Portfolio Balance, to the extent funds are
available for such purpose in accordance with the Priority of Payments.

          "Subordinate Interests": The Class A-2 Subordinate Interests, the
Class B Subordinate Interests, the Class C Subordinate Interests, the Class D
Subordinate Interests, the Class E Subordinate Interests, the Class F
Subordinate Interests, the Class G Subordinate Interests and the Class H
Subordinate Interests, as the context may require.

          "Subsequent Collateral Debt Security": Any Collateral Debt Security
that is acquired after the Closing Date.

          "Substitute Collateral Debt Security": A Collateral Debt Security that
is acquired by the Issuer in substitution for Collateral Debt Securities
previously pledged to the Trustee in accordance herewith.

          "Successful Auction": (i) An Auction which is conducted in accordance
with Section 9.2(b) or (ii) the purchase of Collateral Debt Securities by the
Holder of the Preferred Shares or its Affiliates for a price equal to the Total
Redemption Price pursuant to Section 12.4(c).

          "Tax Event": Means (i) any obligor is, or on the next scheduled
payment date under any Collateral Debt Security, will be, required to deduct or
withhold from any payment under any Collateral Debt Security to the Issuer for
or on account of any tax for whatever reason and such obligor is not required to
pay to the Issuer such additional amount as is necessary to ensure that the net
amount actually received by the Issuer (free and clear of taxes, whether
assessed against such obligor or the Issuer) will equal the full amount that the
Issuer would have received had no such deduction or withholding been required,
(ii) any jurisdiction imposes net income, profits, or similar tax on the Issuer,
(iii) the Issuer is required to deduct or withhold from any payment under any
Hedge Agreement for or on account of any tax and the Issuer is obligated to make
a gross up payment (or otherwise pay additional amounts) to any Hedge
Counterparty, (iv) any Hedge Counterparty is required to deduct or withhold from
any payment under any Hedge Agreement for or on account of any tax for whatever
reason and such Hedge Counterparty is not required to pay to the Issuer such
additional amount as is necessary to ensure that the net amount actually
received by the Issuer (free and clear of taxes, whether assessed against such
obligor or the Issuer) will equal the full amount that the Issuer would have
received had no such deduction or withholding been required or (v) the Issuer
fails to maintain its status as a qualified REIT subsidiary (within the meaning
of Section 856(i)(2) of the Code).

          "Tax Materiality Condition": The condition that will be satisfied if
either (i) as a result of the occurrence of a Tax Event, a tax or taxes are
imposed on the Issuer or withheld from

                                      -77-

<PAGE>

payments to the Issuer and with respect to which the Issuer receives less than
the full amount that the Issuer would have received had no such deduction
occurred and such amount exceeds, in the aggregate, U.S. $1 million during any
12-month period or (ii) the Issuer fails to maintain its status as a qualified
REIT subsidiary (within the meaning of Section 856(i)(2) of the Code).

          "Tax Redemption": The meaning specified in Section 9.1(b) hereof.

          "Total Redemption Price": The amount equal to funds sufficient to pay
all amounts and expenses described under clauses (1) through (5), (26), (27) and
(28) of Section 11.1(a)(i) and to redeem all Notes at their applicable
Redemption Prices.

          "Transaction Documents": This Indenture, the Collateral Management
Agreement, the Collateral Debt Securities Purchase Agreements, the Company
Administration Agreement, the Preferred Shares Paying Agency Agreement and each
Hedge Agreement.

          "Transfer Agent": The Person or Persons, which may be the Issuer,
authorized by the Issuer to exchange or register the transfer of Notes.

          "Treasury Regulations": Temporary or final regulations promulgated
under the Code by the United States Treasury Department.

          "Trust Officer": When used with respect to the Trustee, any officer
within the CDO Trust Services Group of the Corporate Trust Office (or any
successor group of the Trustee) including any vice president, assistant vice
president or officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred at the CDO Trust
Services Group of the Corporate Trust Office because of his knowledge of and
familiarity with the particular subject.

          "Trustee": LaSalle Bank National Association, a national banking
association organized and existing under the laws of the United States of
America, unless a successor Person shall have become the Trustee pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" shall mean
such successor Person.

          "Trustee Fee Proposal": The letter dated as of November 28, 2005, to
Arbor Commercial Mortgage, LLC, as revised to date.

          "UCC": The applicable Uniform Commercial Code.

          "UCC Account": "Account," as such term is defined in Section
9-102(a)(2) of the UCC.

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

          "Underlying Instruments": The indenture, loan agreement, note,
mortgage, intercreditor agreement, pooling and servicing agreement,
participation agreement or other agreement pursuant to which a Collateral Debt
Security or Eligible Investment has been issued or created and each other
agreement that governs the terms of or secures the obligations represented

                                      -78-

<PAGE>

by such Collateral Debt Security or Eligible Investment or of which holders of
such Collateral Debt Security or Eligible Investment are the beneficiaries.

          "Underlying Mortgage Property": With respect to (i) a Loan (other than
a Participation or Mezzanine Loan), the commercial mortgage property or
properties securing the Loan, (ii) a Participation, the commercial mortgage
property or properties securing the Underlying Term Loan, or (iii) a Mezzanine
Loan, the commercial mortgage property or properties related to the Mezzanine
Loan.

          "Underlying Term Loan": With respect to (i) a Loan (other than a
Participation or a Mezzanine Loan), such Loan or (ii) a Participation, the
underlying commercial mortgage loan.

          "United States": The United States of America, including any state and
any territory or possession administered thereby.

          "Unregistered Securities": The meaning specified in Section 5.17(c)
hereof.

          "Unscheduled Principal Payments": Any proceeds received by the Issuer
from an unscheduled prepayment or redemption (in whole but not in part) by the
obligor of a Collateral Debt Security prior to the stated maturity date of such
Collateral Debt Security.

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

          "U.S. Person": The meaning specified in Regulation S.

          "Weighted Average Coupon": The Moody's Weighted Average Coupon, the
S&P Weighted Average Coupon or the Fitch Weighted Average Coupon, as the context
requires.

          "Weighted Average Life": As of any Measurement Date with respect to
the Collateral Debt Securities (other than Defaulted Securities), the number
obtained by (i) summing the products obtained by multiplying (a) the Average
Life at such time of each Collateral Debt Security (other than Defaulted
Securities) by (b) the outstanding Principal Balance of such Collateral Debt
Security and (ii) dividing such sum by the Aggregate Principal Balance at such
time of all Collateral Debt Securities (other than Defaulted Securities).

          "Weighted Average Life Test": With respect to any Collateral Debt
Securities, a test that will be satisfied as of any Measurement Date if the
Weighted Average Life of such Collateral Debt Securities as of such Measurement
Date is less than or equal to eight years.

          "Weighted Average Moody's Rating Factor": The amount determined by
summing the products obtained by multiplying the Principal Balance of each
Collateral Debt Security (excluding Defaulted Securities) by its Moody's Rating
Factor, dividing such sum by the Aggregate Principal Balance of all such
obligations and rounding the result up to the nearest whole number.

          "Weighted Average Spread": The Moody's Weighted Average Spread, the
S&P Weighted Average Spread or the Fitch Weighted Average Spread, as the context
requires.

                                      -79-

<PAGE>

          "Whole Loan": A whole loan (including, without limitation, an A Note)
secured by a mortgage on multi-family or commercial real estate property or a
senior interest therein.

          "Written Down Security": As of any date of determination, any
Collateral Debt Security as to which the aggregate par amount of the entire
issue of such Collateral Debt Security and all other securities secured by the
same pool of collateral and that rank senior in priority of payment to such
issue exceeds the aggregate par amount of all collateral (giving effect to any
appraisal reductions) securing such issue (excluding defaulted collateral).

          Section 1.2 Assumptions as to Pledged Obligations.

          (a) In connection with all calculations required to be made pursuant
to this Indenture with respect to Scheduled Distributions on any Pledged
Obligation, or any payments on any other assets included in the Assets, and with
respect to the income that can be earned on Scheduled Distributions on such
Pledged Obligations and on any other amounts that may be received for deposit in
the applicable Collection Account, the provisions set forth in this Section 1.2
shall be applied.

          (b) All calculations with respect to Scheduled Distributions on the
Pledged Obligations securing the Notes shall be made on the basis of information
as to the terms of each such Pledged Obligation and upon report of payments, if
any, received on such Pledged Obligation that are furnished by or on behalf of
the issuer of such Pledged Obligation and, to the extent they are not manifestly
in error, such information or report may be conclusively relied upon in making
such calculations.

          (c) For each Due Period, the Scheduled Distribution on any Pledged
Obligation (other than a Defaulted Security, which, except as otherwise provided
herein, shall be assumed to have a Scheduled Distribution of zero) shall be the
sum of (i) the total amount of payments and collections in respect of such
Pledged Obligation (including all Sales Proceeds received during the Due Period
and not reinvested in Substitute Collateral Debt Securities or retained in the
Principal Collection Account for subsequent reinvestment) that, if paid as
scheduled, will be available in the Collection Accounts at the end of such Due
Period for payment on the Notes and of expenses of the Issuer and the Co-Issuer
pursuant to the Priority of Payments and (ii) any such amounts received in prior
Due Periods that were not disbursed on a previous Payment Date and do not
constitute amounts which have been used as reimbursement with respect to a prior
Interest Advance pursuant to the terms of this Indenture.

          (d) With respect to any Collateral Debt Security as to which any
interest or other payment thereon is subject to withholding tax of any relevant
jurisdiction, each Scheduled Distribution thereon shall, for purposes of the
Coverage Tests and the Collateral Quality Tests, be deemed to be payable net of
such withholding tax unless the issuer thereof or obligor thereon is required to
make additional payments to fully compensate the Issuer for such withholding
taxes (including in respect of any such additional payments). On any date of
determination, the amount of any Scheduled Distribution due on any future date
shall be assumed to be made net of any such uncompensated withholding tax based
upon withholding tax rates in effect on such date of determination.

                                      -80-

<PAGE>

          (e) For purposes of calculating any Interest Coverage Ratio, the
expected interest income on floating rate Collateral Debt Securities and
Eligible Investments and under each Hedge Agreement and the expected interest
payable on the Notes shall be calculated using the (i) interest rates applicable
thereto on the applicable Measurement Date and (ii) accrued original issue
discount on Eligible Investments shall be deemed to be Scheduled Distributions
of interest due on the date such original issue discount is scheduled to be
paid. Notwithstanding the foregoing, for the purposes of calculating any
Interest Coverage Ratio, there shall be excluded all scheduled or deferred
payments of interest on or principal of Collateral Debt Securities and any
payment, including any amount payable to the Issuer by each Hedge Counterparty,
which the Collateral Manager has determined in its reasonable judgment shall not
be made in Cash or received when due.

          (f) Each Scheduled Distribution receivable with respect to a Pledged
Obligation shall be assumed to be received on the applicable Due Date, and each
such Scheduled Distribution shall be assumed to be immediately deposited in the
applicable Collection Account except to the extent the Collateral Manager has a
reasonable expectation that such Scheduled Distribution will not be received on
the applicable Due Date. All such funds shall be assumed to continue to earn
interest until the date on which they are required to be available in the
applicable Collection Account for transfer to the Payment Account for
application, in accordance with the terms hereof, to payments of principal of or
interest on the Notes or other amounts payable pursuant to this Indenture.

          (g) All calculations required to be made and all reports which are to
be prepared pursuant to this Indenture with respect to the Pledged Obligations,
shall be made on the basis of the date on which the Issuer makes a commitment to
purchase or sell an asset (the "trade date"), not the settlement date.

          (h) For purposes of calculating the Par Value Ratio, an appraisal
reduction of a Collateral Debt Security will be assumed to result in an implied
reduction of Principal Balance for such Collateral Debt Security only if such
appraisal reduction is intended to reduce the interest payable on such
Collateral Debt Security and only in proportion to such interest reduction. For
purposes of the Par Value Ratio, any Collateral Debt Security that has sustained
an implied reduction of Principal Balance due to an appraisal reduction will not
be considered a Defaulted Security solely due to such implied reduction. The
Collateral Manager will notify the Trustee of any appraisal reductions of
Collateral Debt Securities if the Collateral Manager has actual knowledge
thereof.

          Section 1.3 Interest Calculation Convention.

          All calculations of interest hereunder that are made with respect to
the Notes shall be made on the basis of the actual number of days during the
related Interest Accrual Period divided by 360.

          Section 1.4 Rounding Convention.

          Unless otherwise specified herein, test calculations that evaluate to
a percentage will be rounded to the nearest ten thousandth of a percentage point
and test calculations that

                                      -81-

<PAGE>

evaluate to a number or decimal will be rounded to the nearest one hundredth of
a percentage point.

                                    ARTICLE 2

                                    THE NOTES

          Section 2.1 Forms Generally.

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

          Section 2.2 Forms of Notes and Certificate of Authentication.

          (a) Form. The form of each Class of Notes including the Certificate of
Authentication, shall be substantially as set forth in Exhibits A-1, A-2, B, C,
D, E, F, G and H hereto.

          (b) Global Securities.

          (i) The Notes initially offered and sold in the United States to (or
     to U.S. Persons who are) QIBs shall be represented by one or more permanent
     global notes in definitive, fully registered form without interest coupons
     with the applicable legend set forth in Exhibits A-1, A-2, B, C, D, E, F, G
     and H hereto added to the form of such Notes (each, a "Rule 144A Global
     Security"), which shall be registered in the name of the nominee of the
     Depository and deposited with the Trustee, at its Corporate Trust Office,
     as custodian for the Depository, duly executed by the Issuer and the
     Co-Issuer and authenticated by the Trustee as hereinafter provided. The
     aggregate principal amount of the Rule 144A Global Securities may from time
     to time be increased or decreased by adjustments made on the records of the
     Trustee or the Depository or its nominee, as the case may be, as
     hereinafter provided.

          (ii) The Notes initially sold in offshore transactions in reliance on
     Regulation S shall be represented by one or more permanent global notes in
     definitive, fully registered form without interest coupons with the
     applicable legend set forth in Exhibits A-1, A-2, B, C, D, E, F, G and H,
     hereto added to the form of such Notes (each, a "Regulation S Global
     Security"), which shall be deposited on behalf of the subscribers for such
     Notes represented thereby with the Trustee as custodian for the Depository
     and registered in the name of a nominee of the Depository for the
     respective accounts of Euroclear and Clearstream, Luxembourg or their
     respective depositories, duly executed

                                      -82-

<PAGE>

     by the Issuer and the Co-Issuer and authenticated by the Trustee as
     hereinafter provided. The aggregate principal amount of the Regulation S
     Global Securities may from time to time be increased or decreased by
     adjustments made on the records of the Trustee or the Depository or its
     nominee, as the case may be, as hereinafter provided.

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

          Each of the Issuer and Co-Issuer shall execute and the Trustee shall,
in accordance with this Section 2.2(c), authenticate and deliver initially one
or more Global Securities that shall be (i) registered in the name of the
nominee of the Depository for such Global Security or Global Securities and (ii)
delivered by the Trustee to such Depository or pursuant to such Depository's
instructions or held by the Trustee's agent as custodian for the Depository.

          Agent Members shall have no rights under this Indenture with respect
to any Global Security held on their behalf by the Trustee, as custodian for the
Depository or under the Global Security, and the Depository may be treated by
the Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer, the
Co-Issuer or the Trustee as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Issuer, the Co-Issuer, the Trustee, or any agent of the Issuer, the
Co-Issuer or the Trustee, from giving effect to any written certification, proxy
or other authorization furnished by the Depository or impair, as between the
Depository and its Agent Members, the operation of customary practices governing
the exercise of the rights of a holder of any Global Security.

          (d) Delivery of Certificated Notes in Lieu of Global Securities.
Except as provided in Section 2.10 hereof, owners of beneficial interests in a
Class of Global Securities shall not be entitled to receive physical delivery of
a Certificated Note.

          Section 2.3 Authorized Amount; Stated Maturity; and Denominations.

          (a) The aggregate principal amount of Notes that may be authenticated
and delivered under this Indenture is limited to $356,250,000, except for Notes
authenticated and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Sections 2.5, 2.6 or 8.5 hereof.

          Such Notes shall be divided into nine (9) Classes having designations
and original principal amounts as follows:

<TABLE>
<CAPTION>
                                                                       ORIGINAL
                                                                       PRINCIPAL
                            DESIGNATION                                 AMOUNT
                            -----------                              ------------
<S>                                                                  <C>
Class A-1 Senior Secured Floating Rate Term Notes Due 2038 .......   $161,500,000
Class A-2 Second Priority Senior Secured Floating Rate Term
   Notes Due 2038 ................................................   $ 40,375,000
</TABLE>

                                      -83-

<PAGE>

<TABLE>
<CAPTION>
                                                                       ORIGINAL
                                                                       PRINCIPAL
                            DESIGNATION                                 AMOUNT
                            -----------                              ------------
<S>                                                                  <C>
Class B Third Priority Senior Secured Floating Rate Term Notes
   Due 2038 ......................................................   $ 57,000,000
Class C Fourth Priority Floating Rate Capitalized Interest Term
   Notes Due 2038 ................................................   $ 29,687,500
Class D Fifth Priority Floating Rate Capitalized Interest Term
   Notes Due 2038 ................................................   $ 10,212,500
Class E Sixth Priority Floating Rate Capitalized Interest Term
   Notes Due 2038 ................................................   $  9,025,000
Class F Seventh Priority Floating Rate Capitalized Interest
   Term Notes Due 2038 ...........................................   $ 17,575,000
Class G Eighth Priority Floating Rate Capitalized Interest Term
   Notes Due 2038 ................................................   $ 13,062,500
Class H Ninth Priority Floating Rate Capitalized Interest Term
   Notes Due 2038 ................................................   $ 17,812,500
</TABLE>

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

          Section 2.4 Execution, Authentication, Delivery and Dating.

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

          Notes bearing the manual or facsimile signatures of individuals who
were at any time the Authorized Officers of the Issuer or the Co-Issuer shall
bind the Issuer or the Co-Issuer, as the case may be, notwithstanding the fact
that such individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Notes or did not hold such offices at
the date of issuance of such Notes.

          At any time and from time to time after the execution and delivery of
this Indenture, the Issuer and the Co-Issuer may deliver Notes executed by the
Issuer and the Co-Issuer to the Trustee or the Authenticating Agent for
authentication and the Trustee or the Authenticating Agent, upon Issuer Order,
shall authenticate and deliver such Notes as provided in this Indenture and not
otherwise.

          Each Note authenticated and delivered by the Trustee or the
Authenticating Agent upon Issuer Order on the Closing Date shall be dated as of
the Closing Date. All other Notes that are authenticated after the Closing Date
for any other purpose under this Indenture shall be dated the date of their
authentication.

          Notes issued upon transfer, exchange or replacement of other Notes
shall be issued in authorized denominations reflecting the original aggregate
principal amount of the Notes so transferred, exchanged or replaced, but shall
represent only the current outstanding principal amount of the

                                      -84-

<PAGE>

Notes so transferred, exchanged or replaced. In the event that any Note is
divided into more than one Note in accordance with this Article 2, the original
principal amount of such Note shall be proportionately divided among the Notes
delivered in exchange therefor and shall be deemed to be the original aggregate
principal amount of such subsequently issued Notes.

          No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
Certificate of Authentication, substantially in the form provided for herein,
executed by the Trustee or by the Authenticating Agent by the manual signature
of one of their Authorized Officers, and such certificate upon any Note shall be
conclusive evidence, and the only evidence, that such Note has been duly
authenticated and delivered hereunder.

          Section 2.5 Registration, Registration of Transfer and Exchange.

          (a) The Issuer and the Co-Issuer shall cause to be kept a register
     (the "Notes Register") in which, subject to such reasonable regulations as
     it may prescribe, the Issuer and the Co-Issuer shall provide for the
     registration of Notes and the registration of transfers of Notes. The
     Trustee is hereby initially appointed "Notes Registrar" for the purpose of
     registering Notes and transfers of such Notes with respect to the Notes
     Register as herein provided. Upon any resignation or removal of the Notes
     Registrar, the Issuer and the Co-Issuer shall promptly appoint a successor
     or, in the absence of such appointment, assume the duties of Notes
     Registrar.

          If a Person other than the Trustee is appointed by the Issuer and the
Co-Issuer as Notes Registrar, the Issuer and the Co-Issuer shall give the
Trustee prompt written notice of the appointment of a successor Notes Registrar
and of the location, and any change in the location, of the Notes Registrar, and
the Trustee shall have the right to inspect the Notes Register at all reasonable
times and to obtain copies thereof and the Trustee shall have the right to rely
upon a certificate executed on behalf of the Notes Registrar by an Officer
thereof as to the names and addresses of the Holders of the Notes and the
principal amounts and numbers of such Notes.

          Subject to this Section 2.5, upon surrender for registration of
transfer of any Notes at the office or agency of the Issuer to be maintained as
provided in Section 7.2, the Issuer and the Co-Issuer shall execute, and the
Trustee shall authenticate and deliver, in the name of the designated transferee
or transferees, one or more new Notes of any authorized denomination and of a
like aggregate principal amount.

          At the option of the Holder, Notes may be exchanged for Notes of like
terms, in any authorized denominations and of like aggregate principal amount,
upon surrender of the Notes to be exchanged at such office or agency. Whenever
any Note is surrendered for exchange, the Issuer and the Co-Issuer shall
execute, and the Trustee shall authenticate and deliver, the Notes that the
Noteholder making the exchange is entitled to receive.

          All Notes issued and authenticated upon any registration of transfer
or exchange of Notes shall be the valid obligations of the Issuer and the
Co-Issuer, evidencing the same debt,

                                      -85-

<PAGE>

and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

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

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

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

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

          (c) No Note may be offered, sold, resold or delivered, within the
United States or to, or for the benefit of, U.S. Persons except in accordance
with Section 2.5(e) below and in accordance with Rule 144A to QIBs who are
Qualified Purchasers purchasing for their own account or for the accounts of one
or more QIBs who are Qualified Purchasers, for which the purchaser is acting as
fiduciary or agent. The Notes may be offered, sold, resold or delivered, as the
case may be, in offshore transactions to non-U.S. Persons in reliance on
Regulation S under the Securities Act. None of the Issuer, the Co-Issuer, the
Trustee or any other Person may register the Notes under the Securities Act or
any state securities laws.

          (d) Upon final payment due on the Stated Maturity of a Note, the
Holder thereof shall present and surrender such Note at the Corporate Trust
Office of the Trustee or at the office of the Paying Agent (outside the United
States if then required by applicable law in the case of a Note in definitive
form issued in exchange for a beneficial interest in a Regulation S Global
Security pursuant to Section 2.10).

          (e) Transfers of Global Securities. Notwithstanding any provision to
the contrary herein, so long as a Global Security remains outstanding and is
held by or on behalf of the Depository, transfers of a Global Security, in whole
or in part, shall only be made in accordance with Section 2.2(c) and this
Section 2.5(e).

          (i) Subject to clauses (ii) through (iv) of this Section 2.5(e),
     transfers of a Global Security shall be limited to transfers of such Global
     Security in whole, but not in part, to nominees of the Depository or to a
     successor of the Depository or such successor's nominee.

                                      -86-

<PAGE>

          (ii) Regulation S Global Security to Rule 144A Global Security. If a
     holder of a beneficial interest in a Regulation S Global Security wishes to
     transfer all or a part of its interest in such Regulation S Global Security
     to a Person who wishes to take delivery thereof in the form of a Rule 144A
     Global Security, such holder may, subject to the terms hereof and the rules
     and procedures of Euroclear, Clearstream, Luxembourg or the Depository, as
     the case may be, exchange or cause the exchange of such interest for an
     equivalent beneficial interest in a Rule 144A Global Security of the same
     Class. Upon receipt by the Trustee, as Notes Registrar, of (A) instructions
     from Euroclear, Clearstream, Luxembourg or the Depository, as the case may
     be, directing the Trustee, as Notes Registrar, to cause such Rule 144A
     Global Security to be increased by an amount equal to such beneficial
     interest in such Regulation S Global Security but not less than the minimum
     denomination applicable to the related Class of Notes, and (B) a
     certificate substantially in the form of Exhibit J hereto given by the
     prospective transferee of such beneficial interest and stating, among other
     things, that such transferee acquiring such interest in a Rule 144A Global
     Security is a QIB and a Qualified Purchaser, is obtaining such beneficial
     interest in a transaction pursuant to Rule 144A and in accordance with any
     applicable securities laws of any state of the United States or any other
     applicable jurisdiction, then Euroclear, Clearstream, Luxembourg or the
     Trustee, as Notes Registrar, as the case may be, shall approve the
     instruction at the Depository to reduce such Regulation S Global Security
     by the aggregate principal amount of the interest in such Regulation S
     Global Security to be transferred and increase the Rule 144A Global
     Security specified in such instructions by an Aggregate Outstanding Amount
     equal to such reduction in such principal amount of the Regulation S Global
     Security.

          (iii) Rule 144A Global Security to Regulation S Global Security. If a
     holder of a beneficial interest in a Rule 144A Global Security wishes to
     transfer all or a part of its interest in such Rule 144A Global Security to
     a Person who wishes to take delivery thereof in the form of a Regulation S
     Global Security, such holder may, subject to the terms hereof and the rules
     and procedures of Euroclear, Clearstream, Luxembourg or the Depository, as
     the case may be, exchange or cause the exchange of such interest for an
     equivalent beneficial interest in a Regulation S Global Security of the
     same Class. Upon receipt by the Trustee, as Notes Registrar, of (A)
     instructions from Euroclear, Clearstream, Luxembourg or the Depository, as
     the case may be, directing the Trustee, as Notes Registrar, to cause such
     Regulation S Global Security to be increased by an amount equal to the
     beneficial interest in such Rule 144A Global Security but not less than the
     minimum denomination applicable to the related Class of Notes to be
     exchanged, and (B) a certificate substantially in the form of Exhibit I
     hereto given by the prospective transferee of such beneficial interest and
     stating, among other things, that such transferee acquiring such interest
     in a Regulation S Global Security is a not a U.S. Person and that such
     transfer is being made pursuant to Rule 903 or 904 under Regulation S, then
     Euroclear, Clearstream, Luxembourg or the Trustee, as Notes Registrar, as
     the case may be, shall approve the instruction at the Depository to reduce
     such Rule 144A Global Security by the aggregate principal amount of the
     interest in such Rule 144A Global Security to be transferred and increase
     the Regulation S Global Security specified in such instructions by an
     Aggregate Outstanding Amount equal to such reduction in the principal
     amount of the Rule 144A Global Security.

                                      -87-

<PAGE>

          (iv) Other Exchanges. In the event that, pursuant to Section 2.10
     hereof, a Global Security is exchanged for Certificated Notes, such Notes
     may be exchanged for one another only in accordance with such procedures as
     are substantially consistent with the provisions above (including
     certification requirements intended to ensure that such transfers are to a
     QIB who is also a Qualified Purchaser or are to a non-U.S. Person, or
     otherwise comply with Rule 144A or Regulation S, as the case may be) and as
     may be from time to time adopted by the Issuer, the Co-Issuer and the
     Trustee.

          (f) Removal of Legend. If Notes are issued upon the transfer, exchange
or replacement of Notes bearing the applicable legends set forth in Exhibits
A-1, A-2, B, C, D, E, F, G and H hereto, and if a request is made to remove such
applicable legend on such Notes, the Notes so issued shall bear such applicable
legend, or such applicable legend shall not be removed, as the case may be,
unless there is delivered to the Issuer and the Co-Issuer such satisfactory
evidence, which may include an Opinion of Counsel of an attorney at law licensed
to practice law in the State of New York (and addressed to the Issuer and the
Trustee), as may be reasonably required by the Issuer and the Co-Issuer, if
applicable, to the effect that neither such applicable legend nor the
restrictions on transfer set forth therein are required to ensure that transfers
thereof comply with the provisions of Rule 144A or Regulation S, as applicable,
the Investment Company Act or ERISA. So long as the Issuer or the Co-Issuer is
relying on an exemption under or promulgated pursuant to the Investment Company
Act, the Issuer or the Co-Issuer shall not remove that portion of the legend
required to maintain an exemption under or promulgated pursuant to the
Investment Company Act. Upon provision of such satisfactory evidence, as
confirmed in writing by the Issuer and the Co-Issuer, if applicable, to the
Trustee, the Trustee, at the direction of the Issuer and the Co-Issuer, if
applicable, shall authenticate and deliver Notes that do not bear such
applicable legend.

          (g) Each beneficial owner of Rule 144A Global Securities shall be
deemed to represent and agree as follows (terms used in this paragraph that are
defined in Rule 144A are used herein as defined therein):

          (i) In the case of a Rule 144A Global Security, the owner is (1) a QIB
     and a Qualified Purchaser, (2) is aware that the sale of the Notes to it
     (other than the initial sale by the Issuer and the Co-Issuer, as
     applicable,) is being made in reliance on the exemption from registration
     provided by Rule 144A, and (3) is acquiring the Notes for its own account
     or for one or more accounts, each of which is a QIB and a Qualified
     Purchaser, and as to each of which the owner exercises sole investment
     discretion, (4) in a principal amount of not less than $100,000, for each
     such account.

          (ii) The owner understands that the Notes are being offered only in a
     transaction not involving any public offering in the United States within
     the meaning of the Securities Act, the Notes have not been and shall not be
     registered under the Securities Act, and, if in the future the owner
     decides to offer, resell, pledge or otherwise transfer the Notes, such
     Notes may only be offered, resold, pledged or otherwise transferred in
     accordance with this Indenture and the applicable legend on such Notes set
     forth in Exhibits A-1, A-2, B, C, D, E, F, G and H. The owner acknowledges
     that no representation is made by the Issuer, the Co-Issuer, or the Initial
     Purchaser, as the case

                                      -88-

<PAGE>

     may be, as to the availability of any exemption under the Securities Act or
     any state securities laws for resale of the Notes.

          (iii) The owner is not purchasing the Notes with a view to the resale,
     distribution or other disposition thereof in violation of the Securities
     Act. The owner understands that an investment in the Notes involves certain
     risks, including the risk of loss of all or a substantial part of its
     investment under certain circumstances. The owner has had access to such
     financial and other information concerning the Issuer, the Co-Issuer and
     the Notes as it deemed necessary or appropriate in order to make an
     informed investment decision with respect to its purchase of the Notes,
     including an opportunity to ask questions of and request information from
     the Collateral Manager, the Issuer and the Co-Issuer.

          (iv) In connection with the purchase of the Notes (A) none of the
     Issuer, the Co-Issuer, the Initial Purchaser, the Collateral Manager or the
     Trustee is acting as a fiduciary or financial or investment adviser for the
     owner; (B) the owner is not relying (for purposes of making any investment
     decision or otherwise) upon any advice, counsel or representations (whether
     written or oral) of the Issuer, the Co-Issuer, the Initial Purchaser, the
     Collateral Manager or the Trustee other than in a current offering
     memorandum for such Notes and any representations expressly set forth in a
     written agreement with such party; (C) none of the Issuer, the Co-Issuer,
     the Initial Purchaser, the Collateral Manager or the Trustee has given to
     the owner (directly or indirectly through any other person) any assurance,
     guarantee, or representation whatsoever as to the expected or projected
     success, profitability, return, performance, result, effect, consequence,
     or benefit (including legal, regulatory, tax, financial, accounting, or
     otherwise) of its purchase, (D) the owner has consulted with its own legal,
     regulatory, tax, business, investment, financial, and accounting advisers
     to the extent it has deemed necessary, and it has made its own investment
     decisions (including decisions regarding the suitability of any transaction
     pursuant to this Indenture) based upon its own judgment and upon any advice
     from such advisers as it has deemed necessary and not upon any view
     expressed by the Issuer, the Co-Issuer, the Initial Purchaser, the
     Collateral Manager or the Trustee; and (E) the owner is purchasing the
     Notes with a full understanding of all of the terms, conditions and risks
     thereof (economic and otherwise), and is capable of assuming and willing to
     assume (financially and otherwise) these risks.

          (v) The owner understands that the Notes shall bear the applicable
     legend set forth in Exhibits A-1, A-2, B, C, D, E, F, G and H. The Rule
     144A Global Securities may not at any time be held by or on behalf of any
     U.S. Person that is not a QIB who is a Qualified Purchaser. The owner must
     inform a prospective transferee of the transfer restrictions.

          (vi) Unless a prospective Holder of a Note otherwise provides another
     representation acceptable to the Trustee, the Collateral Manager, the
     Issuer and the Co-Issuer, each Holder of a Global Security, by its
     acquisition thereof, shall be deemed to have represented to the Issuer, the
     Co-Issuer, the Collateral Manager and the Trustee that either (a) no part
     of the funds being used to pay the purchase price for such Notes
     constitutes an asset of any "employee benefit plan" (as defined in Section
     3(3) of ERISA)

                                      -89-

<PAGE>

     or "plan" (as defined in Section 4975(e)(1) of the Code) that is subject to
     ERISA or Section 4975 of the Code or any other plan which is subject to any
     federal, state or local law ("Similar Law") that is substantially similar
     to Section 406 of ERISA or Section 4975 of the Code (each a "Benefit Plan"
     and funds of such a Benefit Plan, "Plan Assets"), or an entity whose
     underlying assets include Plan Assets of any such Benefit Plan, or (b) if
     the funds being used to pay the purchase price for such Notes include Plan
     Assets of any Benefit Plan, its purchase and holding are eligible for the
     exemptive relief from the prohibited transaction rules granted by
     Prohibited Transaction Class Exemption ("PTCE") 84-14, PTCE 90-1, PTCE
     91-38, PTCE 95-60, PTCE 96-23, or a similar exemption, or in the case of
     any Benefit Plan subject to Similar Law, do not result in a non-exempt
     violation of Similar Law.

          (vii) The owner shall not, at any time, offer to buy or offer to sell
     the Notes by any form of general solicitation or advertising, including,
     but not limited to, any advertisement, article, notice or other
     communication published in any newspaper, magazine or similar medium or
     broadcast over television or radio or at a seminar or meeting whose
     attendees have been invited by general solicitations or advertising.

          (viii) The owner is not a member of the public in the Cayman Islands,
     within the meaning of Section 194 of the Cayman Islands Companies Law (2004
     Revision), unless the Issuer has been listed on the Cayman Islands Stock
     Exchange.

          (ix) The owner understands that the Issuer, Co-Issuer, Trustee or
     Paying Agent shall require certification acceptable to it (A) as a
     condition to the payment of principal of and interest on any Notes without,
     or at a reduced rate of, U.S. withholding or backup withholding tax, and
     (B) to enable the Issuer, Co-Issuer, Trustee and Paying Agent to determine
     their duties and liabilities with respect to any taxes or other charges
     that they may be required to pay, deduct or withhold from payments in
     respect of such Notes or the Holder of such Notes under any present or
     future law or regulation of the Cayman Islands or the United States or any
     present or future law or regulation of any political subdivision thereof or
     taxing authority therein or to comply with any reporting or other
     requirements under any such law or regulation. Such certification may
     include U.S. federal income tax forms (such as IRS Form W-8BEN
     (Certification of Foreign Status of Beneficial Owner), IRS Form W-8IMY
     (Certification of Foreign Intermediary Status), IRS Form W-9 (Request for
     Taxpayer Identification Number and Certification), or IRS Form W-8ECI
     (Certification of Foreign Person's Claim for Exemption from Withholding on
     Income Effectively Connected with Conduct of a U.S. Trade or Business) or
     any successors to such IRS forms). In addition, the Issuer, Co-Issuer,
     Trustee or Paying Agent may require certification acceptable to it to
     enable the Issuer to qualify for a reduced rate of withholding in any
     jurisdiction from or through which the Issuer receives payments on its
     assets. Each owner agrees to provide any certification requested pursuant
     to this paragraph and to update or replace such form or certification in
     accordance with its terms or its subsequent amendments.

          (x) The owner hereby agrees that, for purposes of U.S. federal, state
     and local income and franchise tax and any other income taxes, (A) the
     Notes will be treated as indebtedness, and (B) the Preferred Shares will be
     treated as equity; the owner agrees to

                                      -90-

<PAGE>

     such treatment and agrees to take no action inconsistent with such
     treatment, unless required by law.

          (xi) The owner, if not a "United States person" (as defined in Section
     7701(a)(30) of the Code), either: (A) is not a bank (within the meaning of
     Section 881(c)(3)(A) of the Code); (B) is a bank (within the meaning of
     Section 881(c)(3)(A) of the Code) that has provided an IRS Form W-8ECI
     representing that all payments received or to be received by it from the
     Issuer are effectively connected with the conduct of a trade or business in
     the United States; or (C) is a bank (within the meaning of Section
     881(c)(3)(A) of the Code) and it is eligible for benefits under an income
     tax treaty with the United States that eliminates U.S. federal income
     taxation of U.S. source interest not attributable to a permanent
     establishment in the United States and the Issuer is treated as a fiscally
     transparent entity (as defined in Treasury Regulations section
     1.894-1(d)(3)(ii)) under the laws of owner's jurisdiction with respect to
     payments made on the Collateral Debt Securities held by the owner.

          (h) Each beneficial owner of Regulation S Global Securities shall be
deemed to have made the representations set forth in clauses (ii), (iii), (iv),
(vi), (vii), (viii), (ix), (x) and (xi) of Section 2.5(g) and shall be deemed to
have further represented and agreed as follows:

          (i) The owner is aware that the sale of such Notes to it is being made
in reliance on the exemption from registration provided by Regulation S and
understands that the Notes offered in reliance on Regulation S will bear the
appropriate legend set forth in Exhibits A-1, A-2, B, C, D, E, F, G and H
hereto, and be represented by one or more Regulation S Global Securities. The
Notes so represented may not at any time be held by or on behalf of U.S.
Persons. Each of the owner and the related Holder is not, and shall not be, a
U.S. Person. Before any interest in a Regulation S Global Security may be
offered, resold, pledged or otherwise transferred to a person who takes delivery
in the form of a Rule 144A Global Security, the transferee shall be required to
provide the Trustee with a written certification substantially in the form of
Exhibits I and J (as applicable) hereto as to compliance with the transfer
restrictions. The owner must inform a prospective transferee of the transfer
restrictions.

          (j) Any purported transfer of a Note not in accordance with this
Section 2.5 shall be null and void and shall not be given effect for any purpose
hereunder.

          (k) Notwithstanding anything contained in this Indenture to the
contrary, neither the Trustee nor the Notes Registrar (nor any other Transfer
Agent) shall be responsible or liable for compliance with applicable federal or
state securities laws (including, without limitation, the Securities Act or Rule
144A or Regulation S promulgated thereunder), the Investment Company Act, ERISA
or the Code (or any applicable regulations thereunder); provided, however, that
if a specified transfer certificate or Opinion of Counsel is required by the
express terms of this Section 2.5 to be delivered to the Trustee or Notes
Registrar prior to registration of transfer of a Note, the Trustee and/or Notes
Registrar, as applicable, is required to request, as a condition for registering
the transfer of the Note, such certificate or Opinion of Counsel and to examine
the same to determine whether it conforms on its face to the

                                      -91-

<PAGE>

requirements hereof (and the Trustee or Notes Registrar, as the case may be,
shall promptly notify the party delivering the same if it determines that such
certificate or Opinion of Counsel does not so conform).

          (l) If the Trustee determines or is notified by the Issuer, Co-Issuer
or the Collateral Manager that (i) a transfer or attempted or purported transfer
of any interest in any Note was consummated in compliance with the provisions of
this Section 2.5 on the basis of a materially incorrect certification from the
transferee or purported transferee, (ii) a transferee failed to deliver to the
Trustee any certification required to be delivered hereunder or (iii) the holder
of any interest in a Note is in breach of any representation or agreement set
forth in any certification or any deemed representation or agreement of such
holder, the Trustee shall not register such attempted or purported transfer and
if a transfer has been registered, such transfer shall be absolutely null and
void ab initio and shall vest no rights in the purported transferee (such
purported transferee, a "Disqualified Transferee") and the last preceding holder
of such interest in such Note that was not a Disqualified Transferee shall be
restored to all rights as a Holder thereof retroactively to the date of transfer
of such Note by such Holder.

          In addition, the Trustee may require that the interest in the Note
referred to in (i), (ii) or (iii) in the preceding paragraph be transferred to
any person designated by the Issuer or the Collateral Manager at a price
determined by the Issuer or the Collateral Manager, as applicable, based upon
its estimation of the prevailing price of such interest and each Holder, by
acceptance of an interest in a Note, authorizes the Trustee to take such action.
In any case, the Trustee shall not be held responsible for any losses that may
be incurred as a result of any required transfer under this Section 2.5(l).

          (m) Each Holder of Notes approves and consents to (i) the initial
purchase of the Collateral Debt Securities by the Issuer from Affiliates of the
Collateral Manager on or prior to the Closing Date and (ii) any other
transaction between the Issuer and the Collateral Manager or its Affiliates that
are permitted under the terms of this Indenture or the Collateral Management
Agreement.

          Section 2.6 Mutilated, Defaced, Destroyed, Lost or Stolen Note.

          If (a) any mutilated or defaced Note is surrendered to a Transfer
Agent, or if there shall be delivered to the Issuer, the Co-Issuer, the Trustee
and the relevant Transfer Agent (each a "Specified Person") evidence to their
reasonable satisfaction of the destruction, loss or theft of any Note, and (b)
there is delivered to the Specified Person such security or indemnity as may be
required by each Specified Person to save each of them and any agent of any of
them harmless (an unsecured indemnity agreement delivered to the Trustee by an
institutional investor with a net worth of at least $200,000,000 being deemed
sufficient to satisfy such security or indemnity requirement), then, in the
absence of notice to the Specified Persons that such Note has been acquired by a
bona fide purchaser, the Issuer and the Co-Issuer shall execute and, upon Issuer
Request, the Trustee shall authenticate and deliver, in lieu of any such
mutilated, defaced, destroyed, lost or stolen Note, a new Note, of like tenor
(including the same date of issuance) and equal principal amount, registered in
the same manner, dated the date of its authentication, bearing interest from the
date to which interest has been paid on the mutilated, defaced, destroyed, lost
or stolen Note and bearing a number not contemporaneously outstanding.

                                      -92-

<PAGE>

          If, after delivery of such new Note, a bona fide purchaser of the
predecessor Note presents for payment, transfer or exchange such predecessor
Note, any Specified Person shall be entitled to recover such new Note from the
Person to whom it was delivered or any Person taking therefrom, and each
Specified Person shall be entitled to recover upon the security or indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
such Specified Person in connection therewith.

          In case any such mutilated, defaced, destroyed, lost or stolen Note
has become due and payable, the Issuer and the Co-Issuer, if applicable, in
their discretion may, instead of issuing a new Note, pay such Note without
requiring surrender thereof except that any mutilated or defaced Note shall be
surrendered.

          Upon the issuance of any new Note under this Section 2.6, the Issuer
and the Co-Issuer, if applicable, may require the payment by the registered
Holder thereof of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
fees and expenses of the Trustee) connected therewith.

          Every new Note issued pursuant to this Section 2.6 in lieu of any
mutilated, defaced, destroyed, lost or stolen Note shall constitute an original
additional contractual obligation of the Issuer and the Co-Issuer, if
applicable, and such new Note shall be entitled, subject to the second paragraph
of this Section 2.6, to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.

          The provisions of this Section 2.6 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, defaced, destroyed, lost or stolen Notes.

          Section 2.7 Payment of Principal and Interest and Other Amounts;
Principal and Interest Rights Preserved.

          (a) The Class A-1 Notes shall accrue interest during each Interest
Accrual Period at the Class A-1 Rate. Interest on each Class A-1 Note shall be
due and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-1 Note bears to the Aggregate Outstanding Amount of all Class A-1 Notes;
provided, however, that the payment of interest on the Class A-1 Notes is
subordinated to the payment on each Payment Date of certain amounts in
accordance with the Priority of Payments.

          (b) The Class A-2 Notes shall accrue interest during each Interest
Accrual Period at the Class A-2 Rate. Interest on each Class A-2 Note shall be
due and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class A-2 Note bears to the Aggregate Outstanding Amount of all Class A-2 Notes;
provided, however, that payment of interest on the Class A-2 Notes is
subordinated to the payment on each Payment Date of the interest due and payable
on the Class A-1 Notes (including any Class A-1 Defaulted Interest Amount) and
certain other amounts in accordance with the Priority of Payments.

                                      -93-

<PAGE>

          (c) The Class B Notes shall accrue interest during each Interest
Accrual Period at the Class B Rate. Interest on each Class B Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class B Note bears to the Aggregate Outstanding Amount of all Class B Notes;
provided, however, that payment of interest on the Class B Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes and the Class A-2 Notes (including any Class A-1 Defaulted Interest
Amount and any Class A-2 Defaulted Interest Amount) and certain other amounts in
accordance with the Priority of Payments.

          (d) The Class C Notes shall accrue interest during each Interest
Accrual Period at the Class C Rate. Interest on each Class C Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class C Note bears to the Aggregate Outstanding Amount of all Class C Notes;
provided, however, that payment of interest on the Class C Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes and the Class B Notes (including any Class A-1
Defaulted Interest Amount, any Class A-2 Defaulted Interest Amount and Class B
Defaulted Interest Amount) and certain other amounts in accordance with the
Priority of Payments.

          For so long as any Class B Notes are Outstanding, any payment of
interest due on the Class C Notes which is not available to be paid (the "Class
C Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class C Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class C Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class C Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class C Capitalized Interest
shall be an Event of Default. Class C Capitalized Interest shall be added to the
principal amount of the Class C Notes, shall bear interest thereafter at the
Class C Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class B
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class C Capitalized Interest) but not paid on the Class C
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.

          (e) The Class D Notes shall accrue interest during each Interest
Accrual Period at the Class D Rate. Interest on each Class D Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class D Note bears to the Aggregate Outstanding Amount of all Class D Notes;
provided, however, that payment of interest on the Class D Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes
(including any Class A-1 Defaulted Interest Amount, any Class A-2 Defaulted
Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest
Amount and Class C Capitalized Interest) and certain other amounts in accordance
with the Priority of Payments.

                                      -94-

<PAGE>

          For so long as any Class C Notes are Outstanding, any payment of
interest due on the Class D Notes which is not available to be paid ("Class D
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class D Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class D Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class D Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class D Capitalized Interest
shall be an Event of Default. Class D Capitalized Interest shall be added to the
principal amount of the Class D Notes, shall bear interest thereafter at the
Class D Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class C
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class D Capitalized Interest) but not paid on the Class D
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.

          (f) The Class E Notes shall accrue interest during each Interest
Accrual Period at the Class E Rate. Interest on each Class E Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class E Note bears to the Aggregate Outstanding Amount of all Class E Notes;
provided, however, that payment of interest on the Class E Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes and the
Class D Notes (including any Class A-1 Defaulted Interest Amount, any Class A-2
Defaulted Interest Amount, Class B Defaulted Interest Amount, Class C Defaulted
Interest Amount, Class C Capitalized Interest, Class D Defaulted Interest Amount
and Class D Capitalized Interest) and certain other amounts in accordance with
the Priority of Payments.

          For so long as any Class D Notes are Outstanding, any payment of
interest due on the Class E Notes which is not available to be paid (the "Class
E Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class E Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class E Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class E Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class E Capitalized Interest
shall be an Event of Default. Class E Capitalized Interest shall be added to the
principal amount of the Class E Notes, shall bear interest thereafter at the
Class E Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class D
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class E Capitalized Interest) but not paid on the Class E
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.

                                      -95-

<PAGE>

          (g) The Class F Notes shall accrue interest during each Interest
Accrual Period at the Class F Rate. Interest on each Class F Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class F Note bears to the Aggregate Outstanding Amount of all Class F Notes;
provided, however, that payment of interest on the Class F Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes and the Class E Notes (including any Class A-1 Defaulted Interest
Amount, any Class A-2 Defaulted Interest Amount, Class B Defaulted Interest
Amount, Class C Defaulted Interest Amount, Class C Capitalized Interest, Class D
Defaulted Interest Amount, Class D Capitalized Interest, Class E Defaulted
Interest Amount and Class E Capitalized Interest) and certain other amounts in
accordance with the Priority of Payments.

          For so long as any Class E Notes are Outstanding, any payment of
interest due on the Class F Notes which is not available to be paid ("Class F
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class F Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class F Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class F Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class F Capitalized Interest
shall be an Event of Default. Class F Capitalized Interest shall be added to the
principal amount of the Class F Notes, shall bear interest thereafter at the
Class F Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class E
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class F Capitalized Interest) but not paid on the Class F
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.

          (h) The Class G Notes shall accrue interest during each Interest
Accrual Period at the Class G Rate. Interest on each Class G Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class G Note bears to the Aggregate Outstanding Amount of all Class G Notes;
provided, however, that payment of interest on the Class G Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes and the Class F Notes (including any Class A-1
Defaulted Interest Amount, any Class A-2 Defaulted Interest Amount, Class B
Defaulted Interest Amount, Class C Defaulted Interest Amount, Class C
Capitalized Interest, Class D Defaulted Interest Amount, Class D Capitalized
Interest, Class E Defaulted Interest Amount, Class E Capitalized Interest, Class
F Defaulted Interest Amount and Class F Capitalized Interest) and certain other
amounts in accordance with the Priority of Payments.

          For so long as any Class F Notes are Outstanding, any payment of
interest due on the Class G Notes which is not available to be paid (the "Class
G Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and

                                      -96-

<PAGE>

payable" for the purpose of Section 5.1(a) hereof (and the failure to pay such
Class G Capitalized Interest shall not be an Event of Default) until the Payment
Date on which funds are available to pay all or any portion of such Class G
Capitalized Interest in accordance with the Priority of Payments. On or after
such Payment Date, only such portion of any payment of Class G Capitalized
Interest for which funds are available in accordance with the Priority of
Payments shall be considered "due and payable" and the failure to pay such
portion of Class G Capitalized Interest shall be an Event of Default. Class G
Capitalized Interest shall be added to the principal amount of the Class G
Notes, shall bear interest thereafter at the Class G Rate (to the extent lawful)
and shall be payable on the first Payment Date on which funds are permitted to
be used for such purpose in accordance with the Priority of Payments. On or
after the Payment Date on which the Class F Notes are no longer Outstanding, to
the extent interest is due (excluding any previously deferred Class G
Capitalized Interest) but not paid on the Class G Notes, the failure to pay such
interest shall constitute an Event of Default hereunder.

          (i) The Class H Notes shall accrue interest during each Interest
Accrual Period at the Class H Rate. Interest on each Class H Note shall be due
and payable on each Payment Date immediately following the related Interest
Accrual Period in the proportion that the outstanding principal amount of such
Class H Note bears to the Aggregate Outstanding Amount of all Class H Notes;
provided, however, that payment of interest on the Class H Notes is subordinated
to the payment on each Payment Date of the interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes, the Class F Notes and the Class G Notes (including
any Class A-1 Defaulted Interest Amount, any Class A-2 Defaulted Interest
Amount, Class B Defaulted Interest Amount, Class C Defaulted Interest Amount,
Class C Capitalized Interest, Class D Defaulted Interest Amount, Class D
Capitalized Interest, Class E Defaulted Interest Amount, Class E Capitalized
Interest, Class F Defaulted Interest Amount, Class F Capitalized Interest, Class
G Defaulted Interest Amount and Class G Capitalized Interest) and certain other
amounts in accordance with the Priority of Payments.

          For so long as any Class G Notes are Outstanding, any payment of
interest due on the Class H Notes which is not available to be paid ("Class H
Capitalized Interest") in accordance with the Priority of Payments on any
Payment Date shall not be considered "due and payable" for the purpose of
Section 5.1(a) hereof (and the failure to pay such Class H Capitalized Interest
shall not be an Event of Default) until the Payment Date on which funds are
available to pay all or any portion of such Class H Capitalized Interest in
accordance with the Priority of Payments. On or after such Payment Date, only
such portion of any payment of Class H Capitalized Interest for which funds are
available in accordance with the Priority of Payments shall be considered "due
and payable" and the failure to pay such portion of Class H Capitalized Interest
shall be an Event of Default. Class H Capitalized Interest shall be added to the
principal amount of the Class H Notes, shall bear interest thereafter at the
Class H Rate (to the extent lawful) and shall be payable on the first Payment
Date on which funds are permitted to be used for such purpose in accordance with
the Priority of Payments. On or after the Payment Date on which the Class G
Notes are no longer Outstanding, to the extent interest is due (excluding any
previously deferred Class H Capitalized Interest) but not paid on the Class H
Notes, the failure to pay such interest shall constitute an Event of Default
hereunder.

                                      -97-

<PAGE>

          (j) Upon any Optional Redemption, Tax Redemption, Auction Call
Redemption or Clean-up Call, all net proceeds remaining after the sale of the
Collateral Debt Securities in accordance with Article 12 hereof and Cash and
proceeds from Eligible Investments (other than the Issuer's right, title and
interest in the property described in clause (i) of the definition of "Excepted
Assets"), after the payment of the amounts referred to in subclauses (1) through
(23), (26), (27) and (28) of Section 11.1(a)(i) and subclauses (1) through (12)
of Section 11.1(a)(ii) will be distributed by the Trustee to the Preferred
Shares Paying Agent for distribution to the holders of the Preferred Shares,
whereupon the Preferred Shares will be cancelled and deemed paid in full for all
purposes.

          (k) Interest shall cease to accrue on each Class of Notes, or in the
case of a partial repayment, on such part, from the date of repayment or Stated
Maturity unless payment of principal is improperly withheld or unless a Default
has occurred with respect to such payments of principal.

          (l) The principal of each Class of Notes matures at par and is due and
payable on the Stated Maturity, unless the unpaid principal of such Class of
Notes becomes due and payable at an earlier date by declaration of acceleration,
call for redemption or otherwise; provided, however, that the payment of
principal of the Class A-2 Notes (other than payment of principal pursuant to
Section 9.6 or Section 9.7) may only occur after the principal of the Class A-1
Notes has been paid in full and is subordinated to the payment of each Payment
Date of the principal and interest due and payable on the Class A-1 Notes and
other amounts in accordance with the Priority of Payments and any payment of
principal of the Class A-2 Notes which is not paid, in accordance with the
Priority of Payments, on any Payment Date, shall not be considered "due and
payable" solely for purposes of Section 5.1(b) until the Payment Date on which
such principal may be paid in accordance with the Priority of Payments or all of
the Class A-1 Notes have been paid in full; provided, further, that the payment
of principal of the Class B Notes (other than payment of principal pursuant to
Section 9.6 or Section 9.7) may only occur after the principal of the Class A-1
Notes and the Class A-2 Notes has been paid in full and is subordinated to the
payment on each Payment Date of the principal and interest due and payable on
the Class A-1 Notes, the Class A-2 Notes and other amounts in accordance with
the Priority of Payments and any payment of principal of the Class B Notes which
is not paid, in accordance with the Priority of Payments, on any Payment Date,
shall not be considered "due and payable" solely for purposes of Section 5.1(b)
until the Payment Date on which such principal may be paid in accordance with
the Priority of Payments or all of the

                                      -98-

<PAGE>

Class A-1 Notes and the Class A-2 Notes have been paid in full; provided,
further, that the payment of principal of the Class C Notes (other than payment
of the amounts constituting Class C Capitalized Interest, notwithstanding that
such Class C Capitalized Interest may be deemed to constitute additions to
principal, and other than the payment of principal pursuant to Section 9.6 or
Section 9.7) may only occur after the principal of the Class A-1 Notes, the
Class A-2 Notes and the Class B Notes has been paid in full and is subordinated
to the payment on each Payment Date of the principal and interest due and
payable on the Class A-1 Notes, the Class A-2 Notes, the Class B Notes and other
amounts in accordance with the Priority of Payments and any payment of principal
of the Class C Notes which is not paid, in accordance with the Priority of
Payments, on any Payment Date, shall not be considered "due and payable" solely
for purposes of Section 5.1(b) until the Payment Date on which such principal
may be paid in accordance with the Priority of Payments or all of the Class A-1
Notes, the Class A-2 Notes and the Class B Notes have been paid in full;
provided, further, that the payment of principal of the Class D Notes (other
than payment of the amounts constituting Class D Capitalized Interest,
notwithstanding that such Class D Capitalized Interest may be deemed to
constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the principal of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C
Notes has been paid in full and is subordinated to the payment on each Payment
Date of the principal and interest due and payable on the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes and other amounts in
accordance with the Priority of Payments and any payment of principal of the
Class D Notes which is not paid, in accordance with the Priority of Payments, on
any Payment Date, shall not be considered "due and payable" solely for purposes
of Section 5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes and the Class C Notes have been paid in full;
provided, further, that the payment of principal of the Class E Notes (other
than payment of the amounts constituting Class E Capitalized Interest,
notwithstanding that such Class E Capitalized Interest may be deemed to
constitute additions to principal, and other than the payment of principal
pursuant to Section 9.6 or Section 9.7) may only occur after the principal of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes
and the Class D Notes has been paid in full and is subordinated to the payment
on each Payment Date of the principal and interest due and payable on the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes and other amounts in accordance with the Priority of Payments and any
payment of principal of the Class E Notes which is not paid, in accordance with
the Priority of Payments, on any Payment Date, shall not be considered "due and
payable" solely for purposes of Section 5.1(b) until the Payment Date on which
such principal may be paid in accordance with the Priority of Payments or all of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes
and the Class D Notes have been paid in full; provided, further, that the
payment of principal of the Class F Notes (other than payment of the amounts
constituting Class F Capitalized Interest, notwithstanding that such Class F
Capitalized Interest may be deemed to constitute additions to principal, and
other than the payment of principal pursuant to Section 9.6 or Section 9.7) may
only occur after the principal of the Class A-1 Notes, the Class A-2 Notes, the
Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes has
been paid in full and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and other amounts in accordance with the Priority of Payments and any
payment of principal of the Class F Notes which is not paid, in accordance with
the Priority of Payments, on any Payment Date, shall not be considered "due and
payable" solely for purposes of Section 5.1(b) until the Payment Date on which
such principal may be paid in accordance with the Priority of Payments or all of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes have been paid in full; provided,
further, that the payment of principal of the Class G Notes (other than payment
of the amounts constituting Class G Capitalized Interest, notwithstanding that
such Class G Capitalized Interest may be deemed to constitute additions to
principal, and other than the payment of principal pursuant to Section 9.6 or
Section 9.7) may only occur after the principal of the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes and the Class F Notes has been

                                      -99-

<PAGE>

paid in full and is subordinated to the payment on each Payment Date of the
principal and interest due and payable on the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes and other amounts in accordance with the Priority of
Payments and any payment of principal of the Class G Notes which is not paid, in
accordance with the Priority of Payments, on any Payment Date, shall not be
considered "due and payable" solely for purposes of Section 5.1(b) until the
Payment Date on which such principal may be paid in accordance with the Priority
of Payments or all of the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes have been paid in full; provided, further, that the payment of principal
of the Class H Notes (other than payment of the amounts constituting Class H
Capitalized Interest, notwithstanding that such Class H Capitalized Interest may
be deemed to constitute additions to principal, and other than the payment of
principal pursuant to Section 9.6 or Section 9.7) may only occur after the
principal of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes has been paid in full and is subordinated to the payment on each
Payment Date of the principal and interest due and payable on the Class A-1
Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and other amounts
in accordance with the Priority of Payments and any payment of principal of the
Class H Notes which is not paid, in accordance with the Priority of Payments, on
any Payment Date, shall not be considered "due and payable" solely for purposes
of Section 5.1(b) until the Payment Date on which such principal may be paid in
accordance with the Priority of Payments or all of the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the
Class E Notes, the Class F Notes and the Class G Notes have been paid in full.

          (m) As a condition to the payment of principal of and interest on any
Note without the imposition of U.S. withholding tax, the Issuer shall require
certification acceptable to it to enable the Issuer, the Co-Issuer, the Trustee,
the Preferred Shares Paying Agent and the Paying Agent to determine their duties
and liabilities with respect to any taxes or other charges that they may be
required to deduct or withhold from payments in respect of such Security under
any present or future law or regulation of the United States or any present or
future law or regulation of any political subdivision thereof or taxing
authority therein or to comply with any reporting or other requirements under
any such law or regulation.

          (n) Payments in respect of interest on and principal of the Notes
shall be payable by wire transfer in immediately available funds to a Dollar
account maintained by the Holder or its nominee; provided that the Holder has
provided wiring instructions to the Trustee on or before the related Record Date
or, if wire transfer cannot be effected, by a Dollar check drawn on a bank in
the United States, or by a Dollar check mailed to the Holder at its address in
the Notes Register. The Issuer expects that the Depository or its nominee, upon
receipt of any payment of principal or interest in respect of a Global Security
held by the Depository or its nominee, shall immediately credit the applicable
Agent Members' accounts with payments in amounts proportionate to the respective
beneficial interests in such Global Security as shown on the records of the
Depository or its nominee. The Issuer also expects that payments by Agent
Members to owners of beneficial interests in such Global Security held through
Agent Members will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees

                                     -100-
<PAGE>

for such customers. Such payments will be the responsibility of the Agent
Members. Upon final payment due on the Maturity of a Note, the Holder thereof
shall present and surrender such Note at the Corporate Trust Office of the
Trustee or at the office of the Paying Agent (outside of the United States if
then required by applicable law in the case of a Certificated Note issued in
exchange for a beneficial interest in the Regulation S Global Security) on or
prior to such Maturity. None of the Issuer, the Co-Issuer, the Trustee or the
Paying Agent will have any responsibility or liability with respect to any
records maintained by the Holder of any Note with respect to the beneficial
holders thereof or payments made thereby on account of beneficial interests held
therein. In the case where any final payment of principal and interest is to be
made on any Note (other than on the Stated Maturity thereof) the Issuer or, upon
Issuer Request, the Trustee, in the name and at the expense of the Issuer shall,
not more than 30 nor fewer than five Business Days prior to the date on which
such payment is to be made, mail to the Persons entitled thereto at their
addresses appearing on the Notes Register, a notice which shall state the date
on which such payment will be made and the amount of such payment per $500,000
initial principal amount of Notes and shall specify the place where such Notes
may be presented and surrendered for such payment.

          (o) Subject to the provisions of Sections 2.7(a) through (l) and
Section 2.7(t) hereof, Holders of Notes as of the Record Date in respect of a
Payment Date shall be entitled to the interest accrued and payable in accordance
with the Priority of Payments and principal payable in accordance with the
Priority of Payments on such Payment Date. All such payments that are mailed or
wired and returned to the Paying Agent shall be held for payment as herein
provided at the office or agency of the Issuer and the Co-Issuer to be
maintained as provided in Section 7.2 (or returned to the Trustee).

          (p) Interest on any Note which is payable, and is punctually paid or
duly provided for, on any Payment Date shall be paid to the Person in whose name
that Note (or one or more predecessor Notes) is registered at the close of
business on the Record Date for such interest.

          (q) Payments of principal to Holders of the Notes of each Class shall
be made in the proportion that the Aggregate Outstanding Amount of the Notes of
such Class registered in the name of each such Holder on such Record Date bears
to the Aggregate Outstanding Amount of all Notes of such Class on such Record
Date.

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

          (s) All reductions in the principal amount of a Note (or one or more
predecessor Notes) effected by payments of installments of principal made on any
Payment Date, Redemption Date or upon Maturity shall be binding upon all future
Holders of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof, whether or not such payment
is noted on such Note.

          (t) Notwithstanding anything contained in this Indenture to the
contrary, the obligations of the Issuer and the Co-Issuer under the Notes and
this Indenture are non-recourse obligations of the Issuer and the Co-Issuer
payable solely from the Assets and following

                                     -101-

<PAGE>

realization of the Assets, any claims of the Noteholders or the Trustee shall be
extinguished. No recourse shall be had for the payment of any amount owing in
respect of the Notes against any Officer, director, employee, shareholder,
limited partner or incorporator of the Issuer, the Co-Issuer or any of their
respective successors or assigns for any amounts payable under the Notes or this
Indenture. It is understood that the foregoing provisions of this paragraph
shall not (i) prevent recourse to the Assets for the sums due or to become due
under any security, instrument or agreement which is part of the Assets or (ii)
constitute a waiver, release or discharge of any indebtedness or obligation
evidenced by the Notes or secured by this Indenture (to the extent it relates to
the obligation to make payments on the Notes) until such Assets have been
realized, whereupon any outstanding indebtedness or obligation in respect of the
Notes shall be extinguished. It is further understood that the foregoing
provisions of this paragraph shall not limit the right of any Person to name the
Issuer or the Co-Issuer as a party defendant in any Proceeding or in the
exercise of any other remedy under the Notes or this Indenture, so long as no
judgment in the nature of a deficiency judgment or seeking personal liability
shall be asked for or (if obtained) enforced against any such Person or entity.

          (u) Subject to the foregoing provisions of this Section 2.7, each Note
delivered under this Indenture and upon registration of transfer of or in
exchange for or in lieu of any other Note shall carry the rights of unpaid
interest and principal that were carried by such other Note.

          (v) Notwithstanding any of the foregoing provisions with respect to
payments of principal of and interest on the Notes (but subject to Sections
2.7(l) and (t)), if the Notes have become or been declared due and payable
following an Event of Default and such acceleration of Maturity and its
consequences have not been rescinded and annulled and the provisions of Section
5.5 are not applicable, then payments of principal of and interest on such Notes
shall be made in accordance with Section 5.7 hereof.

          (w) Payments in respect of the Preferred Shares as contemplated by
Sections 11.1(a)(i)(29) and 11.1(a)(ii)(13) shall be made by the Trustee to the
Preferred Shares Paying Agent.

          Section 2.8 Persons Deemed Owners.

          The Issuer, the Co-Issuer, the Trustee, and any agent of the Issuer,
the Co-Issuer or the Trustee may treat as the owner of a Note the Person in
whose name such Note is registered on the Notes Register on the applicable
Record Date for the purpose of receiving payments of principal of and interest
and other amounts on such Note and on any other date for all other purposes
whatsoever (whether or not such Note is overdue), and none of the Issuer, the
Co-Issuer or the Trustee nor any agent of the Issuer, the Co-Issuer or the
Trustee shall be affected by notice to the contrary; provided, however, that the
Depository, or its nominee, shall be deemed the owner of the Global Securities,
and owners of beneficial interests in Global Securities will not be considered
the owners of any Notes for the purpose of receiving notices. With respect to
the Preferred Shares, on any Payment Date, the Trustee shall deliver to the
Preferred Shares Paying Agent the distributions thereon for distribution to the
Preferred Shareholders.

                                     -102-

<PAGE>

          Section 2.9 Cancellation.

          All Notes surrendered for payment, registration of transfer, exchange
or redemption, or deemed lost or stolen, shall, if surrendered to any Person
other than the Trustee, be delivered to the Trustee, and shall be promptly
canceled by the Trustee and may not be reissued or resold. No Notes shall be
authenticated in lieu of or in exchange for any Notes canceled as provided in
this Section 2.9, except as expressly permitted by this Indenture. All canceled
Notes held by the Trustee shall be destroyed or held by the Trustee in
accordance with its standard retention policy unless the Issuer and the
Co-Issuer shall direct by an Issuer Order that they be returned to them.

          Section 2.10 Global Securities; Temporary Notes.

          (a) In the event that the Depository notifies the Issuer and the
Co-Issuer that it is unwilling or unable to continue as Depository for a Global
Security or if at any time such Depository ceases to be a "Clearing Agency"
registered under the Exchange Act and a successor depository is not appointed by
the Issuer within 90 days of such notice, the Global Securities deposited with
the Depository pursuant to Section 2.2 hereof shall be transferred to the
beneficial owners thereof subject to the procedures and conditions set forth in
this Section 2.10.

          (b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to Section 2.10(a) above shall be surrendered by the Depository
to the Trustee's Corporate Trust Office together with necessary instruction for
the registration and delivery of Class A-1 Notes, the Class A-2 Notes, Class B
Notes, Class C Notes, Class D Notes, Class E Notes, Class F Notes, Class G Notes
and Class H Notes in definitive registered form without interest coupons (each,
a "Certificated Note") to the beneficial owners (or such owner's nominee)
holding the ownership interests in such Global Security. Any such transfer shall
be made, without charge, and the Trustee shall authenticate and deliver, upon
such transfer of each portion of such Global Security, an equal aggregate
principal amount of Certificated Notes of the same Class and authorized
denominations. Any Certificated Notes delivered in exchange for an interest in a
Global Security shall, except as otherwise provided by Section 2.5(f), bear the
applicable legend set forth in Exhibits A-1, A-2, B, C, D, E, F, G and H, and
shall be subject to the transfer restrictions referred to in such applicable
legend. The Holder of each such registered individual Global Security may
transfer such Global Security by surrendering it at the Corporate Trust Office
of the Trustee, or at the office of the Paying Agent or Irish Paying Agent.

          (c) Subject to the provisions of Section 2.10(b) above, the registered
Holder of a Global Security may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Indenture or the Notes.

          (d) In the event of the occurrence of either of the events specified
in Section 2.10(a) above, the Issuer and the Co-Issuer shall promptly make
available to the Trustee a reasonable supply of Certificated Notes.

                                     -103-

<PAGE>

          Pending the preparation of Certificated Notes pursuant to this Section
2.10, the Issuer and the Co-Issuer may execute and, upon Issuer Order, the
Trustee shall authenticate and deliver, temporary Class A-1 Notes, Class A-2
Notes, Class B Notes, Class C Notes, Class D Notes, Class E Notes, Class F
Notes, Class G Notes or Class H Notes that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, in any authorized
denomination, substantially of the tenor of the Certificated Notes in lieu of
which they are issued and with such appropriate insertions, omissions,
substitutions and other variations as the Officers executing such Certificated
Notes may determine, as conclusively evidenced by their execution of such
Certificated Notes.

          If temporary Certificated Notes are issued, the Issuer and the
Co-Issuer shall cause permanent Certificated Notes to be prepared without
unreasonable delay. The Certificated Notes shall be printed, lithographed,
typewritten or otherwise reproduced, or provided by any combination thereof, or
in any other manner permitted by the rules and regulations of any applicable
notes exchange, all as determined by the Officers executing such Certificated
Notes. After the preparation of Certificated Notes, the temporary Notes shall be
exchangeable for Certificated Notes upon surrender of the applicable temporary
Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, Class D Notes,
Class E Notes, Class F Notes, Class G Notes or Class H Notes at the office or
agency maintained by the Issuer and the Co-Issuer for such purpose, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Class A-1 Notes, Class A-2, Notes, Class B Notes, Class C Notes, Class
D Notes, Class E Notes, Class F Notes, Class G Notes or Class H Notes, the
Issuer and the Co-Issuer shall execute, and the Trustee shall authenticate and
deliver, in exchange therefor the same aggregate principal amount of
Certificated Notes of authorized denominations. Until so exchanged, the
temporary Class A-1 Notes, Class A-2 Notes, Class B Notes, Class C Notes, Class
D Notes, Class E Notes, Class F Notes, Class G Notes or Class H Notes shall in
all respects be entitled to the same benefits under this Indenture as
Certificated Notes.

          Section 2.11 U.S. Tax Treatment of Notes and the Issuer.

          (a) Each of the Issuer and the Co-Issuer intends that, for U.S.
federal income tax purposes, the Notes be treated as debt and that the Issuer be
treated as a "qualified REIT subsidiary" (within the meaning of Section 856(i)
of the Code). Each prospective purchaser and any subsequent transferee of a Note
or any interest therein shall, by virtue of its purchase or other acquisition of
such Note or interest therein, be deemed to have agreed to treat such Note in a
manner consistent with the preceding sentence for U.S. federal income tax
purposes.

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

          Notwithstanding the foregoing, if the Holder of such Note so requests
and such Holder informs the Issuer or its authorized representative of the par
value of each Class of Notes held by such Holder during such taxable year
(including, if any Notes were acquired or sold during such taxable year, the
date such Notes were acquired or sold, and par value of such Notes), the Issuer
or its authorized representative will inform such Holder of its pro rata share
of the Issuer's ordinary earnings and net capital gain in a timely manner.

                                      -104-

<PAGE>

          (c) Each Holder of Notes shall timely furnish to the Issuer, the
Co-Issuer or its agents any U.S. federal income tax form or certification (such
as IRS Form W-8BEN (Certification of Foreign Status of Beneficial Owner) (with
Part III marked), IRS Form W-8IMY (Certification of Foreign Intermediary
Status), IRS Form W-9 (Request for Taxpayer Identification Number and
Certification), or IRS Form W-8ECI (Certification of Foreign Person's Claim for
Exemption from Withholding on Income Effectively Connected with Conduct of a
U.S. Trade or Business) or any successors to such IRS forms that the Issuer, the
Co-Issuer or its agents may reasonably request and shall update or replace such
forms or certification in accordance with its terms or its subsequent
amendments.

          Section 2.12 Authenticating Agents.

          Upon the request of the Issuer and the Co-Issuer, the Trustee shall,
and if the Trustee so chooses the Trustee may pursuant to this Indenture,
appoint one or more Authenticating Agents with power to act on its behalf and
subject to its direction in the authentication of Notes in connection with
issuance, transfers and exchanges under Sections 2.4, 2.5, 2.6 and 8.5 hereof,
as fully to all intents and purposes as though each such Authenticating Agent
had been expressly authorized by such Sections to authenticate such Notes. For
all purposes of this Indenture, the authentication of Notes by an Authenticating
Agent pursuant to this Section 2.12 shall be deemed to be the authentication of
Notes by the Trustee.

          Any corporation or banking association into which any Authenticating
Agent may be merged or converted or with which it may be consolidated, or any
corporation or banking association resulting from any merger, consolidation or
conversion to which any Authenticating Agent shall be a party, or any
corporation succeeding to the corporate trust business of any Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, without
the execution or filing of any further act on the part of the parties hereto or
such Authenticating Agent or such successor corporation. Any Authenticating
Agent may at any time resign by giving written notice of resignation to the
Trustee, the Issuer and the Co-Issuer. The Trustee may at any time terminate the
agency of any Authenticating Agent by giving written notice of termination to
such Authenticating Agent, the Issuer and the Co-Issuer. Upon receiving such
notice of resignation or upon such a termination, the Trustee shall promptly
appoint a successor Authenticating Agent and shall give written notice of such
appointment to the Issuer.

          The Trustee agrees to pay to each Authenticating Agent appointed by it
from time to time reasonable compensation for its services, and reimbursement
for its reasonable expenses relating thereto and the Trustee shall be entitled
to be reimbursed for such payments, subject to Section 6.7 hereof. The
provisions of Sections 2.9, 6.4 and 6.5 hereof shall be applicable to any
Authenticating Agent.

          Section 2.13 Forced Sale on Failure to Comply with Restrictions.

          (a) Notwithstanding anything to the contrary elsewhere in this
Indenture, any transfer of a Note or interest therein to a U.S. Person who is
determined not to have been both a QIB and a Qualified Purchaser at the time of
acquisition of the Note or interest therein shall be null and void and any such
proposed transfer of which the Issuer, the Co-Issuer or the

                                     -105-

<PAGE>

Trustee shall have notice may be disregarded by the Issuer, the Co-Issuer and
the Trustee for all purposes.

          (b) If the Issuer determines that any Holder of a Note has not
satisfied the applicable requirement described in Section 2.13(a) above (any
such person a "Non-Permitted Holder"), then the Issuer shall promptly after
discovery that such Person is a Non-Permitted Holder by the Issuer, the
Co-Issuer or the Trustee (and notice by the Trustee or the Co-Issuer to the
Issuer, if either of them makes the discovery), send notice to such
Non-Permitted Holder demanding that such Non-Permitted Holder transfer its
interest to a Person that is not a Non-Permitted Holder within 30 days of the
date of such notice. If such Non-Permitted Holder fails to so transfer its Note
or interest therein, the Issuer shall have the right, without further notice to
the Non-Permitted Holder, to sell such Note or interest therein to a purchaser
selected by the Issuer that is not a Non-Permitted Holder on such terms as the
Issuer may choose. The Issuer, or the Trustee acting on behalf of the Issuer,
may select the purchaser by soliciting one or more bids from one or more brokers
or other market professionals that regularly deal in securities similar to the
Note, and selling such Note to the highest such bidder. However, the Issuer or
the Trustee may select a purchaser by any other means determined by it in its
sole discretion. The Holder of such Note, the Non-Permitted Holder and each
other Person in the chain of title from the Holder to the Non-Permitted Holder,
by its acceptance of an interest in the Note, agrees to cooperate with the
Issuer and the Trustee to effect such transfers. The proceeds of such sale, net
of any commissions, expenses and taxes due in connection with such sale shall be
remitted to the Non-Permitted Holder. The terms and conditions of any sale under
this Section 2.13(b) shall be determined in the sole discretion of the Issuer,
and the Issuer shall not be liable to any Person having an interest in the Note
sold as a result of any such sale of exercise of such discretion.

                                    ARTICLE 3

                    CONDITIONS PRECEDENT; PLEDGED OBLIGATIONS

          Section 3.1 General Provisions.

          The Notes to be issued on the Closing Date shall be executed by the
Issuer and the Co-Issuer upon compliance with Section 3.2 and shall be delivered
to the Trustee for authentication and thereupon the same shall be authenticated
and delivered by the Trustee upon Issuer Request and upon receipt by the Trustee
of the items described below:

          (a) an Officer's Certificate of the Issuer (i) evidencing the
authorization by Board Resolution of the execution and delivery of this
Indenture, the Collateral Management Agreement, each Hedge Agreement and related
documents, the execution, authentication and delivery of the Notes and
specifying the Stated Maturity of each Class of Notes, the principal amount of
each Class of Notes and the applicable Note Interest Rate of each Class of Notes
to be authenticated and delivered, and (ii) certifying that (A) the attached
copy of the Board

                                      -106-

<PAGE>

Resolution is a true and complete copy thereof, (B) such resolutions have not
been rescinded and are in full force and effect on and as of the Closing Date,
(C) the Directors authorized to execute and deliver such documents hold the
offices and have the signatures indicated thereon and (D) at least $115,674,026
of proceeds on account of the sale on the Closing Date of the Preferred Shares
shall have been received;

          (b) an Officer's Certificate of the Co-Issuer (i) evidencing the
authorization by Board Resolution of the execution and delivery of this
Indenture and related documents, the execution, authentication and delivery of
the Notes and specifying the Stated Maturity of each Class of Notes, the
principal amount of each Class of Notes and the applicable Note Interest Rate of
each Class of Notes to be authenticated and delivered, and (ii) certifying that
(A) the attached copy of the Board Resolution is a true and complete copy
thereof, (B) such resolutions have not been rescinded and are in full force and
effect on and as of the Closing Date and (C) the Officers authorized to execute
and deliver such documents hold the offices and have the signatures indicated
thereon;

          (c) (i) either (A) certificates of the Issuer or other official
document evidencing the due authorization, approval or consent of any
governmental body or bodies, at the time having jurisdiction in the premises,
together with an Opinion of Counsel of the Issuer that no other authorization,
approval or consent of any governmental body is required for the valid issuance
of such Notes, or (B) an Opinion of Counsel of the Issuer reasonably
satisfactory in form and substance to the Trustee that no such authorization,
approval or consent of any governmental body is required for the valid issuance
of such Notes except as may have been given; and

          (ii) either (A) certificates of the Co-Issuer or other official
     document evidencing the due authorization, approval or consent of any
     governmental body or bodies, at the time having jurisdiction in the
     premises, together with an Opinion of Counsel of the Co-Issuer that no
     other authorization, approval or consent of any governmental body is
     required for the valid issuance of such Notes, or (B) an Opinion of Counsel
     of the Co-Issuer reasonably satisfactory in form and substance to the
     Trustee that no such authorization, approval or consent of any governmental
     body is required for the valid issuance of such Notes except as may have
     been given;

          (d) opinions of Cadwalader, Wickersham & Taft LLP, special U.S.
counsel to the Issuer and the Co-Issuer (which opinions may be limited to the
laws of the State of New York and the federal law of the United States and may
assume, among other things, the correctness of the representations and
warranties made or deemed made by the owners of Notes pursuant to Section 2.5(g)
and (i)) dated the Closing Date, substantially in the form of Exhibit K attached
hereto;

          (e) an opinion of Maples and Calder, Cayman Islands counsel to the
Issuer (which opinion shall be limited to the laws of the Cayman Islands), dated
the Closing Date, substantially in the form of Exhibit L attached hereto;

                                     -107-

<PAGE>

          (f) an opinion of Skadden, Arps, Slate, Meagher & Flom LLP, special
tax counsel to the Arbor Parent regarding its qualification and taxation as a
REIT in the form of Exhibit M attached hereto;

          (g) an Officer's Certificate, given on behalf of the Issuer and
without personal liability, stating that the Issuer is not in Default under this
Indenture and that the issuance of the Notes will not result in a breach of any
of the terms, conditions or provisions of, or constitute a Default under, the
Governing Documents of the Issuer, any indenture or other agreement or
instrument to which the Issuer is a party or by which it is bound, or any order
of any court or administrative agency entered in any Proceeding to which the
Issuer is a party or by which it may be bound or to which it may be subject;
that all conditions precedent provided in this Indenture relating to the
authentication and delivery of the Notes applied for and all conditions
precedent provided in the Preferred Shares Paying Agency Agreement relating to
the issuance by the Issuer of the Preferred Shares have been complied with;

          (h) an Officer's Certificate stating that the Co-Issuer is not in
Default under this Indenture and that the issuance of the Securities will not
result in a breach of any of the terms, conditions or provisions of, or
constitute a Default under, the Governing Documents of the Co-Issuer, any
indenture or other agreement or instrument to which the Co-Issuer is a party or
by which it is bound, or any order of any court or administrative agency entered
in any Proceeding to which the Co-Issuer is a party or by which it may be bound
or to which it may be subject; that all conditions precedent provided in this
Indenture relating to the authentication and delivery of the Notes applied for
have been complied with; and that all expenses due or accrued with respect to
the offering or relating to actions taken on or in connection with the Closing
Date have been paid;

          (i) an executed counterpart of each initial Collateral Debt Securities
Purchase Agreement and the Collateral Management Agreement;

          (j) an executed copy of each Hedge Agreement;

          (k) an executed counterpart of the Preferred Shares Paying Agency
Agreement;

          (l) an opinion of counsel to each Hedge Counterparty dated the Closing
Date, substantially in the form of Exhibit N attached hereto;

          (m) (i) an opinion of Kronish Lieb Weiner & Hellman LLP, special
counsel to the Collateral Manager, the Arbor Parent and the Advancing Agent,
dated the Closing Date, substantially in the form of Exhibit O attached hereto
and (ii) an opinion of Shearman & Sterling LLP, special counsel (regarding
certain Investment Company Act issues) to the Arbor Parent, dated the Closing
Date, substantially in the form of Exhibit P attached hereto;

          (n) an opinion of counsel to the Trustee dated the Closing Date,
substantially in the form of Exhibit Q attached hereto;

          (o) an opinion of counsel to each Seller dated the Closing Date,
substantially in the form of Exhibit R attached hereto;

                                      -108-

<PAGE>

          (p) an Accountants' Report confirming the following information as of
the Closing Date: (i) the information (other than the Principal Balance and the
Purchase Price) with respect to each Collateral Debt Security set forth on the
Schedule of Closing Date Collateral Debt Securities attached hereto as Schedule
I by reference to such sources as shall be specified therein and (ii) specifying
the procedures undertaken by the accountants to review data and computations
relating to the foregoing;

          (q) an Officer's Certificate from the Collateral Manager (i)
confirming that each Collateral Debt Security set forth on the Schedule I
attached hereto meets the Eligibility Criteria and that Schedule I correctly
lists the Collateral Debt Securities to be Granted to the Trustee on the Closing
Date, and (ii) stating the Aggregate Principal Amount of the Collateral Debt
Securities;

          (r) evidence of preparation for filing at the appropriate filing
office in the District of Columbia of a financing statement executed on behalf
of the Issuer relating to the perfection of the lien of this Indenture;

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

          (t) such other documents as the Trustee may reasonably require.
Section 3.2 Security for Notes.

          Prior to the issuance of the Notes on the Closing Date, the Issuer
shall cause the following conditions to be satisfied:

          (a) Grant of Security Interest; Delivery of Collateral Debt
Securities. The Grant pursuant to the Granting clauses of this Indenture of all
of the Issuer's right, title and interest in and to the Assets and the transfer
of all Collateral Debt Securities acquired in connection therewith purchased by
the Issuer on the Closing Date (as set forth in the Schedule of Closing Date
Collateral Debt Securities) to the Trustee, without recourse (except as
expressly provided in each applicable Collateral Debt Security Purchase
Agreement), in the manner provided in Section 3.3(a) and the crediting to the
Custodial Account by the Custodial Securities Intermediary of such Collateral
Debt Securities shall have occurred;

          (b) Certificate of the Issuer. A certificate of an Authorized Officer
of the Issuer given on behalf of the Issuer and without personal liability,
dated as of the Closing Date, delivered to the Trustee, to the effect that, in
the case of each Collateral Debt Security pledged to the Trustee for inclusion
in the Assets on the Closing Date and immediately prior to the delivery thereof
on the Closing Date:

          (i) the Issuer is the owner of such Collateral Debt Security free and
     clear of any liens, claims or encumbrances of any nature whatsoever except
     for those which are being released on the Closing Date;

                                     -109-

<PAGE>

          (ii) the Issuer has acquired its ownership in such Collateral Debt
     Security in good faith without notice of any adverse claim, except as
     described in paragraph (i) above;

          (iii) the Issuer has not assigned, pledged or otherwise encumbered any
     interest in such Collateral Debt Security (or, if any such interest has
     been assigned, pledged or otherwise encumbered, it has been released) other
     than interests Granted pursuant to this Indenture;

          (iv) the Underlying Instrument with respect to such Collateral Debt
     Security does not prohibit the Issuer from Granting a security interest in
     and assigning and pledging such Collateral Debt Security to the Trustee;

          (v) the information set forth with respect to such Collateral Debt
     Security in the Schedule of Closing Date Collateral Debt Securities is
     correct;

          (vi) the Collateral Debt Securities included in the Assets satisfy the
     requirements of the definition of Eligibility Criteria and the requirements
     of Section 3.2(a); and

          (vii) the Grant pursuant to the Granting Clauses of this Indenture
     shall result in a first priority security interest in favor of the Trustee
     for the benefit of the Holders of the Notes and each Hedge Counterparty in
     all of the Issuer's right, title and interest in and to the Collateral Debt
     Securities pledged to the Trustee for inclusion in the Assets on the
     Closing Date.

          (c) Rating Letters. The Trustee's receipt of a letter signed by each
Rating Agency and confirming that (i) the Class A-1 Notes have been rated "Aaa"
by Moody's and "AAA" by S&P and Fitch, (ii) the Class A-2 Notes have been rated
"Aaa" by Moody's and "AAA" by S&P and Fitch, (iii) the Class B Notes have been
rated at least "Aa2" by Moody's and "AA" by S&P and Fitch, (iv) the Class C
Notes have been rated at least "A1" by Moody's and "A+" by S&P and Fitch, (v)
the Class D Notes have been rated at least "A2" by Moody's and "A" by S&P and
Fitch, (vi) the Class E Notes have been rated at least "A3" by Moody's and "A-"
by S&P and Fitch, (vii) the Class F Notes have been rated at least "Baa1" by
Moody's and "BBB+" by S&P and Fitch, (viii) the Class G Notes have been rated at
least "Baa2" by Moody's and "BBB" by S&P and Fitch and (ix) the Class H Notes
have been rated at least "Baa3" by Moody's and "BBB-" by S&P and Fitch and that
such ratings are in full force and effect on the Closing Date.

          (d) Accounts. Evidence of the establishment of the Payment Account,
the Collection Account, the Unused Proceeds Account, the Delayed Funding
Obligations Account, the Expense Account, each Defeased Collateral Account, each
Hedge Collateral Account, each Hedge Termination Account, the Preferred Shares
Distribution Account and the Custodial Account.

          (e) Deposit to Expense Account. On the Closing Date, the Issuer shall
deposit into the Expense Account from the gross proceeds of the offering of the
Securities, approximately $500,000.

                                     -110-

<PAGE>

          (f) Deposit to Delayed Funding Obligations Account. On the Closing
Date, the Issuer or the applicable Sellers shall deposit into the Delayed
Funding Obligations Account an amount, which, in the aggregate is sufficient to
fulfill the maximum funding obligations under all Delayed Draw Term Loans
included in the Initial Collateral Debt Securities.

          (g) Deposit to Unused Proceeds Account. On the Closing Date, the
Issuer shall deposit into the Unused Proceeds Account, $62,693,342.

          (h) Issuance of Preferred Shares. The Issuer shall have delivered to
the Trustee evidence that the Preferred Shares have been, or contemporaneously
with the issuance of the Notes will be, (i) issued by the Issuer and (ii)
acquired in their entirety by ARMS Equity.

          Section 3.3 Transfer of Pledged Obligations.

          (a) LaSalle Bank National Association is hereby appointed as
Securities Intermediary (in such capacity, the "Custodial Securities
Intermediary") to hold all Pledged Obligations delivered to it in physical form
at its office in Chicago, Illinois. Any successor to such Securities
Intermediary shall be a U.S. state or national bank or trust company that is not
an Affiliate of the Issuer or the Co-Issuer and has capital and surplus of at
least $100,000,000. Subject to the limited right to relocate Pledged Obligations
set forth in Section 7.5(b), the Custodial Securities Intermediary, as a
Securities Intermediary, shall hold all Collateral Debt Securities in the
Custodial Account, all Eligible Investments and other investments purchased in
accordance with this Indenture in the respective Accounts in which the funds
used to purchase such investments are held in accordance with Article 10 and, in
respect of each Account (other than the Payment Account and the Preferred Shares
Distribution Account), the Trustee shall have entered into an agreement with the
Issuer and the Custodial Securities Intermediary (the "Securities Account
Control Agreement") providing, inter alia, that the establishment and
maintenance of such Account will be governed by a law satisfactory to the
Issuer, the Trustee and the Custodial Securities Intermediary. To the maximum
extent feasible, Pledged Obligations shall be transferred to the Trustee as
Security Entitlements in the manner set forth in clause (i) below. In the event
that the measures set forth in clause (i) below cannot be taken as to any
Pledged Obligations, such Pledged Obligation may be transferred to the Trustee
in the manner set forth in clauses (ii) through (vii) below, as appropriate. The
security interest of the Trustee in Pledged Obligations shall be perfected and
otherwise evidenced as follows:

          (i) in the case of such Pledged Obligations consisting of Security
     Entitlements, by the Issuer (A) causing the Custodial Securities
     Intermediary, in accordance with the Securities Account Control Agreement,
     to indicate by book entry that a Financial Asset has been credited to the
     Custodial Account and (B) causing the Custodial Securities Intermediary to
     agree pursuant to the Securities Account Control Agreement that it will
     comply with Entitlement Orders originated by the Trustee with respect to
     each such Security Entitlement without further consent by the Issuer;

                                     -111-

<PAGE>

          (ii) in the case of Pledged Obligations that are "uncertificated
     securities" (as such term is defined in the UCC), to the extent that any
     such uncertificated securities do not constitute Financial Assets forming
     the basis of Security Entitlements by the Trustee pursuant to clause (i)
     (the "Uncertificated Securities"), by the Issuer (A) causing the issuer(s)
     of such Uncertificated Securities to register on their respective books the
     Trustee as the registered owner thereof upon original issue or transfer
     thereof or (B) causing another Person, other than a Securities
     Intermediary, either to become the registered owner of such Uncertificated
     Securities on behalf of the Trustee, or such Person having previously
     become the registered owner, to acknowledge that it holds such
     Uncertificated Securities for the Trustee;

          (iii) in the case of Pledged Obligations consisting of Certificated
     Securities in registered form to the extent that any such Certificated
     Securities do not constitute Financial Assets forming the basis of Security
     Entitlements acquired by the Trustee pursuant to clause (i) (the
     "Registered Securities"), by the Issuer (A) causing (1) the Trustee to
     obtain possession of such Registered Securities in the State of Illinois or
     (2) another Person, other than a Securities Intermediary, either to acquire
     possession of such Registered Securities on behalf of the Trustee, or
     having previously acquired such Registered Securities, in either case, in
     the State of Illinois, to acknowledge that it holds such Registered
     Securities for the Trustee and (B) causing (1) the endorsement of such
     Registered Securities to the Trustee by an effective endorsement or (2) the
     registration of such Registered Securities in the name of the Trustee by
     the issuer thereof upon its original issue or registration of transfer;

          (iv) in the case of Pledged Obligations consisting of Certificated
     Securities in bearer form, to the extent that any such Certificated
     Securities do not constitute Financial Assets forming the basis of Security
     Entitlements acquired by the Trustee pursuant to clause (i) (the "Bearer
     Securities"), by the Issuer causing (A) the Trustee to obtain possession of
     such Bearer Securities in the State of Illinois or (B) another Person,
     other than a Securities Intermediary, either to acquire possession of such
     Bearer Securities on behalf of the Trustee or, having previously acquired
     possession of such Bearer Securities, in either case, in the State of
     Illinois, to acknowledge that it holds such Bearer Securities for the
     Trustee;

          (v) in the case of Pledged Obligations that consist of Money or
     Instruments (the "Illinois Collateral"), to the extent that any such
     Illinois Collateral does not constitute a Financial Asset forming the basis
     of a Security Entitlement acquired by the Trustee pursuant to clause (i),
     by the Issuer causing (A) the Trustee to acquire possession of such
     Illinois Collateral in the State of Illinois or (B) another Person (other
     than the Issuer or a Person controlling, controlled by, or under common
     control with, the Issuer) (1) to (x) take possession of such Illinois
     Collateral in the State of Illinois and (y) authenticate a record
     acknowledging that it holds such possession for the benefit of the Trustee
     or (2) to (x) authenticate a record acknowledging that it will hold
     possession of such Illinois Collateral for the benefit of the Trustee and
     (y) take possession of such Illinois Collateral in the State of Illinois;

                                     -112-

<PAGE>

          (vi) in the case of Pledged Obligations that consist of UCC Accounts
     or General Intangibles ("Accounts Receivable"), by the Issuer (A)
     notifying, or causing the notification of, the account debtors (as such
     term is defined in Section 9-102(a) of the UCC) for such Accounts
     Receivable of the security interest of the Trustee in such Accounts
     Receivable and causing the Securities Intermediary to credit such Accounts
     Receivable to the Custodial Account and to treat such Accounts Receivable
     as Financial Assets within the meaning of Article 8 of the UCC and (B) to
     the extent that doing so would be effective to perfect a security interest
     in such Accounts Receivable under the UCC as in effect at the time of
     transfer of such Accounts Receivable to the Trustee hereunder, filing or
     causing the filing of a UCC financing statement that encompasses such
     Accounts Receivable with the Recorder of Deeds of the District of Columbia
     and such other offices as applicable; and

          (vii) to the maximum extent reasonably possible, in the case of any
     Loans, Preferred Equity Securities or Participations that are not evidenced
     by Instruments, Certificated Securities or Uncertificated Securities, by
     the Issuer (A) taking all steps necessary (including obtaining any
     necessary consents to the transfer of such Loan, Participation or Preferred
     Equity Security, as applicable) to make the Custodial Securities
     Intermediary the registered owner thereof, (B) causing the Custodial
     Securities Intermediary to credit such Loans, Participations or Preferred
     Equity Securities, as applicable, to the Custodial Account and to treat
     such Loans, Participations or Preferred Equity Securities, as applicable,
     as Financial Assets within the meaning of Article 8 of the UCC and (C) to
     the extent that doing so would be effective to perfect a security interest
     in such Loans, Participations or Preferred Equity Securities, as
     applicable, under the UCC as in effect at the time of transfer of such
     Loans, Participations or Preferred Equity Securities to the Trustee
     hereunder, filing or causing the filing of a UCC financing statement that
     encompasses such Loans, Participations or Preferred Equity Securities, as
     applicable, with the Recorder of Deeds of the District of Columbia and such
     other offices as applicable.

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

          (c) Without limiting the foregoing, the Issuer and the Trustee on
behalf of the Bank agree, and the Bank shall cause the Custodial Securities
Intermediary, to take such different or additional action as the Trustee may
reasonably request in order to maintain the perfection and priority of the
security interest of the Trustee in the event of any change in applicable law or
regulation, including Articles 8 and 9 of the UCC and Treasury Regulations
governing transfers of interests in Government Items (it being understood that
the Trustee shall be entitled to rely upon an Opinion of Counsel, including an
Opinion of Counsel delivered in accordance with Section 3.1(d), as to the need
to file any financing statements or continuation statements, the dates by which
such filings are required to be made and the jurisdictions in which such filings
are required to be made).

          (d) Without limiting any of the foregoing,

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          (i) in connection with each Grant of a Collateral Debt Security
     hereunder, the Issuer shall deliver (or cause to be delivered by the
     applicable Seller) to the Custodial Securities Intermediary (A) the
     original of any note (or a copy of such note together with a lost note
     affidavit and indemnity), certificate or other instrument constituting or
     evidencing such Collateral Debt Security and any other Underlying
     Instrument related to such Collateral Debt Security, the delivery of which
     is necessary in order to perfect the security interest of the Trustee in
     such Collateral Debt Security granted pursuant to this Indenture, (B)
     copies of the other Underlying Instruments then in possession of the Issuer
     and (C) any other agreements, documents, certificates or instruments not
     specifically covered in the foregoing subclauses (A) and (B) of this clause
     (i) to the extent such other agreements, documents, certificates or
     instruments are required to be delivered to the Issuer pursuant to the
     related Collateral Debt Securities Purchase Agreement;

          (ii) from time to time upon the request of the Trustee, Collateral
     Manager or Servicer, the Issuer shall deliver (or cause to be delivered) to
     the Custodial Securities Intermediary any Underlying Instrument in the
     possession of the Issuer and not previously delivered hereunder (including
     originals of Underlying Instruments not previously required to be delivered
     as originals) and as to which the Trustee, Collateral Manager or Servicer,
     as applicable, shall have reasonably determined to be necessary or
     appropriate for the administration of such Collateral Debt Security
     hereunder or under the Collateral Management Agreement or under the
     Servicing Agreement or for the protection of the security interest of the
     Trustee under this Indenture;

          (iii) in connection with any delivery of documents to the Custodial
     Securities Intermediary pursuant to clauses (i) and (ii) above, the Trustee
     shall deliver to the Collateral Manager and the Servicer, on behalf of the
     Issuer, a Trust Receipt in the form of Exhibit S acknowledging the receipt
     of such documents by the Custodial Securities Intermediary and that it is
     holding such documents subject to the terms of this Indenture;

          (iv) from time to time upon request of the Collateral Manager or the
     Servicer, the Custodial Securities Intermediary shall, upon delivery by the
     Collateral Manager or the Servicer of a duly completed Request for Release
     in the form of Exhibit S hereto, release to the Collateral Manager or the
     Servicer such of the Underlying Instruments then in its custody as the
     Collateral Manager or the Servicer reasonably so requests. By submission of
     any such Request for Release, the Collateral Manager or the Servicer, as
     applicable, shall be deemed to have represented and warranted that it has
     determined in accordance with the Collateral Manager Servicing Standard or
     the Servicing Standard set forth in the Servicing Agreement, as the case
     may be, that the requested release is necessary for the administration of
     such Collateral Debt Security hereunder or under the Collateral Management
     Agreement or under the Servicing Agreement or for the protection of the
     security interest of the Trustee under this Indenture. The Collateral
     Manager or the Servicer shall return to the Custodial Securities
     Intermediary each Underlying Instrument released from custody pursuant to
     this clause (iv) within 20 Business Days of receipt thereof (except such
     Underlying Instruments as are released in connection with a sale, exchange
     or other disposition, in each case only as permitted under this Indenture,
     of the related Collateral Debt Security that is consummated within such
     20-day period). Notwithstanding the foregoing provisions of this clause
     (iv), (A)

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     any note, certificate or other instrument evidencing a Pledged Collateral
     Debt Security shall be released only for the purpose of (1) a sale,
     exchange or other disposition of such Pledged Collateral Debt Security that
     is permitted in accordance with the terms of this Indenture, (2)
     presentation, collection, renewal or registration of transfer of such
     Collateral Debt Security or (3) in the case of any note, in connection with
     a payment in full of all amounts owing under such note, and (B) the
     Custodial Securities Intermediary may refuse to honor any Request for
     Release following the occurrence of an Event of Default under this
     Indenture; and

          (v) to the extent the Collateral Manager deems necessary or advisable
     in accordance with the Collateral Manager Servicing Standard, the Issuer
     may, at the direction of the Collateral Manager (but only upon disclosure
     to, and with the prior consent of, the Advisory Committee), assign its
     right to purchase under a "buy/sell" arrangement in respect of a Collateral
     Debt Security to the Holder of the Preferred Shares or any Affiliate
     thereof.

          (e) As of the Closing Date (with respect to the Assets owned or
existing as of the Closing Date) and each date on which an Asset is acquired
(only with respect to each Asset so acquired or arising after the Closing Date),
the Issuer represents and warrants as follows:

          (i) this Indenture creates a valid and continuing security interest
     (as defined in the UCC) in the Assets in favor of the Trustee for the
     benefit of the Noteholders and each Hedge Counterparty, which security
     interest is prior to all other liens, and is enforceable as such against
     creditors of and purchasers from the Issuer;

          (ii) the Issuer owns and has good and marketable title to such Assets
     free and clear of any lien, claim or encumbrance of any Person;

          (iii) in the case of each Asset, the Issuer has acquired its ownership
     in such Asset in good faith without notice of any adverse claim as defined
     in Section 8-102(a)(1) of the UCC as in effect on the date hereof;

          (iv) other than the security interest granted to the Trustee for the
     benefit of the Noteholders and each Hedge Counterparty pursuant to this
     Indenture, the Issuer has not pledged, assigned, sold, granted a security
     interest in, or otherwise conveyed any of the Assets;

          (v) the Issuer has not authorized the filing of, and is not aware of,
     any financing statements against the Issuer that include a description of
     collateral covering the Assets other than any financing statement (x)
     relating to the security interest granted to the Trustee for the benefit of
     the Noteholders and each Hedge Counterparty hereunder or (y) that has been
     terminated; the Issuer is not aware of any judgment lien, Pension Benefit
     Guarantee Corporation lien or tax lien filings against the Issuer;

          (vi) the Issuer has received all consents and approvals required by
     the terms of each Asset and the Underlying Instruments to grant to the
     Trustee its interest and rights in such Asset hereunder;

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<PAGE>

          (vii) the Issuer has caused or will have caused, within 10 days, the
     filing of all appropriate financing statements in the proper filing office
     in the appropriate jurisdictions under applicable law in order to perfect
     the security interest in the Assets granted to the Trustee for the benefit
     of the Noteholders and each Hedge Counterparty hereunder;

          (viii) each Asset is an Instrument, a General Intangible, a
     Certificated Security or an Uncertificated Security, or has been or will
     have been credited to a Securities Account;

          (ix) the Custodial Securities Intermediary has agreed to treat all
     assets credited to the Securities Account as Financial Assets;

          (x) the Issuer has delivered a fully executed Securities Account
     Control Agreement pursuant to which the Custodial Securities Intermediary
     has agreed to comply with all instructions originated by the Trustee
     relating to the Custodial Account without further consent of the Issuer;
     the Custodial Account is not in the name of any person other than the
     Issuer or the Trustee; the Issuer has not consented to the Securities
     Intermediary of the Custodial Account to comply with Entitlement Orders of
     any person other than the Trustee;

          (xi) (A) all original executed copies of each promissory note or other
     writings that constitute or evidence any pledged obligation that
     constitutes an Instrument have been delivered to the Custodial Securities
     Intermediary for the benefit of the Trustee, (B) the Issuer has received a
     written acknowledgement from the Custodial Securities Intermediary that the
     Custodial Securities Intermediary is acting solely as agent of the Trustee
     and (C) none of the promissory notes or other writings that constitute or
     evidence such collateral has any marks or notations indicating that they
     have been pledged, assigned or otherwise conveyed by the Issuer to any
     Person other than the Trustee;

          (xii) (A) the Collection Accounts, the Unused Proceeds Account, the
     Delayed Funding Obligations Account, each Defeased Collateral Account, each
     Hedge Termination Account, each Hedge Collateral Account, the Expense
     Account and the Payment Account (collectively, the "Deposit Accounts")
     constitute "deposit accounts" within the meaning of the UCC, (B) the Issuer
     has taken all steps necessary to cause the Trustee to become the customer
     and account holder of the Deposit Accounts, (C) other than the security
     interest granted to the Trustee pursuant to this Indenture, the Issuer has
     not pledged, assigned, sold, granted a security interest in, or otherwise
     conveyed any of the Deposit Accounts, and (D) the Deposit Accounts are not
     in the name of any person other than the Issuer or the Trustee. The Issuer
     has not consented to the bank maintaining the Deposit Accounts to comply
     with the instructions of any person other than the Trustee; and

          (xiii) the Issuer has established procedures such that any Eligible
     Investments purchased with funds withdrawn from the Deposit Accounts will
     be (i) credited to a Securities Account over which the Trustee will have a
     first priority perfected security interest, (ii) purchased in the name of
     the Trustee, or (iii) held in another manner

                                     -116-

<PAGE>

     sufficient to establish the Trustee's first priority perfected security
     interest over such Eligible Investments.

          (f) The Trustee shall only invest in Eligible Investments which the
applicable Custodial Securities Intermediary agrees to credit to the applicable
account. To the extent any Eligible Investment shall not be delivered to the
Trustee by causing the Custodial Securities Intermediary to create a Security
Entitlement in the Securities Account in favor of the Trustee, the Issuer shall
deliver an Opinion of Counsel to the Trustee to the effect that any other
delivery will effect a first priority security interest in favor of the Trustee
in such Eligible Instrument.

                                   ARTICLE 4
                           SATISFACTION AND DISCHARGE

          Section 4.1 Satisfaction and Discharge of Indenture.

          This Indenture shall be discharged and shall cease to be of further
effect with respect to the Assets securing the Notes and the Issuer's
obligations under each Hedge Agreement except as to (i) the rights of
registration of transfer and exchange, (ii) the substitution of mutilated,
defaced, destroyed, lost or stolen Notes, (iii) the rights of Noteholders to
receive payments of principal thereof and interest thereon as provided herein,
(iv) the rights, obligations and immunities of the Trustee on behalf of the
Noteholders hereunder and (v) the rights of Noteholders as beneficiaries hereof
with respect to the property deposited with the Trustee on their behalf and
payable to all or any of them, and the Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture, when:

               (a) either:

          (i) all Notes theretofore authenticated and delivered (other than (A)
     Notes which have been mutilated, defaced, destroyed, lost or stolen and
     which have been replaced or paid as provided in Section 2.6 and (B) Notes
     for which payment Money has theretofore irrevocably been deposited in trust
     and thereafter repaid to the Issuer or discharged from such trust, as
     provided in Section 7.3) have been delivered to the Trustee for
     cancellation; or

          (ii) all Notes not theretofore delivered to the Trustee for
     cancellation (A) have become due and payable, or (B) will become due and
     payable at their Stated Maturity within one year, or (C) are to be called
     for redemption pursuant to Section 9.1 or Section 9.2 under an arrangement
     satisfactory to the Trustee for the giving of notice of redemption by the
     Issuer and the Co-Issuer pursuant to Section 9.4 and the Issuer or the
     Co-Issuer, in the case of clauses (A), (B) or (C) of this subsection (ii),
     has irrevocably deposited or caused to be deposited with the Trustee, in
     trust for such purpose, Cash or non-callable direct obligations of the
     United States of America; provided that the obligations are entitled to the
     full faith and credit of the United States of America or are debt
     obligations which are rated "Aaa" by Moody's, "AAA" by Fitch and "AAA" by

                                     -117-

<PAGE>

     S&P in an amount sufficient, as verified by a firm of certified public
     accountants which are nationally recognized, to pay and discharge the
     entire indebtedness (including, in the case of a redemption pursuant to
     Section 9.1 or Section 9.2, the Redemption Price) on such Notes not
     theretofore delivered to the Trustee for cancellation, for principal and
     interest to the date of such deposit (in the case of Notes which have
     become due and payable), or to the Stated Maturity or the Redemption Date,
     as the case may be (and in each case in respect of the Notes, subject to
     the Priority of Payments); provided, further, that any such deposit of
     funds with the Trustee in satisfaction of this Indenture shall be subject
     to the Rating Agency Condition; provided, however, this subsection (ii)
     shall not apply if an election to act in accordance with the provisions of
     Section 5.5(a) shall have been made and is not rescinded;

          (b) (i) the Issuer has paid or caused to be paid or provided for (to
the satisfaction of the Person entitled thereto) all other sums payable
hereunder and under the Collateral Management Agreement, the Servicing
Agreement, the Preferred Shares Paying Agency Agreement and the Company
Administration Agreement, and (ii) all Hedge Agreements then in effect have been
terminated and Issuer has paid all amounts, including payments due and payable
in connection with such termination and has paid all other outstanding amounts,
including any outstanding payments due and payable for any previously terminated
Hedge Agreement.

          (c) Each of the Issuer and the Co-Issuer has delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.

          Notwithstanding the satisfaction and discharge of this Indenture, the
rights and obligations of the Issuer, the Co-Issuer, the Trustee, and, if
applicable, the Noteholders, as the case may be, under Sections 2.7, 4.2,
5.4(d), 5.9, 5.18, 6.7 and 7.3 hereof shall survive.

          Section 4.2 Application of Trust Money.

          All Monies deposited with the Trustee pursuant to Section 4.1 shall be
held in trust and applied by it in accordance with the provisions of the Notes
and this Indenture to the payment of the principal and interest, either directly
or through the Paying Agent, as the Trustee may determine, to the Person
entitled thereto of the principal and interest for whose payment such Money has
been deposited with the Trustee; but such Money need not be segregated from
other funds except to the extent required herein or when commingling of funds is
prohibited by law.

          Section 4.3 Repayment of Monies Held by Paying Agent.

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

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in accordance with the Priority of Payments and thereupon such Paying Agent
shall be released from all further liability with respect to such Monies.

                                   ARTICLE 5

                                    REMEDIES

          Section 5.1 Events of Default.

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

          (a) a default in the payment of any interest on any Note when the same
becomes due and payable (provided that (a) if any Class A Notes or Class B Notes
are Outstanding, solely for the purposes of this Section 5.1(a), no interest
shall be "due and payable" on any Class C Notes, Class D Notes, Class E Notes,
Class F Notes, Class G Notes or Class H Notes, (b) if any Class C Notes are
Outstanding, solely for the purposes of this Section 5.1(a), no interest shall
be "due and payable" on any Class D Notes, Class E Notes, Class F Notes, Class G
Notes or Class H Notes, (c) if any Class D Notes are Outstanding, solely for the
purposes of this Section 5.1(a), no interest shall be "due and payable" on any
Class E Notes, Class F Notes, Class G Notes or Class H Notes, (d) if any Class E
Notes are Outstanding, solely for the purposes of this Section 5.1(a), no
interest shall be "due and payable" on any Class F Notes, Class G Notes or Class
H Notes, (e) if any Class F Notes are Outstanding, solely for the purposes of
this Section 5.1(a), no interest shall be "due and payable" on any Class G Notes
or Class H Notes and (f) if any Class G Notes are Outstanding, solely for the
purposes of this Section 5.1(a), no interest shall be "due and payable" on any
Class H Notes), which default continues for a period of three Business Days or,
in the case of a default in payment due to an administrative error or omission
by the Trustee or Paying Agent, which default continues for five Business Days;

          (b) a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class A-1 Note when the same becomes due and
payable, at its Stated Maturity or any Redemption Date, or if there are no Class
A-1 Notes Outstanding, a default in the payment of principal (or the related
Redemption Price, if applicable) of any Class A-2 Note when the same becomes due
and payable, at its Stated Maturity or any Redemption Date, or if there are no
Class A-2 Notes Outstanding, a default in the payment of principal (or the
related Redemption Price, if applicable) of any Class B Note when the same
becomes due and payable at its Stated Maturity or any Redemption Date, or if
there are no Class B Notes Outstanding, a default in the payment of principal
(or the related Redemption Price, if applicable) of any Class C Note (plus any
Class C Capitalized Interest) when the same becomes due and payable at its
Stated Maturity or any Redemption Date, or if there are no Class C Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class D Note (plus any Class D Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date, or if there are no Class D Notes Outstanding, a default in the
payment of principal (or the related

                                     -119-

<PAGE>

Redemption Price, if applicable) of any Class E Note (plus any Class E
Capitalized Interest) when the same becomes due and payable at its Stated
Maturity or any Redemption Date, or if there are no Class E Notes Outstanding, a
default in the payment of principal (or the related Redemption Price, if
applicable) of any Class F Note (plus any Class F Capitalized Interest) when the
same becomes due and payable at its Stated Maturity or any Redemption Date, or
if there are no Class F Notes Outstanding, a default in the payment of principal
(or the related Redemption Price, if applicable) of any Class G Note (plus any
Class G Capitalized Interest) when the same becomes due and payable at its
Stated Maturity or any Redemption Date, or if there are no Class G Notes
Outstanding, a default in the payment of principal (or the related Redemption
Price, if applicable) of any Class H Note (plus any Class H Capitalized
Interest) when the same becomes due and payable at its Stated Maturity or any
Redemption Date (or in the case of a default in payment due to any
administrative error or omission by the Trustee or the Paying Agent, such
default continues for a period of five Business Days);

          (c) the failure on any Payment Date to disburse amounts available in
the Payment Account in accordance with the Priority of Payments set forth under
Section 11.1(a) (other than a default in payment described in clause (a) or (b)
above), which failure continues for a period of three Business Days or, in the
case of a failure to disburse such amounts due to an administrative error or
omission by the Trustee or Paying Agent, which failure continues for five
Business Days;

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

          (e) a default in the performance, or breach, of any other covenant or
other agreement (other than the covenant to meet or improve the Collateral
Quality Tests or the Coverage Tests) of the Issuer or the Co-Issuer hereunder or
any representation or warranty of the Issuer or the Co-Issuer hereunder or in
any certificate or other writing delivered pursuant hereto or in connection
therewith proves to be incorrect in any material respect when made, and the
continuation of such default or breach for a period of 30 days (or, if such
default, breach or failure has an adverse effect on the validity, perfection or
priority of the security interest granted hereunder, 15 days) after either the
Issuer, the Co-Issuer or the Collateral Manager has actual knowledge thereof or
after notice thereof to the Issuer, the Co-Issuer and the Collateral Manager by
the Trustee or to the Issuer, the Co-Issuer, the Collateral Manager and the
Trustee by Holders of at least 25% of the Aggregate Outstanding Amount of the
Controlling Class; provided that a default in the performance by the Issuer of
the obligations imposed on it by this Indenture in connection with the entry
into a replacement Hedge Agreement upon the early termination of a Hedge
Agreement shall not be an Event of Default if the Rating Agency Condition has
been satisfied;

          (f) the entry of a decree or order by a court having competent
jurisdiction adjudging the Issuer or the Co-Issuer as bankrupt or insolvent, or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Issuer or the Co-Issuer under
the Bankruptcy Code or any other applicable law, or appointing a receiver,
liquidator, assignee, or sequestrator (or other similar official) of the Issuer
or the Co-Issuer or of any substantial part of its property, respectively, or
ordering the winding up or

                                     -120-

<PAGE>

liquidation of its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days;

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

          (h) one or more final judgments being rendered against the Issuer or
the Co-Issuer which exceed, in the aggregate, U.S. $1,000,000 (or such lesser
amount as any Rating Agency may specify) and which remain unstayed, undischarged
and unsatisfied for 30 days after such judgment(s) becomes nonappealable, unless
adequate funds have been reserved or set aside for the payment thereof, and
unless (except as otherwise specified in writing by each Rating Agency) the
Rating Agency Condition shall have been satisfied; or

          (i) the Issuer loses its status as a qualified REIT subsidiary (within
the meaning of Section 856(i)(2) of the Code), unless (A) within 90 days, the
Issuer either (1) delivers an opinion of tax counsel of nationally recognized
standing in the United States experienced in such matters to the effect that,
notwithstanding the Issuer's loss of qualified REIT subsidiary status, the
Issuer is not, and has not been, an association (or publicly traded partnership)
taxable as a corporation, or is not, and has not been, otherwise subject to U.S.
federal income tax on a net basis and the Noteholders are not otherwise
materially adversely affected by the loss of qualified REIT subsidiary status or
(2) receives an amount from the Preferred Shareholders sufficient to discharge
in full the amounts then due and unpaid on the Notes and amounts and expenses
described in clauses (1) through (5), (26), (27) and (28) under Section
11.1(a)(i) in accordance with the Priority of Payments or (B) all Classes of the
Notes are subject to a Tax Redemption announced by the Issuer in compliance with
this Indenture, and such redemption has not been rescinded.

          Upon becoming aware of the occurrence of an Event of Default, the
Issuer, shall promptly notify the Trustee, the Collateral Manager, the
Noteholders, the Preferred Shares Paying Agent, the Preferred Shareholders, each
Rating Agency, each Hedge Counterparty and, for so long as any Notes are listed
on the Irish Stock Exchange, the Irish Paying Agent in writing. If the
Collateral Manager has actual knowledge of the occurrence of an Event of
Default, the Collateral Manager shall promptly notify, in writing, the Trustee,
the Noteholders, each Rating Agency and each Hedge Counterparty of the
occurrence of such Event of Default.

          Section 5.2 Acceleration of Maturity; Rescission and Annulment.

          (a) If an Event of Default shall occur and be continuing (other than
the Events of Default specified in Section 5.1(f) or 5.1(g)), the Trustee may
(and shall at the direction of each Class of Notes voting as a separate Class)
declare the principal of and accrued and unpaid

                                     -121-

<PAGE>

interest on all the Notes to be immediately due and payable (and any such
acceleration shall automatically terminate the Reinvestment Period). If an Event
of Default described in Section 5.1(f) or 5.1(g) above occurs, such an
acceleration shall occur automatically and without any further action and any
such acceleration shall automatically terminate the Reinvestment Period. If the
Notes are accelerated, payments shall be made in the order and priority set
forth in Section 11.1(a) hereof.

          (b) At any time after such a declaration of acceleration of Maturity
of the Notes has been made, and before a judgment or decree for payment of the
Money due has been obtained by the Trustee as hereinafter provided in this
Article 5, a Majority of each Class of Notes (voting as a separate Class), by
written notice to the Issuer, the Co-Issuer, the Trustee and each Hedge
Counterparty, may rescind and annul such declaration and its consequences if:

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

                    (A) all unpaid installments of interest on and principal of
               the Notes that would be due and payable hereunder if the Event of
               Default giving rise to such acceleration had not occurred;

                    (B) to the extent that payment of such interest is lawful,
               interest on the Class C Capitalized Interest at the Class C Rate,
               interest on the Class D Capitalized Interest at the Class D Rate,
               interest on the Class E Capitalized Interest at the Class E Rate,
               interest on the Class F Capitalized Interest at the Class F Rate,
               interest on the Class G Capitalized Interest at the Class G Rate
               and interest on the Class H Capitalized Interest at the Class H
               Rate;

                    (C) all unpaid taxes of the Issuer and the Co-Issuer,
               Company Administrative Expenses and other sums paid or advanced
               by or otherwise due and payable to the Trustee hereunder;

                    (D) with respect to each Hedge Agreement, any amount then
               due and payable thereunder; and

                    (E) with respect to the Collateral Management Agreement, any
               Senior Collateral Management Fee then due and any Company
               Administrative Expense due and payable to the Collateral Manager
               thereunder;

          (ii) the Hedge Agreements in effect immediately prior to the
     declaration of such acceleration shall remain in effect or, if such Hedge
     Agreements shall have become subject to early termination after the
     declaration of such acceleration, the Issuer shall have entered into a
     replacement Hedge Agreement for the terminated Hedge Agreement in
     accordance with Section 16.1; and

          (iii) the Trustee has determined that all Events of Default of which
     it has actual knowledge, other than the non-payment of the interest and
     principal on the Notes that

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<PAGE>

     have become due solely by such acceleration, have been cured and a Majority
     of the Controlling Class, by written notice to the Trustee and each Hedge
     Counterparty has agreed with such determination (which agreement shall not
     be unreasonably withheld or delayed) or waived as provided in Section 5.14.

          At any such time that the Trustee shall rescind and annul such
declaration and its consequences as permitted hereinabove, the Trustee shall
preserve the Assets in accordance with the provisions of Section 5.5 with
respect to the Event of Default that gave rise to such declaration; provided,
however, that if such preservation of the Assets is rescinded pursuant to
Section 5.5, the Notes may be accelerated pursuant to the first paragraph of
this Section 5.2, notwithstanding any previous rescission and annulment of a
declaration of acceleration pursuant to this paragraph.

          No such rescission shall affect any subsequent Default or impair any
right consequent thereon. In addition, no such rescission shall affect any Hedge
Agreement if it has been terminated in accordance with its terms.

          (c) Subject to Sections 5.4 and 5.5, a Majority of the Controlling
Class shall have the right to direct the Trustee in the conduct of any
Proceedings for any remedy available to the Trustee or in the sale of any or all
of the Assets; provided that (i) such direction will not conflict with any rule
of law or this Indenture; (ii) the Trustee may take any other action not
inconsistent with such direction; (iii) the Trustee determines that such action
will not involve it in liability (unless the Trustee has received satisfactory
indemnity or reasonable security against any such liability); and (iv) any
direction to undertake a sale of the Assets may be made only as described in
Section 5.17. The Trustee shall provide written notice of the receipt of such
direction to each Hedge Counterparty promptly after receipt thereof.

          (d) As security for the payment by the Issuer of the compensation and
expenses of the Trustee and any sums the Trustee may be entitled to receive as
indemnification by the Issuer, the Issuer hereby grants the Trustee a lien on
the Assets, which lien is senior to the lien of the Noteholders. The Trustee's
lien shall be subject to the Priority of Payments and exercisable by the Trustee
only if the Notes have been declared due and payable following an Event of
Default and such acceleration has not been rescinded or annulled.

          (e) A Majority of the Controlling Class, may, prior to the time a
judgment or decree for the payment of money due has been obtained by the
Trustee, waive any past Default on behalf of the holders of all the Notes and
its consequences in accordance with Section 5.14.

          (f) In determining whether the holders of the requisite percentage of
Notes have given any direction, notice or consent hereunder, (i) Notes owned by
the Issuer, the Co-Issuer or any Affiliate thereof shall be disregarded and
deemed not to be Outstanding and (ii) in relation to (x) any amendment or other
modification of, or assignment or termination of, any of the express rights or
obligations of the Collateral Manager under the Collateral Management Agreement
or this Indenture (including the exercise of any rights to remove the Collateral
Manager or terminate the Collateral Management Agreement or approve or object

                                     -123-

<PAGE>

to a replacement for the Collateral Manager except as specifically provided in
the Collateral Management Agreement with respect to the termination of the
Collateral Manager without cause and with respect to the replacement of the
Collateral Manager in instances where the Collateral Manager has not been
terminated for cause or where such replacement is not an Affiliate of the
Collateral Manager) and (y) the exercise by the Noteholders of their right, in
connection with certain Events of Default, to accelerate amounts due under the
Notes, Notes owned by the Collateral Manager or any of its Affiliates, or by any
accounts managed by them, shall be disregarded and deemed not to be Outstanding.
The Collateral Manager and its Affiliates shall be entitled to vote Notes held
by them, and by accounts managed by them, with respect to all other matters
other than those described in clause (ii).

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

          The Issuer covenants that if a Default shall occur in respect of the
payment of any interest on any Class A-1 Note, the payment of principal on any
Class A-1 Note (but only after interest with respect to the Class A-1 Notes and
any amounts payable pursuant to Section 11.1(a) having a higher priority have
been paid in full), the payment of interest on any Class A-2 Note (but only
after interest with respect to the Class A-1 Notes and any amounts payable
pursuant to Section 11.1(a) having a higher priority have been paid in full),
the payment of principal on any Class A-2 Note (but only after interest and
principal with respect to the Class A-1 Note and interest with respect to the
Class A-2 Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of interest on any Class B
Note (but only after interest with respect to the Class A-1 Notes and the Class
A-2 Notes and any amounts payable pursuant to Section 11.1(a) having a higher
priority have been paid in full), the payment of principal on any Class B Note
(but only after interest and principal with respect to the Class A-1 Notes, the
Class A-2 Notes and interest with respect to the Class B Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class C Note (but only after interest with
respect to the Class A-1 Notes, the Class A-2 Notes and the Class B Notes and
any amounts payable pursuant to Section 11.1(a) having a higher priority have
been paid in full), the payment of principal on any Class C Note (but only after
interest and principal with respect to the Class A-1 Notes, the Class A-2 Notes
and the Class B Notes and interest with respect to the Class C Notes and any
amounts payable pursuant to Section 11.1(a) having a higher priority have been
paid in full), the payment of interest on any Class D Note (but only after
interest with respect to the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes and the Class C Notes and any amounts payable pursuant to Section 11.1(a)
having a higher priority have been paid in full), the payment of principal on
any Class D Note (but only after interest and principal with respect to the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes and the Class C Notes
and interest with respect to the Class D Notes and any amounts payable pursuant
to Section 11.1(a) having a higher priority have been paid in full), the payment
of interest on any Class E Note (but only after interest with respect to the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes and
the Class D Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of principal on any Class E
Note (but only after interest and principal with respect to the Class A-1 Notes,
the Class A-2 Notes, the Class B Notes, the Class C Notes and the Class D Notes
and interest with respect to the Class E Notes and any amounts payable pursuant
to Section 11.1(a) having a higher priority have been paid in full), the payment
of interest on any Class F Note (but only after interest with respect to the
Class A-1 Notes, the

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<PAGE>

Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full), the payment of principal on any Class F
Note (but only after interest and principal with respect to the Class A-1 Notes,
the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes and
the Class E Notes and interest with respect to the Class F Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class G Note (but only after interest with
respect to the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes and
any amounts payable pursuant to Section 11.1(a) having a higher priority have
been paid in full), the payment of principal on any Class G Note (but only after
interest and principal with respect to the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes and
the Class F Notes and interest with respect to the Class G Notes and any amounts
payable pursuant to Section 11.1(a) having a higher priority have been paid in
full), the payment of interest on any Class H Note (but only after interest with
respect to the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes and any amounts payable pursuant to Section 11.1(a) having a
higher priority have been paid in full) or the payment of principal on any Class
H Note (but only after interest and principal with respect to the Class A-1
Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes and the Class G Notes and interest
with respect to the Class H Notes and any amounts payable pursuant to Section
11.1(a) having a higher priority have been paid in full), the Issuer and
Co-Issuer shall, upon demand of the Trustee or any affected Noteholder, pay to
the Trustee, for the benefit of the Holder of such Note, the whole amount, if
any, then due and payable on such Note for principal and interest or other
payment with interest on the overdue principal and, to the extent that payments
of such interest shall be legally enforceable, upon overdue installments of
interest, at the applicable interest rate and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee and such Noteholder and their respective agents and counsel.

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

          If an Event of Default occurs and is continuing, the Trustee shall
proceed to protect and enforce its rights and the rights of the Noteholders by
such Proceedings (x) as directed by a Majority of the Controlling Class or (y)
in the absence of direction by a Majority of the Controlling Class, as deemed
most effectual by the Trustee. Such Proceedings shall be used for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy or
legal or equitable right vested in the Trustee by this Indenture or by law.

          In the case where (x) there shall be pending Proceedings relative to
the Issuer or the Co-Issuer under the Bankruptcy Code or any other applicable
bankruptcy, insolvency or

                                     -125-

<PAGE>

similar law, (y) a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or the Co-Issuer, or their
respective property, or (z) there shall be any other comparable Proceedings
relative to the Issuer or the Co-Issuer, or the creditors or property of the
Issuer or the Co-Issuer, regardless of whether the principal of any Notes shall
then be due and payable as therein expressed or by declaration, or otherwise and
regardless of whether the Trustee shall have made any demand pursuant to the
provisions of this Section 5.3, the Trustee shall be entitled and empowered, by
intervention in such Proceedings or otherwise:

          (a) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in respect of the Notes and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for reasonable compensation to the
Trustee and each predecessor Trustee, and their respective agents, attorneys and
counsel, and for reimbursement of all expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee, except as a result
of negligence or bad faith) and of the Noteholders allowed in any Proceedings
relative to the Issuer, the Co-Issuer or other obligor upon the Notes or to the
creditors or property of the Issuer, the Co-Issuer or such other obligor;

          (b) unless prohibited by applicable law and regulations, to vote on
behalf of the Noteholders in any election of a trustee or a standby trustee in
arrangement, reorganization, liquidation or other bankruptcy or insolvency
proceedings or of a Person performing similar functions in comparable
Proceedings; and

          (c) to collect and receive any Monies or other property payable to or
deliverable on any such claims, and to distribute all amounts received with
respect to the claims of the Noteholders and of the Trustee on their behalf; and
any trustee, receiver or liquidator, custodian or other similar official is
hereby authorized by each of the Noteholders to make payments to the Trustee,
and, in the event that the Trustee shall consent to the making of payments
directly to the Noteholders, to pay to the Trustee such amounts as shall be
sufficient to cover reasonable compensation to the Trustee, each predecessor
Trustee and their respective agents, attorneys and counsel, and all other
reasonable expenses and liabilities incurred, and all advances made, by the
Trustee and each predecessor Trustee except as a result of its own negligence or
bad faith.

          Nothing herein contained shall be deemed to authorize the Trustee to
authorize, consent to, vote for, accept or adopt, on behalf of any Noteholder,
any plan of reorganization, arrangement, adjustment or composition affecting the
Notes or the rights of any Holder thereof, or to authorize the Trustee to vote
in respect of the claim of any Noteholder in any such Proceeding except, as
aforesaid, to vote for the election of a trustee in bankruptcy or similar
Person.

          All rights of action and of asserting claims under this Indenture, or
under any of the Notes, may be enforced by the Trustee without the possession of
any of the Notes or the production thereof in any trial or other Proceedings
relative thereto, and any action or Proceedings instituted by the Trustee shall
be brought in its own name as trustee of an express trust, and any recovery of
judgment, shall be applied as set forth in Section 5.7.

                                     -126-

<PAGE>

          In any Proceedings brought by the Trustee on behalf of the
Noteholders, the Trustee shall be held to represent all the Holders of the
Notes.

          Notwithstanding anything in this Section 5.3 to the contrary, the
Trustee may not sell or liquidate the Assets or institute Proceedings in
furtherance thereof pursuant to this Section 5.3 unless the conditions specified
in Section 5.5(a) are met.

          Section 5.4 Remedies.

          (a) If an Event of Default has occurred and is continuing, and the
Notes have been declared due and payable and such declaration and its
consequences have not been rescinded and annulled, the Issuer and the Co-Issuer
agree that the Trustee may, after notice to the Noteholders and each Hedge
Counterparty, and shall, upon direction by a Majority of the Controlling Class,
to the extent permitted by applicable law, exercise one or more of the following
rights, privileges and remedies:

          (i) institute Proceedings for the collection of all amounts then
     payable on the Notes or otherwise payable under this Indenture (whether by
     declaration or otherwise), enforce any judgment obtained and collect from
     the Assets any Monies adjudged due;

          (ii) sell all or a portion of the Assets or rights of interest
     therein, at one or more public or private sales called and conducted in any
     manner permitted by law and in accordance with Section 5.17 hereof;

          (iii) institute Proceedings from time to time for the complete or
     partial foreclosure of this Indenture with respect to the Assets;

          (iv) exercise any remedies of a secured party under the UCC and take
     any other appropriate action to protect and enforce the rights and remedies
     of the Trustee and the Holders of the Notes hereunder; and

          (v) exercise any other rights and remedies that may be available at
     law or in equity;

provided, however, that the Trustee may not sell or liquidate the Assets or
institute Proceedings in furtherance thereof pursuant to this Section 5.4 unless
either of the conditions specified in Section 5.5(a) is met.

          The Trustee may, but need not, obtain and rely upon an opinion of an
Independent investment banking firm of national reputation with demonstrated
capabilities in structuring and distributing notes or certificates similar to
the Notes as to the feasibility of any action proposed to be taken in accordance
with this Section 5.4 and as to the sufficiency of the proceeds and other
amounts receivable with respect to the Assets to make the required payments of
principal of and interest on the Notes and other amounts payable hereunder,
which opinion shall be conclusive evidence as to such feasibility or
sufficiency.

          (b) If an Event of Default as described in Section 5.1(e) hereof shall
have occurred and be continuing, the Trustee may, and at the request of the
Holders of not less than

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<PAGE>

25% of the Aggregate Outstanding Amount of the Controlling Class shall,
institute a Proceeding solely to compel performance of the covenant or agreement
or to cure the representation or warranty, the breach of which gave rise to the
Event of Default under such Section, and enforce any equitable decree or order
arising from such Proceeding.

          (c) Upon any Sale, whether made under the power of sale hereby given
or by virtue of judicial proceedings, any Noteholder, Preferred Shareholder or
the Collateral Manager or any of its Affiliates may bid for and purchase the
Assets or any part thereof and, upon compliance with the terms of Sale, may
hold, retain, possess or dispose of such property in its or their own absolute
right without accountability; and any purchaser at any such Sale may, in paying
the purchase Money, turn in any of the Notes in lieu of Cash equal to the amount
which shall, upon distribution of the net proceeds of such sale, be payable on
the Notes so turned in by such Holder (taking into account the Class of such
Notes). Such Notes, in case the amounts so payable thereon shall be less than
the amount due thereon, shall be returned to the Holders thereof after proper
notation has been made thereon to show partial payment.

          Upon any Sale, whether made under the power of sale hereby given or by
virtue of judicial proceedings, the receipt of the Trustee or of the Officer
making a sale under judicial proceedings shall be a sufficient discharge to the
purchaser or purchasers at any sale for its or their purchase Money and such
purchaser or purchasers shall not be obliged to see to the application thereof.

          Any such Sale, whether under any power of sale hereby given or by
virtue of judicial proceedings, shall (x) bind the Issuer, the Co-Issuer, the
Trustee, the Noteholders and the Preferred Shareholders, shall operate to divest
all right, title and interest whatsoever, either at law or in equity, of each of
them in and to the property sold and (y) be a perpetual bar, both at law and in
equity, against each of them and their successors and assigns, and against any
and all Persons claiming through or under them.

          (d) Notwithstanding any other provision of this Indenture, none of the
Advancing Agent, the Trustee or any other Secured Party may, prior to the date
which is one year and one day (or, if longer, the applicable preference period
then in effect) after the payment in full of all Notes, institute against, or
join any other Person in instituting against, the Issuer or the Co-Issuer any
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceedings, or other proceedings under federal or State bankruptcy or similar
laws. Nothing in this Section 5.4 shall preclude, or be deemed to stop, the
Advancing Agent, the Trustee or any other Secured Party (i) from taking any
action prior to the expiration of the aforementioned one year and one day (or,
if longer, the applicable preference period then in effect) period in (A) any
case or proceeding voluntarily filed or commenced by the Issuer or the Co-Issuer
or (B) any involuntary insolvency proceeding filed or commenced by a Person
other than the Trustee, or (ii) from commencing against the Issuer or the
Co-Issuer or any of their respective properties any legal action which is not a
bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation
proceeding.

                                     -128-

<PAGE>

          Section 5.5 Preservation of Assets.

          (a) Notwithstanding anything to the contrary herein, if an Event of
Default shall have occurred and be continuing when any of the Notes are
Outstanding, the Trustee shall retain the Assets securing the Notes, collect and
cause the collection of the proceeds thereof and make and apply all payments and
deposits and maintain all accounts in respect of the Assets and the Notes in
accordance with the Priority of Payments and the provisions of Articles 10, 12
and 13 unless either:

          (i) the Trustee, pursuant to Section 5.5(c), determines that the
     anticipated proceeds of a sale or liquidation of the Assets (after
     deducting the reasonable expenses of such sale or liquidation) would be
     sufficient to discharge in full the amounts then due and unpaid on the
     Notes, Company Administrative Expenses due and payable pursuant to
     sub-clauses (3) and (26) of Section 11.1(a)(i) and sub-clauses (1) and (10)
     of Section 11.1(a)(ii), the Senior Collateral Management Fees due and
     payable pursuant to subclause (4) of Section 11.1(a)(i), the Subordinate
     Collateral Management Fees due and payable pursuant to subclause (27) of
     Section 11.1(a)(i), any amounts due and unpaid to each Hedge Counterparty,
     including without limitation, any payments (however described) due and
     payable by the Issuer under each Hedge Agreement upon a termination of such
     Hedge Agreement (including any interest that may accrue thereon) and
     amounts due and payable to the Advancing Agent and the Trustee, in its
     capacity as Backup Advancing Agent, in respect of unreimbursed Interest
     Advances and Reimbursement Interest, and a Majority of the Controlling
     Class agrees with such determination; or

          (ii) the Holders of 66 2/3% of the Aggregate Outstanding Amount of
     each Class of Notes (each voting as a separate Class) (and each Hedge
     Counterparty, unless each shall be paid in full the amounts due and unpaid,
     including, without limitation, any payments (however described) due and
     payable by the Issuer under each Hedge Agreement upon a termination of such
     Hedge Agreement (including any interest that may accrue thereon)), direct,
     subject to the provisions of this Indenture, the sale and liquidation of
     the Assets.

          The Trustee shall give written notice of the retention of the Assets
to the Issuer, the Co-Issuer, the Collateral Manager, each Hedge Counterparty
and the Rating Agencies. So long as such Event of Default is continuing, any
such retention pursuant to this Section 5.5(a) may be rescinded at any time when
the conditions specified in clause (i) or (ii) above exist.

          (b) Nothing contained in Section 5.5(a) shall be construed to require
the Trustee to sell the Assets securing the Notes if the conditions set forth in
Section 5.5(a) are not satisfied. Nothing contained in Section 5.5(a) shall be
construed to require the Trustee to preserve the Assets securing the Notes if
prohibited by applicable law.

          (c) To assist the Trustee in determining whether the condition
specified in Section 5.5(a)(i) exists, the Collateral Manager shall obtain bid
prices with respect to each Pledged Collateral Debt Security from two dealers
(Independent of the Collateral Manager and any of its Affiliates) at the time
making a market in such Pledged Collateral Debt Securities

                                     -129-

<PAGE>

(or, if there is only one market maker, then the Collateral Manager shall obtain
a bid price from that market maker or, if no market maker, from a pricing
service). The Collateral Manager shall compute the anticipated proceeds of sale
or liquidation on the basis of the lowest of such bid prices for each such
Pledged Collateral Debt Security and provide the Trustee with the results
thereof. For the purposes of determining issues relating to the Market Value of
any Pledged Collateral Debt Security and the execution of a sale or other
liquidation thereof, the Trustee may, but need not, retain at the expense of the
Issuer and rely on an opinion of an Independent investment banking firm of
national reputation in connection with a determination (notwithstanding that
such opinion will not be the basis for such determination) as to whether the
condition specified in Section 5.5(a)(i) exists.

          The Trustee shall promptly deliver to the Noteholders and each Hedge
Counterparty a report stating the results of any determination required to be
made pursuant to Section 5.5(a)(i). If requested by a Majority of the
Controlling Class, the Trustee shall make the determinations required by Section
5.5(a)(i) within 30 days of such request.

          Section 5.6 Trustee May Enforce Claims Without Possession of Notes.

          All rights of action and claims under this Indenture or under any of
the Notes may be prosecuted and enforced by the Trustee without the possession
of any of the Notes or the production thereof in any trial or other Proceeding
relating thereto, and any such action or Proceeding instituted by the Trustee
shall be brought in its own name as trustee of an express trust. Any recovery of
judgment in respect of the Notes shall be applied as set forth in Section 5.7
hereof.

          In any Proceedings brought by the Trustee (and in any Proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) in respect of the Notes, the Trustee shall be held to
represent all the Holders of the Notes.

          Section 5.7 Application of Money Collected.

          Any Money collected by the Trustee with respect to the Notes pursuant
to this Article 5 and any Money that may then be held or thereafter received by
the Trustee with respect to the Notes hereunder shall be applied subject to
Section 13.1 hereof and in accordance with the Priority of Payments set forth in
Section 11.1 hereof, at the date or dates fixed by the Trustee.

          Section 5.8 Limitation on Suits.

          No Holder of any Notes shall have any right to institute any
Proceedings, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:

          (a) such Holder has previously given to the Trustee written notice of
an Event of Default;

          (b) except as otherwise provided in Section 5.9 hereof, the Holders of
at least 25% of the then Aggregate Outstanding Amount of the Controlling Class
shall have made written request to the Trustee to institute Proceedings in
respect of such Event of Default in its

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<PAGE>

own name as Trustee hereunder and such Holders have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be incurred
in compliance with such request;

          (c) the Trustee for 30 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such Proceeding; and

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

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

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

          Notwithstanding any other provision in this Indenture (except for
Section 2.7(k) and 2.7(t)), the Holder of any Class of Note shall have the
right, which is absolute and unconditional, to receive payment of the principal
of and interest on such Class of Note as such principal, interest and other
amounts become due and payable in accordance with the Priority of Payments and
Section 13.1, and, subject to the provisions of Sections 5.4 and 5.8 to
institute Proceedings for the enforcement of any such payment, and such right
shall not be impaired without the consent of such Holder; provided, however,
that the right of such Holder to institute proceedings for the enforcement of
any such payment shall not be subject to the 25% threshold requirement set forth
in Section 5.8(b).

          Section 5.10 Restoration of Rights and Remedies.

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

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<PAGE>

          Section 5.11 Rights and Remedies Cumulative.

          No right or remedy herein conferred upon or reserved to the Trustee or
to the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

          Section 5.12 Delay or Omission Not Waiver.

          No delay or omission of the Trustee or of any Noteholder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein or a waiver of a subsequent Event of Default. Every right
and remedy given by this Article 5 or by law to the Trustee, or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Trustee, or by the Noteholders, as the case may be.

          Section 5.13 Control by the Controlling Class.

          Notwithstanding any other provision of this Indenture, if an Event of
Default shall have occurred and be continuing when any of the Notes are
Outstanding, a Majority of the Controlling Class shall have the right to cause
the institution of and direct the time, method and place of conducting any
Proceeding for any remedy available to the Trustee for exercising any trust,
right, remedy or power conferred on the Trustee in respect of the Notes;
provided that:

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

          (b) the Trustee may take any other action deemed proper by the Trustee
that is not inconsistent with such direction; provided, however, that, subject
to Section 6.1, the Trustee need not take any action that it determines might
involve it in liability (unless the Trustee has received satisfactory indemnity
against such liability as set forth below);

          (c) the Trustee shall have been provided with indemnity satisfactory
to it; and

          (d) any direction to the Trustee to undertake a Sale of the Assets
shall be by the Holders of Notes secured thereby representing 66 2/3% of the
Aggregate Outstanding Amount of each Class of Notes.

          Section 5.14 Waiver of Past Defaults.

          Prior to the time a judgment or decree for payment of the Money due
has been obtained by the Trustee, as provided in this Article 5, a Majority of
each and every Class of Notes (voting as a separate Class) may, on behalf of the
Holders of all the Notes, waive any past Default in respect of the Notes and its
consequences, except a Default:

          (a) in the payment of principal of any Note;

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          (b) in the payment of interest in respect of the Controlling Class;

          (c) in respect of a covenant or provision hereof that, under Section
8.2, cannot be modified or amended without the waiver or consent of the Holder
of each Outstanding Note and each Hedge Counterparty adversely affected thereby;

          (d) in respect of any covenant or provision hereof for the individual
protection or benefit of the Trustee (without the Trustee's express written
consent thereto); or

          (e) a default that also materially adversely affects a Hedge
Counterparty unless such Hedge Counterparty also agrees to such default.

          In the case of any such waiver, the Issuer, the Co-Issuer, the
Trustee, and the Holders of the Notes shall be restored to their respective
former positions and rights hereunder, but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto. The Trustee
shall promptly give written notice of any such waiver to the Collateral Manager,
each Noteholder and each Hedge Counterparty.

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

          Section 5.15 Undertaking for Costs.

          All parties to this Indenture agree, and each Holder of any Note by
its acceptance thereof shall be deemed to have agreed, that any court may in its
discretion require, in any suit for the enforcement of any right or remedy under
this Indenture, or in any suit against the Trustee for any action taken or
omitted by it as Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section 5.15 shall not apply to any suit instituted by (x)
the Trustee, (y) any Noteholder, or group of Noteholders, holding in the
aggregate more than 10% of the Aggregate Outstanding Amount of the Controlling
Class or (z) any Noteholder for the enforcement of the payment of the principal
of or interest on any Note or any other amount payable hereunder on or after the
Stated Maturity (or, in the case of redemption, on or after the applicable
Redemption Date).

          Section 5.16 Waiver of Stay or Extension Laws.

          Each of the Issuer and the Co-Issuer covenants (to the extent that it
may lawfully do so) that it will not at any time insist upon, plead or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants, the performance of or any remedies under this Indenture;
and each of the Issuer and the Co-Issuer (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not

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<PAGE>

hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.

          Section 5.17 Sale of Assets.

          (a) The power to effect any sale (a "Sale") of any portion of the
Assets pursuant to Sections 5.4 and 5.5 hereof shall not be exhausted by any one
or more Sales as to any portion of such Assets remaining unsold, but shall
continue unimpaired until all amounts secured by the Assets shall have been paid
or if there are insufficient proceeds to pay such amount until the entire Assets
shall have been sold. The Trustee may, upon notice to the Securityholders and
each Hedge Counterparty, and shall, upon direction of a Majority of the
Controlling Class, from time to time postpone any Sale by public announcement
made at the time and place of such Sale; provided, however, that if the Sale is
rescheduled for a date more than three Business Days after the date of the
determination by the Trustee pursuant to Section 5.5(a)(i) hereof, such Sale
shall not occur unless and until the Trustee has again made the determination
required by Section 5.5(a)(i) hereof. The Trustee hereby expressly waives its
rights to any amount fixed by law as compensation for any Sale; provided that
the Trustee shall be authorized to deduct the reasonable costs, charges and
expenses incurred by it in connection with such Sale from the proceeds thereof
notwithstanding the provisions of Section 6.7 hereof.

          (b) The Trustee may bid for and acquire any portion of the Assets in
connection with a public Sale thereof, and may pay all or part of the purchase
price by crediting against amounts owing on the Notes or other amounts secured
by the Assets, all or part of the net proceeds of such Sale after deducting the
reasonable costs, charges and expenses incurred by the Trustee in connection
with such Sale notwithstanding the provisions of Section 6.7 hereof. The Notes
need not be produced in order to complete any such Sale, or in order for the net
proceeds of such Sale to be credited against amounts owing on the Notes. The
Trustee may hold, lease, operate, manage or otherwise deal with any property so
acquired in any manner permitted by law in accordance with this Indenture.

          (c) If any portion of the Assets consists of securities issued without
registration under the Securities Act ("Unregistered Securities"), the Trustee
may seek an Opinion of Counsel, or, if no such Opinion of Counsel can be
obtained and with the consent of a Majority of the Controlling Class, seek a no
action position from the Securities and Exchange Commission or any other
relevant federal or State regulatory authorities, regarding the legality of a
public or private Sale of such Unregistered Securities. In no event shall the
Trustee be required to register Unregistered Securities under the Securities
Act.

          (d) The Trustee shall execute and deliver an appropriate instrument of
conveyance transferring its interest in any portion of the Assets in connection
with a Sale thereof. In addition, the Trustee is hereby irrevocably appointed
the agent and attorney in fact of the Issuer to transfer and convey its interest
in any portion of the Assets in connection with a Sale thereof, and to take all
action necessary to effect such Sale. No purchaser or transferee at such a Sale
shall be bound to ascertain the Trustee's authority, to inquire into the
satisfaction of any conditions precedent or to see to the application of any
Monies.

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<PAGE>

          (e) In the event of any Sale of the Assets pursuant to Section 5.4 or
Section 5.5, payments on the Notes shall be made in the order and priority set
forth in Section 11.1(a) in the same manner as if the Notes had been
accelerated.

          Section 5.18 Action on the Notes.

          The Trustee's right to seek and recover judgment on the Notes or under
this Indenture shall not be affected by the application for or obtaining of any
other relief under or with respect to this Indenture. Neither the lien of this
Indenture nor any rights or remedies of the Trustee or the Noteholders shall be
impaired by the recovery of any judgment by the Trustee against the Issuer or
the Co-Issuer or by the levy of any execution under such judgment upon any
portion of the Assets or upon any of the assets of the Issuer or the Co-Issuer.

                                    ARTICLE 6

                                   THE TRUSTEE

          Section 6.1 Certain Duties and Responsibilities.

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

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

          (ii) in the absence of manifest error, or bad faith on its part, the
     Trustee may conclusively rely, as to the truth of the statements and the
     correctness of the opinions expressed therein, upon certificates or
     opinions furnished to the Trustee and conforming to the requirements of
     this Indenture; provided, however, that in the case of any such
     certificates or opinions which by any provision hereof are specifically
     required to be furnished to the Trustee, the Trustee shall be under a duty
     to examine the same to determine whether or not they substantially conform
     to the requirements of this Indenture and shall promptly, but in any event
     within three Business Days in the case of an Officer's Certificate
     furnished by the Collateral Manager, notify the party delivering the same
     if such certificate or opinion does not conform. If a corrected form shall
     not have been delivered to the Trustee within 15 days after such notice
     from the Trustee, the Trustee shall so notify the Noteholders.

          (b) In case an Event of Default known to the Trustee has occurred and
is continuing, the Trustee shall, prior to the receipt of directions, if any,
from a Majority of the Controlling Class (or other Noteholders to the extent
provided in Article 5 hereof), exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in its exercise
as a prudent person would exercise or use under the circumstances in the conduct
of such person's own affairs.

          (c) If, in performing its duties under this Agreement, the Trustee is
required to decide between alternative courses of action, the Trustee may
request written instructions from

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<PAGE>

the Collateral Manager as to courses of action desired by it. If the Trustee
does not receive such instructions within two Business Days after it has
requested them, it may, but shall be under no duty to, take or refrain from
taking such action. The Trustee shall act in accordance with instructions
received after such two-Business Day period except to the extent it has already
taken, or committed itself to take, action inconsistent with such instructions.
The Trustee shall be entitled to rely on the advice of legal counsel and
Independent accountants in performing its duties hereunder and be deemed to have
acted in good faith if it acts in accordance with such advice.

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

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

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

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

          (iv) no provision of this Indenture shall require the Trustee to
     expend or risk its own funds or otherwise incur any financial liability in
     the performance of any of its duties hereunder, or in the exercise of any
     of its rights or powers contemplated hereunder, if it shall have reasonable
     grounds for believing that repayment of such funds or adequate indemnity
     against such risk or liability is not reasonably assured to it (if the
     amount of such funds or risk or liability does not exceed the amount
     payable to the Trustee pursuant to Section 11.1(a)(i)(3) and Section
     11.1(a)(ii)(1) net of the amounts specified in Section 6.7(a)(i), the
     Trustee shall be deemed to be reasonably assured of such repayment) unless
     such risk or liability relates to its ordinary services under this
     Indenture, except where this Indenture provides otherwise; and

          (v) the Trustee shall not be liable to the Noteholders for any action
     taken or omitted by it at the direction of the Issuer, the Co-Issuer, the
     Collateral Manager, the Controlling Class and/or a Noteholder under
     circumstances in which such direction is required or permitted by the terms
     of this Indenture.

          (e) For all purposes under this Indenture, the Trustee shall not be
deemed to have notice or knowledge of any Event of Default described in Section
5.1(d), 5.1(f), 5.1(g), 5.1(h) or 5.1(i) or any Default described in Section
5.1(e) unless a Trust Officer assigned to and working in the Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such an Event of Default or Default is received by the

                                     -136-

<PAGE>

Trustee at the Corporate Trust Office, and such notice references, as
applicable, the Notes generally, the Issuer, the Assets or this Indenture. For
purposes of determining the Trustee's responsibility and liability hereunder,
whenever reference is made in this Indenture to such an Event of Default or a
Default, such reference shall be construed to refer only to such an Event of
Default or Default of which the Trustee is deemed to have notice as described in
this Section 6.1.

          (f) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
Section 6.1(a), (b), (c), (d) and (e).

          (g) The Trustee shall, upon reasonable prior written notice to the
Trustee, permit the Issuer, the Co-Issuer, the Collateral Manager or the Rating
Agencies, during the Trustee's normal business hours, to examine all books of
account, records, reports and other papers of the Trustee relating to the Notes,
to make copies and extracts therefrom (the reasonable out-of-pocket expenses
incurred in making any such copies or extracts to be reimbursed to the Trustee
by such Person) and to discuss the Trustee's actions, as such actions relate to
the Trustee's duties with respect to the Notes, with the Trustee's officers and
employees responsible for carrying out the Trustee's duties with respect to the
Notes.

          Section 6.2 Notice of Default.

          Promptly (and in no event later than three Business Days) after the
occurrence of any Default known to the Trustee or after any declaration of
acceleration has been made or delivered to the Trustee pursuant to Section 5.2,
the Trustee shall transmit by mail to the Collateral Manager, the Irish Paying
Agent (for so long as any Notes are listed on the Irish Stock Exchange), each
Hedge Counterparty, each Rating Agency (for so long as any Class of Notes is
Outstanding and rated by such Rating Agency) and to all Holders of Notes as
their names and addresses appear on the Notes Register, notice of all Defaults
hereunder known to the Trustee, unless such Default shall have been cured or
waived.

          Section 6.3 Certain Rights of Trustee.

          Except as otherwise provided in Section 6.1:

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

          (b) any request or direction of the Issuer or the Co-Issuer mentioned
herein shall be sufficiently evidenced by an Issuer Request or Issuer Order, as
the case may be;

          (c) whenever in the administration of this Indenture the Trustee shall
(i) deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate or (ii) be required to determine the value of
any Assets or funds hereunder or the cash flows projected to be

                                     -137-

<PAGE>

received therefrom, the Trustee may, in the absence of bad faith on its part,
rely on reports of nationally recognized accountants, investment bankers or
other persons qualified to provide the information required to make such
determination, including nationally recognized dealers in securities of the type
being valued and securities quotation services;

          (d) as a condition to the taking or omitting of any action by it
hereunder, the Trustee may consult with counsel and the advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or omitted by it hereunder in good
faith and in reliance thereon;

          (e) the Trustee shall be under no obligation to exercise or to honor
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might reasonably be incurred
by it in compliance with such request or direction;

          (f) the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, note or other paper
documents, but the Trustee, in its discretion, may and, upon the written
direction of a Majority of the Controlling Class or of a Rating Agency, shall
make such further inquiry or investigation into such facts or matters as it may
see fit or as it shall be directed and shall have received indemnification
reasonably acceptable to the Trustee, and, the Trustee shall be entitled, on
reasonable prior notice to the Issuer, the Co-Issuer, the Collateral Manager and
the Servicer, to examine the books and records relating to the Notes and the
Assets, as applicable, at the premises of the Issuer, the Co-Issuer and the
Collateral Manager, personally or by agent or attorney during the Issuer's, the
Co-Issuer's or the Collateral Manager's normal business hours upon not less than
three Business Days' prior written notice; provided that the Trustee shall, and
shall cause its agents to, hold in confidence all such information, except (i)
to the extent disclosure may be required by law by any regulatory authority and
(ii) to the extent that the Trustee, in its sole judgment, may determine that
such disclosure is consistent with its obligations hereunder;

          (g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder (except with respect to its duty to make any
Interest Advance under the circumstances specified in Section 10.8) either
directly or by or through agents or attorneys; provided that the Trustee shall
not be responsible for any willful misconduct or negligence on the part of any
agent appointed and supervised, or attorney appointed, with due care by it
hereunder;

          (h) the Trustee shall not be liable for any action it takes or omits
to take in good faith that it reasonably and prudently believes to be authorized
or within its rights or powers hereunder;

          (i) the Trustee shall not be responsible for the accuracy of the books
or records of, or for any acts or omissions of, the Depository, any Transfer
Agent (other than the Trustee itself acting in that capacity), Clearstream,
Luxembourg, Euroclear, any Calculation

                                     -138-

<PAGE>

Agent (other than the Trustee itself acting in that capacity) or any Paying
Agent (other than the Trustee itself acting in that capacity); and

          (j) the Trustee shall not be liable for the actions or omissions of
the Collateral Manager; and without limiting the foregoing, the Trustee shall
not (except to the extent, if at all, otherwise expressly stated in this
Indenture) be under any obligation to monitor, evaluate or verify compliance by
the Collateral Manager with the terms hereof or the Collateral Management
Agreement, or to verify or independently determine the accuracy of information
received by it from the Collateral Manager (or from any selling institution,
agent bank, trustee or similar source) with respect to the Collateral Debt
Securities.

          Section 6.4 Not Responsible for Recitals or Issuance of Notes.

          The recitals contained herein and in the Notes, other than the
Certificate of Authentication thereon, shall be taken as the statements of the
Issuer and the Co-Issuer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representation as to the validity or
sufficiency of this Indenture (except as may be made with respect to the
validity of the Trustee's obligations hereunder), the Assets or the Notes. The
Trustee shall not be accountable for the use or application by the Issuer or the
Co-Issuer of the Notes or the proceeds thereof or any Money paid to the Issuer
or the Co-Issuer pursuant to the provisions hereof.

          Section 6.5 May Hold Notes.

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

          Section 6.6 Money Held in Trust.

          Money held by the Trustee hereunder shall be held in trust to the
extent required herein. The Trustee shall be under no liability for interest on
any Money received by it hereunder except as otherwise agreed upon with the
Issuer and except to the extent of income or other gain on investments which are
deposits in or certificates of deposit of the Trustee in its commercial capacity
and income or other gain actually received by the Trustee on Eligible
Investments.

          Section 6.7 Compensation and Reimbursement.

          (a) The Issuer agrees:

          (i) to pay the Trustee on each Payment Date, in accordance with the
     Priority of Payments, the fee specified in the Trustee Fee Proposal as
     compensation for all services rendered by it hereunder (which compensation
     shall not be limited by any provision of law in regard to the compensation
     of a trustee of an express trust);

          (ii) except as otherwise expressly provided herein, to reimburse the
     Trustee (subject to any written agreement between the Issuer and the
     Trustee) in a timely manner

                                      -139-
<PAGE>

     upon its request for all reasonable expenses, disbursements and advances
     (except as otherwise provided herein with respect to Interest Advances)
     incurred or made by the Trustee in accordance with any provision of this
     Indenture (including securities transaction charges to the extent not
     waived due to the Trustee's receipt of payments from a financial
     institution with respect to certain Eligible Investments, as specified by
     the Collateral Manager and the reasonable compensation and expenses and
     disbursements of its agents and legal counsel and of any accounting firm or
     investment banking firm employed by the Trustee pursuant to Section 5.4,
     5.5, 10.10 or 10.12 hereof, except any such expense, disbursement or
     advance as may be attributable to its negligence, willful misconduct or bad
     faith);

          (iii) to indemnify the Trustee and its Officers, directors, employees
     and agents for, and to hold them harmless against, any loss, liability or
     expense incurred without negligence, willful misconduct or bad faith on
     their part, arising out of or in connection with the acceptance or
     administration of this trust, including the costs and expenses of defending
     themselves against any claim or liability in connection with the exercise
     or performance of any of their powers or duties hereunder; and

          (iv) to pay the Trustee reasonable additional compensation together
     with its expenses (including reasonable counsel fees) for any collection
     action taken pursuant to Section 6.13 hereof.

          (b) The Issuer may remit payment for such fees and expenses to the
Trustee or, in the absence thereof, the Trustee may from time to time deduct
payment of its fees and expenses hereunder from Monies on deposit in the Payment
Account in accordance with the Priority of Payments.

          (c) The Trustee, in its capacity as Trustee, Paying Agent, Calculation
Agent, Transfer Agent, Custodial Securities Intermediary, Backup Advancing Agent
and Notes Registrar, hereby agrees not to cause the filing of a petition in
bankruptcy against the Issuer or the Co-Issuer until at least one year and one
day (or, if longer, the applicable preference period then in effect) after the
payment in full of all Notes issued under this Indenture. This provision shall
survive termination of this Agreement.

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

          Fees shall be accrued on the actual number of days in the related
Interest Accrual Period. The Trustee shall receive amounts pursuant to this
Section 6.7 and Section 11.1(a) only to the extent that such payment is made in
accordance with the Priority of Payments and the

                                     -140-

<PAGE>

failure to pay such amounts to the Trustee will not, by itself, constitute an
Event of Default. Subject to Section 6.9, the Trustee shall continue to serve as
Trustee under this Indenture notwithstanding the fact that the Trustee shall not
have received amounts due to it hereunder. No direction by a Majority of the
Controlling Class shall affect the right of the Trustee to collect amounts owed
to it under this Indenture.

          If on any Payment Date when any amount shall be payable to the Trustee
pursuant to this Indenture is not paid because there are insufficient funds
available for the payment thereof, all or any portion of such amount not so paid
shall be deferred and payable on any later Payment Date on which a fee shall be
payable and sufficient funds are available therefor in accordance with the
Priority of Payments.

          Section 6.8 Corporate Trustee Required; Eligibility.

          There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the United States of
America or of any State thereof, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$200,000,000, subject to supervision or examination by federal or State
authority, having a rating of at least "A2" by Moody's, a rating of at least
"BBB" by Fitch and a long-term senior unsecured debt rating of at least "A+" and
a short-term debt rating of at least "A-1" by S&P and having an office within
the United States. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section 6.8, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.8, it shall resign immediately in the
manner and with the effect hereinafter specified in this Article 6.

          Section 6.9 Resignation and Removal; Appointment of Successor.

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

          (b) The Trustee may resign at any time by giving written notice
thereof to the Issuer, the Co-Issuer, the Collateral Manager, each Hedge
Counterparty, the Noteholders and each Rating Agency. Upon receiving such notice
of resignation, the Issuer and the Co-Issuer shall promptly appoint a successor
trustee or trustees by written instrument, in duplicate, executed by an
Authorized Officer of the Issuer and an Authorized Officer of the Co-Issuer, one
copy of which shall be delivered to the Trustee so resigning and one copy to the
successor Trustee or Trustees, together with a copy to each Noteholder, each
Hedge Counterparty and the Collateral Manager; provided that such successor
Trustee shall be appointed only upon the written consent of a Majority of the
Notes (or if there are no Notes Outstanding, a Majority of the Preferred Shares)
or, at any time when an Event of Default shall have occurred and be continuing
or when a successor Trustee has been appointed pursuant to Section 6.10, by Act
of a Majority of the Controlling Class. If no successor Trustee shall have been
appointed and an instrument of acceptance by a successor Trustee shall not have
been delivered to the Trustee

                                     -141-

<PAGE>

within 30 days after the giving of such notice of resignation, the resigning
Trustee, the Controlling Class of Notes or any Holder of a Note, on behalf of
himself and all others similarly situated, may petition any court of competent
jurisdiction for the appointment of a successor Trustee.

          (c) The Trustee may be removed at any time by Act of 66-2/3% of the
Notes (or if there are no Notes Outstanding, a Majority of the Preferred Shares)
or, at any time when an Event of Default shall have occurred and be continuing
or when a successor Trustee has been appointed pursuant to Section 6.10, by Act
of the Controlling Class, upon written notice delivered to the Trustee and to
the Issuer and the Co-Issuer.

          (d) If at any time:

               (i) the Trustee shall cease to be eligible under Section 6.8 and
          shall fail to resign after written request therefor by the Issuer, the
          Co-Issuer, or by any Holder; or

               (ii) the Trustee shall become incapable of acting or there shall
          be instituted any proceeding pursuant to which it could be adjudged as
          bankrupt or insolvent or a receiver or liquidator of the Trustee or of
          its property shall be appointed or any public officer shall take
          charge or control of the Trustee or of its property or affairs for the
          purpose of rehabilitation, conservation or liquidation;

then, in any such case (subject to Section 6.9(a)), (a) the Issuer or the
Co-Issuer, by Issuer Order, subject to the written consent of each Hedge
Counterparty, may remove the Trustee or (b) subject to Section 5.15, a Majority
of the Controlling Class or any Holder may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.

          (e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any reason,
the Issuer and the Co-Issuer, by Issuer Order, subject to the written consent of
each Hedge Counterparty and the Collateral Manager, shall promptly appoint a
successor Trustee. If the Issuer and the Co-Issuer shall fail to appoint a
successor Trustee within 60 days after such resignation, removal or incapability
or the occurrence of such vacancy, a successor Trustee may be appointed by Act
of a Majority of the Controlling Class delivered to the Issuer, the Co-Issuer,
the Collateral Manager and the retiring Trustee. The successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede any successor Trustee proposed by the Issuer and
the Co-Issuer. If no successor Trustee shall have been so appointed by the
Issuer and the Co-Issuer or a Majority of the Controlling Class and shall have
accepted appointment in the manner hereinafter provided, subject to Section
5.15, each Hedge Counterparty, the Controlling Class or any Holder may, on
behalf of itself or himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee.

          (f) The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Trustee and each appointment of a successor
Trustee by mailing written notice of such event by first class mail, postage
prepaid, to each Rating Agency, each

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Hedge Counterparty, the Preferred Shares Paying Agent, the Collateral Manager
and to the Holders of the Notes as their names and addresses appear in the Notes
Register. Each notice shall include the name of the successor Trustee and the
address of its Corporate Trust Office. If the Issuer or the Co-Issuer fail to
mail such notice within 10 days after acceptance of appointment by the successor
Trustee, the successor Trustee shall cause such notice to be given at the
expense of the Issuer or the Co-Issuer, as the case may be.

          Section 6.10 Acceptance of Appointment by Successor.

          Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Issuer, the Co-Issuer, each Hedge Counterparty, the
Collateral Manager, the Servicer and the retiring Trustee an instrument
accepting such appointment. Upon delivery of the required instruments, the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts, duties and obligations of the
retiring Trustee; but, on request of the Issuer and the Co-Issuer or a Majority
of the Controlling Class or the Collateral Manager or the successor Trustee,
such retiring Trustee shall, upon payment of its charges then unpaid, execute
and deliver an instrument transferring to such successor Trustee all the rights,
powers and trusts of the retiring Trustee, and shall duly assign, transfer and
deliver to such successor Trustee all property and Money held by such retiring
Trustee hereunder, subject nevertheless to its lien, if any, provided for in
Section 6.7(d). Upon request of any such successor Trustee, the Issuer and the
Co-Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Trustee all such rights, powers and
trusts.

          No successor Trustee shall accept its appointment unless at the time
of such acceptance such successor shall be qualified and eligible under this
Article 6 and (a) such successor shall have long term debt rated within the four
highest rating categories by each Rating Agency, and (b) each Rating Agency has
confirmed in writing that the employment of such successor would not adversely
affect the rating on the Notes.

          Section 6.11 Merger, Conversion, Consolidation or Succession to
Business of Trustee.

          Any corporation or banking association into which the Trustee may be
merged or converted or with which it may be consolidated, or any corporation or
banking association resulting from any merger, conversion or consolidation to
which the Trustee shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder; provided such corporation shall be otherwise
qualified and eligible under this Article 6, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any of the Notes have been authenticated, but not delivered, by the Trustee then
in office, any successor by merger, conversion or consolidation to such
authenticating Trustee may adopt such authentication and deliver the Notes so
authenticated with the same effect as if such successor Trustee had itself
authenticated such Notes.

                                     -143-

<PAGE>

          Section 6.12 Co-Trustees and Separate Trustee.

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

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

          Should any written instrument from the Issuer or the Co-Issuer be
required by any co-trustee, so appointed, more fully confirming to such
co-trustee such property, title, right or power, any and all such instruments
shall, on request, be executed, acknowledged and delivered by the Issuer or the
Co-Issuer, as the case may be. The Issuer agrees to pay (but only from and to
the extent of the Assets) to the extent funds are available therefor under
subclauses (3) and (26) of Section 11.1(a)(i), for any reasonable fees and
expenses in connection with such appointment.

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

          (a) the Notes shall be authenticated and delivered and all rights,
powers, duties and obligations hereunder in respect of the custody of
securities, Cash and other personal property held by, or required to be
deposited or pledged with, the Trustee hereunder, shall be exercised solely by
the Trustee;

          (b) the rights, powers, duties and obligations hereby conferred or
imposed upon the Trustee in respect of any property covered by the appointment
of a co-trustee shall be conferred or imposed upon and exercised or performed by
the Trustee or by the Trustee and such co-trustee jointly in the case of the
appointment of a co-trustee as shall be provided in the instrument appointing
such co-trustee, except to the extent that under any law of any jurisdiction in
which any particular act is to be performed, the Trustee shall be incompetent or
unqualified to perform such act, in which event such rights, powers, duties and
obligations shall be exercised and performed by a co-trustee;

          (c) the Trustee at any time, by an instrument in writing executed by
it, with the concurrence of the Issuer and the Co-Issuer evidenced by an Issuer
Order, may accept the resignation of, or remove, any co-trustee appointed under
this Section 6.12, and in case an Event of Default has occurred and is
continuing, the Trustee shall have the power to accept the resignation of, or
remove, any such co-trustee without the concurrence of the Issuer or the
Co-

                                     -144-

<PAGE>

Issuer. A successor to any co-trustee so resigned or removed may be appointed in
the manner provided in this Section 6.12;

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

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

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

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

          In the event that in any month the Trustee shall not have received a
Scheduled Distribution, (a) the Trustee shall promptly notify the Issuer and the
Collateral Manager in writing and (b) unless within three Business Days (or the
end of the applicable grace period for such payment, if longer) after such
notice such payment shall have been received by the Trustee, or the Issuer, in
its absolute discretion (but only to the extent permitted by Section 10.2(a)),
shall have made provision for such payment satisfactory to the Trustee in
accordance with Section 10.2(a), the Trustee shall request the obligor of such
Pledged Obligation, the trustee under the related Underlying Instrument or
paying agent designated by either of them, as the case may be, to make such
payment as soon as practicable after such request but in no event later than
three Business Days after the date of such request. In the event that such
payment is not made within such time period, the Trustee, subject to the
provisions of clause (iv) of Section 6.1(d), shall take such action as the
Collateral Manager reasonably shall direct in writing. Any such action shall be
without prejudice to any right to claim a Default or Event of Default under this
Indenture. In the event that the Issuer or the Collateral Manager requests a
release of a Pledged Obligation in connection with any such action under the
Collateral Management Agreement, such release shall be subject to Section 10.11
and Article 12 of this Indenture, as the case may be. Notwithstanding any other
provision hereof, the Trustee shall deliver to the Issuer or its designee any
payment with respect to any Pledged Obligation received after the Due Date
thereof to the extent the Issuer previously made provisions for such payment
satisfactory to the Trustee in accordance with this Section 6.13 and such
payment shall not be deemed part of the Assets.

          Section 6.14 Representations and Warranties of the Trustee.

          The Trustee represents and warrants that:

          (a) the Trustee is a national banking association with trust powers,
duly and validly existing under the laws of the United States of America, with
corporate power and authority to execute, deliver and perform its obligations
under this Indenture, and is duly eligible and qualified to act as trustee under
this Indenture;

          (b) this Indenture has been duly authorized, executed and delivered by
the Trustee and constitutes the valid and binding obligation of the Trustee,
enforceable against it in accordance with its terms except (i) as limited by
bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other

                                     -145-

<PAGE>

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

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

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

          (e) there are no proceedings pending or, to the best knowledge of the
Trustee, threatened against the Trustee before any Federal, state or other
governmental agency, authority, administrator or regulatory body, arbitrator,
court or other tribunal, foreign or domestic, which could have a material
adverse effect on the Pledged Obligations or the performance by the Trustee of
its obligations under this Indenture.

          Section 6.15 Requests for Consents.

          In the event that the Trustee receives written notice of any proposed
amendment, consent or waiver under the Underlying Instruments of any Collateral
Debt Security (before or after any default) or in the event any action is
required to be taken in respect to an Underlying Instrument, the Trustee shall
promptly contact the Issuer and the Collateral Manager. The Collateral Manager
may, on behalf of the Issuer, instruct the Trustee pursuant to an Issuer Order
to, and the Trustee shall, with respect to which a Collateral Debt Security as
to which a consent or waiver under the Underlying Instruments of such Collateral
Debt Security (before or after any default) has been proposed or with respect to
action required to be taken in respect of an Underlying Instrument, give
consent, grant a waiver, vote or exercise any or all other rights or remedies
with respect to any such Collateral Debt Security in accordance with such Issuer
Order. In the absence of any instruction from the Collateral Manager, the
Trustee shall not engage in any vote or take any action with respect to such a
Collateral Debt Security.

                                    ARTICLE 7

                                    COVENANTS

                                     -146-

<PAGE>

          Section 7.1 Payment of Principal and Interest.

          The Issuer and the Co-Issuer shall duly and punctually pay the
principal of and interest on each Class of Notes in accordance with the terms of
such Notes and this Indenture. Amounts properly withheld under the Code or other
applicable law by any Person from a payment to any Noteholder of interest and/or
principal shall be considered as having been paid by the Issuer and the
Co-Issuer, and, with respect to the Preferred Shares, by the Issuer, to such
Preferred Shareholder for all purposes of this Indenture.

          The Trustee shall, unless prevented from doing so for reasons beyond
its reasonable control, give notice to each Securityholder of any such
withholding requirement no later than 10 days prior to the related Payment Date
from which amounts are required (as directed by the Issuer (or the Collateral
Manager on behalf of the Issuer)) to be withheld, provided that, despite the
failure of the Trustee to give such notice, amounts withheld pursuant to
applicable tax laws shall be considered as having been paid by the Issuer and
the Co-Issuer, as provided above.

          Section 7.2 Maintenance of Office or Agency.

          The Issuer and the Co-Issuer hereby appoint the Trustee as a Paying
Agent for the payment of principal of and interest on the Notes and where Notes
may be surrendered for registration of transfer or exchange and the Issuer and
the Co-Issuer hereby appoint CT Corporation System, 111 Eighth Avenue, 13th
Floor, New York, New York 10011, as their agent where notices and demands to or
upon the Co-Issuer in respect of the Notes or this Indenture, or the Issuer in
respect of the Notes or this Indenture, may be served.

          The Issuer and the Co-Issuer hereby appoint the Irish Paying Agent as
a Paying Agent for the payment of principal of and interest on the Notes and to
act as their agent where notices and demands to or upon the Issuer or the
Co-Issuer in respect of the Notes or this Indenture may be served and where
Notes may be surrendered for registration of transfer or exchange.

          The Issuer or the Co-Issuer may at any time and from time to time vary
or terminate the appointment of any such agent or appoint any additional agents
for any or all of such purposes; provided, however, that the Issuer and the
Co-Issuer, if applicable, will maintain in the Borough of Manhattan, The City of
New York, an office or agency where notices and demands to or upon the Issuer
and the Co-Issuer in respect of the Notes and this Indenture may be served, and,
subject to any laws or regulations applicable thereto, an office or agency
outside of the United States where Notes may be presented and surrendered for
payment; provided, further, that no paying agent shall be appointed in a
jurisdiction which subjects payments on the Notes to withholding tax. The Issuer
or the Co-Issuer, as the case may be, shall give prompt written notice to the
Trustee, each Rating Agency and the Noteholders of the appointment or
termination of any such agent and of the location and any change in the location
of any such office or agency.

          If at any time the Issuer and the Co-Issuer, if applicable, shall fail
to maintain any such required office or agency in the Borough of Manhattan, The
City of New York, or outside

                                     -147-

<PAGE>

the United States, or shall fail to furnish the Trustee with the address
thereof, presentations and surrenders may be made (subject to the limitations
described in the preceding paragraph) at and notices and demands may be served
on the Issuer and the Co-Issuer, and Notes may be presented and surrendered for
payment to the appropriate Paying Agent at its main office and the Issuer and
the Co-Issuer hereby appoint the same as their agent to receive such respective
presentations, surrenders, notices and demands.

          Section 7.3 Money for Note Payments to be Held in Trust.

          All payments of amounts due and payable with respect to any Notes that
are to be made from amounts withdrawn from the Payment Account shall be made on
behalf of the Issuer and the Co-Issuer by the Trustee or a Paying Agent (in each
case, from and to the extent of available funds in the Payment Account and
subject to the Priority of Payments) with respect to payments on the Notes.

          When the Paying Agent is not also the Notes Registrar, the Issuer and
the Co-Issuer shall furnish, or cause the Notes Registrar to furnish, no later
than the fifth calendar day after each Record Date a list, if necessary, in such
form as such Paying Agent may reasonably request, of the names and addresses of
the Holders of Notes and of the certificate numbers of individual Notes held by
each such Holder.

          Whenever the Paying Agent is not also the Trustee, the Issuer, the
Co-Issuer, and such Paying Agent shall, on or before the Business Day next
preceding each Payment Date or Redemption Date, as the case may be, direct the
Trustee to deposit on such Payment Date with such Paying Agent, if necessary, an
aggregate sum sufficient to pay the amounts then becoming due pursuant to the
terms of this Indenture (to the extent funds are then available for such purpose
in the Payment Account, and subject to the Priority of Payments), such sum to be
held for the benefit of the Persons entitled thereto and (unless such Paying
Agent is the Trustee) the Issuer and the Co-Issuer shall promptly notify the
Trustee of its action or failure so to act. Any Monies deposited with a Paying
Agent (other than the Trustee) in excess of an amount sufficient to pay the
amounts then becoming due on the Notes with respect to which such deposit was
made shall be paid over by such Paying Agent to the Trustee for application in
accordance with Article 11. Any such Paying Agent shall be deemed to agree by
assuming such role not to cause the filing of a petition in bankruptcy against
the Issuer or the Co-Issuer for the non-payment to the Paying Agent of any
amounts payable thereto until at least one year and one day (or, if longer, the
applicable preference period then in effect) after the payment in full of all
Notes issued under this Indenture.

          The initial Paying Agent shall be as set forth in Section 7.2. Any
additional or successor Paying Agents shall be appointed by Issuer Order of the
Issuer and Issuer Order of the Co-Issuer with written notice thereof to the
Trustee; provided, however, that so long as any Class of the Notes are rated by
a Rating Agency and with respect to any additional or successor Paying Agent for
the Notes, either (i) such Paying Agent has a long-term debt rating of "Aa3" or
higher by Moody's, "AA-"or higher by Fitch and "AA-" or higher by S&P or a
short-term debt rating of "P-1" by Moody's, "F1+" by Fitch and "A1+" by S&P or
(ii) each Rating Agency confirms that employing such Paying Agent shall not
adversely affect the then-current ratings of the Notes. In the event that such
successor Paying Agent ceases to have a long-term debt rating of "Aa3" or

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<PAGE>

higher by Moody's, "AA-"or higher by Fitch or "AA-" or higher by S&P or a
short-term debt rating of at least "P-1" by Moody's, "F1+" by Fitch and "A-1+"
by S&P, the Issuer and the Co-Issuer shall promptly remove such Paying Agent and
appoint a successor Paying Agent. The Issuer and the Co-Issuer shall not appoint
any Paying Agent that is not, at the time of such appointment, a depository
institution or trust company subject to supervision and examination by federal
and/or state and/or national banking authorities. The Issuer and the Co-Issuer
shall cause the Paying Agent other than the Trustee to execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee (and if the Trustee acts as Paying Agent, it hereby so agrees), subject
to the provisions of this Section 7.3, that such Paying Agent will:

          (a) allocate all sums received for payment to the Holders of Notes for
which it acts as Paying Agent on each Payment Date and Redemption Date among
such Holders in the proportion specified in the applicable report or Redemption
Date Statement, as the case may be, in each case to the extent permitted by
applicable law;

          (b) hold all sums held by it for the payment of amounts due with
respect to the Notes for the benefit of the Persons entitled thereto until such
sums shall be paid to such Persons or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided;

          (c) if such Paying Agent is not the Trustee, immediately resign as a
Paying Agent and forthwith pay to the Trustee all sums held by it for the
payment of Notes if at any time it ceases to meet the standards set forth above
required to be met by a Paying Agent at the time of its appointment;

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

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

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

          Except as otherwise required by applicable law, any Money deposited
with the Trustee in trust or deposited with the Paying Agent for the payment of
the principal of or interest on any Note and remaining unclaimed for two years
after such principal or interest has become due and payable shall be paid to the
Issuer; and the Holder of such Note shall thereafter, as an unsecured general
creditor, look only to the Issuer for payment of such amounts and all liability
of the Trustee or the Paying Agent with respect to such Money (but only to the
extent of the

                                     -149-

<PAGE>

amounts so paid to the Issuer or the Co-Issuer, as applicable) shall thereupon
cease; provided, however, that the Irish Paying Agent, before being required to
make any such payment, shall at the expense of the Issuer cause to be published
once, in a newspaper published in the English language, customarily published on
each Business Day and of general circulation in Dublin, Ireland, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining shall be repaid to the Issuer. The Trustee
or the Paying Agent, before being required to make any such release of payment,
may, but shall not be required to, adopt and employ, at the expense of the
Issuer or the Co-Issuer, as the case may be, any reasonable means of
notification of such release of payment, including, but not limited to, mailing
notice of such release to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in Monies due and
payable but not claimed is determinable from the records of the Paying Agent, at
the last address of record of each such Holder.

          Section 7.4 Existence of the Issuer and Co-Issuer.

          (a) So long as any Note is Outstanding, the Issuer shall, to the
maximum extent permitted by applicable law, maintain in full force and effect
its existence and rights as an exempted company incorporated with limited
liability under the laws of the Cayman Islands and shall obtain and preserve its
qualification to do business as a foreign limited liability company in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture, the Notes or any of the
Assets; provided that the Issuer shall be entitled to change its jurisdiction of
registration from the Cayman Islands to any other jurisdiction reasonably
selected by the Issuer so long as (i) such change is not disadvantageous in any
material respect to the Holders of the Notes or the Preferred Shares or any
Hedge Counterparty, (ii) written notice of such change shall have been given by
the Trustee to the Holders of the Notes or Preferred Shares, the Preferred
Shares Paying Agent, each Hedge Counterparty and each Rating Agency 15 Business
Days prior to such change and (iii) on or prior to the 15th Business Day
following such notice the Trustee shall not have received written notice from a
Majority of the Controlling Class or a Majority of the Preferred Shares or any
Hedge Counterparty objecting to such change. So long as any Note is Outstanding,
the Issuer will maintain at all times at least one director who is Independent
of the Collateral Manager and its Affiliates.

          (b) So long as any Note is Outstanding, the Co-Issuer shall maintain
in full force and effect its existence and rights as a limited liability company
organized under the laws of Delaware and shall obtain and preserve its
qualification to do business as a foreign limited liability company in each
jurisdiction in which such qualifications are or shall be necessary to protect
the validity and enforceability of this Indenture or the Notes; provided,
however, that the Co-Issuer shall be entitled to change its jurisdiction of
formation from Delaware to any other jurisdiction reasonably selected by the
Co-Issuer so long as (i) such change is not disadvantageous in any material
respect to the Holders of the Notes or any Hedge Counterparty, (ii) written
notice of such change shall have been given by the Trustee to the Holders of the
Notes, each Hedge Counterparty and each Rating Agency 15 Business Days prior to
such change and (iii) on or prior to the 15th Business Day following such notice
the Trustee shall not have received written notice from a Majority of the
Controlling Class or any Hedge Counterparty objecting to such change. So long as
any Note is Outstanding, the Co-

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<PAGE>

Issuer shall maintain at all times at least one manager who is Independent of
the Collateral Manager and its Affiliates.

          (c) So long as any Note is Outstanding, the Issuer shall ensure that
all corporate or other formalities regarding its existence are followed
(including correcting any known misunderstanding regarding its separate
existence). So long as any Note is Outstanding, the Issuer shall not take any
action or conduct its affairs in a manner that is likely to result in its
separate existence being ignored or its assets and liabilities being
substantively consolidated with any other Person in a bankruptcy, reorganization
or other insolvency proceeding. So long as any Note is Outstanding, the Issuer
shall maintain and implement administrative and operating procedures reasonably
necessary in the performance of the Issuer's obligations hereunder, and the
Issuer shall at all times keep and maintain, or cause to be kept and maintained,
separate books, records, accounts and other information customarily maintained
for the performance of the Issuer's obligations hereunder. Without limiting the
foregoing, so long as any Note is Outstanding, (i) the Issuer shall (A) pay its
own liabilities only out of its own funds and (B) use separate stationery,
invoices and checks and (ii) the Issuer shall not (A) have any subsidiaries, (B)
have any employees, (C) engage in any transaction with any shareholder that is
not permitted under the terms of the Collateral Management Agreement, (D) pay
dividends other than in accordance with the terms of this Indenture and the
Preferred Shares Paying Agency Agreement or (E) conduct business under an
assumed name (i.e., no "DBAs"); provided that the foregoing shall not prohibit
the Issuer from entering into the transactions contemplated by the
Administration Agreement with the Company Administrator and the Preferred Shares
Paying Agency Agreement with the Shares Registrar.

          (d) So long as any Note is Outstanding, the Co-Issuer shall ensure
that all limited liability company or other formalities regarding its existence)
are followed, as well as correcting any known misunderstanding regarding its
separate existence. The Co-Issuer shall not take any action or conduct its
affairs in a manner, that is likely to result in its separate existence being
ignored or its assets and liabilities being substantively consolidated with any
other Person in a bankruptcy, reorganization or other insolvency proceeding. The
Co-Issuer shall maintain and implement administrative and operating procedures
reasonably necessary in the performance of the Co-Issuer's obligations
hereunder, and the Co-Issuer shall at all times keep and maintain, or cause to
be kept and maintained, books, records, accounts and other information
customarily maintained for the performance of the Co- Issuer's obligations
hereunder. Without limiting the foregoing, the Co-Issuer shall not (A) have any
subsidiaries, (B) have any employees (other than its managers), (C) join in any
transaction with any member that is not permitted under the terms of the
Collateral Management Agreement or (D) pay dividends other than in accordance
with the terms of this Indenture.

          Section 7.5 Protection of Assets.

          (a) The Trustee, on behalf of the Issuer, pursuant to any Opinion of
Counsel received pursuant to Section 7.5(d) shall execute and deliver all such
Financing Statements, continuation statements, instruments of further assurance
and other instruments, and shall take such other action as may be necessary or
advisable or desirable to secure the rights and remedies of the Holders and each
Hedge Counterparty hereunder and to:

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<PAGE>

          (i) Grant more effectively all or any portion of the Assets;

          (ii) maintain or preserve the lien (and the priority thereof) of this
     Indenture or to carry out more effectively the purposes hereof;

          (iii) perfect, publish notice of or protect the validity of any Grant
     made or to be made by this Indenture (including, without limitation, any
     and all actions necessary or desirable as a result of changes in law or
     regulations);

          (iv) enforce any of the Pledged Obligations or other instruments or
     property included in the Assets;

          (v) preserve and defend title to the Assets and the rights of the
     Trustee, the Holders of the Notes and each Hedge Counterparty in the Assets
     against the claims of all persons and parties; and

          (vi) pursuant to Sections 11.1(a)(i)(1) and 11.1(a)(ii)(1), pay or
     cause to be paid any and all taxes levied or assessed upon all or any part
     of the Assets.

          The Issuer hereby designates the Trustee, its agent and
attorney-in-fact to execute any Financing Statement, continuation statement or
other instrument required pursuant to this Section 7.5. The Trustee agrees that
it will from time to time execute and cause to be filed Financing Statements and
continuation statements (it being understood that the Trustee shall be entitled
to rely upon an Opinion of Counsel described in Section 7.5(d), at the expense
of the Issuer, as to the need to file such Financing Statements and continuation
statements, the dates by which such filings are required to be made and the
jurisdictions in which such filings are required to be made).

          (b) The Trustee shall not (except in accordance with Section 10.11(a),
(b) or (c) and except for payments, deliveries and distributions otherwise
expressly permitted under this Indenture) (i) remove any portion of the Assets
that consists of Cash or is evidenced by an instrument, certificate or other
writing (A) from the jurisdiction in which it was held at the date as described
in the Opinion of Counsel delivered at the Closing Date pursuant to Section
3.1(d) or (B) from the possession of the Person who held it on such date or (ii)
cause or permit the Custodial Account or the Custodial Securities Intermediary
to be located in a different jurisdiction from the jurisdiction in which such
securities accounts and Custodial Securities Intermediary were located on the
Closing Date, unless the Trustee shall have first received an Opinion of Counsel
to the effect that the lien and security interest created by this Indenture with
respect to such property will continue to be maintained after giving effect to
such action or actions.

          (c) The Issuer shall pay or cause to be paid taxes, if any, levied on
account of the beneficial ownership by the Issuer of any Pledged Obligations
that secure the Notes.

          (d) For so long as the Notes are Outstanding, (i) on December 31, 2010
and (ii) every 60 months after such date, the Issuer (or the Collateral Manager
on behalf of the Issuer) shall deliver to the Trustee for the benefit of the
Trustee, the Collateral Manager, each Hedge Counterparty and each Rating Agency,
at the expense of the Issuer, an Opinion of

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Counsel stating what is required, in the opinion of such counsel, as of the date
of such opinion, to maintain the lien and security interest created by this
Indenture with respect to the Assets, and confirming the matters set forth in
the Opinion of Counsel, furnished pursuant to Section 3.1(d), with regard to the
perfection and priority of such security interest (and such Opinion may likewise
be subject to qualifications and assumptions similar to those set forth in the
Opinion delivered pursuant to Section 3.1(d)).

          Section 7.6 Notice of Any Amendments.

          Each of the Issuer and the Co-Issuer shall give notice to the Rating
Agencies of, and satisfy the Rating Agency Condition with respect to, any
amendments to its Governing Documents.

          Section 7.7 Performance of Obligations.

          (a) Each of the Issuer and the Co-Issuer shall not take any action,
and will use its best effort not to permit any action to be taken by others,
that would release any Person from any of such Person's covenants or obligations
under any instrument included in the Assets, except in the case of enforcement
action taken with respect to any Defaulted Security in accordance with the
provisions hereof and as otherwise required hereby.

          (b) The Issuer or the Co-Issuer may, with the prior written consent of
the Majority of the Notes (or if there are no Notes Outstanding, a Majority of
the Preferred Shares), contract with other Persons, including the Collateral
Manager or the Trustee, for the performance of actions and obligations to be
performed by the Issuer or the Co-Issuer, as the case may be, hereunder by such
Persons and the performance of the actions and other obligations with respect to
the Assets of the nature set forth in the Collateral Management Agreement by the
Collateral Manager. Notwithstanding any such arrangement, the Issuer or the
Co-Issuer, as the case may be, shall remain primarily liable with respect
thereto. In the event of such contract, the performance of such actions and
obligations by such Persons shall be deemed to be performance of such actions
and obligations by the Issuer or the Co-Issuer; and the Issuer or the Co-Issuer
shall punctually perform, and use its best efforts to cause the Collateral
Manager or such other Person to perform, all of their obligations and agreements
contained in the Collateral Management Agreement or such other agreement.

          Section 7.8 Negative Covenants.

          (a) The Issuer and the Co-Issuer shall not:

          (i) sell, assign, participate, transfer, exchange or otherwise dispose
     of, or pledge, mortgage, hypothecate or otherwise encumber (or permit such
     to occur or suffer such to exist), any part of the Assets, except as
     otherwise expressly permitted by this Indenture or the Collateral
     Management Agreement;

          (ii) claim any credit on, make any deduction from, or dispute the
     enforceability of, the payment of the principal or interest payable in
     respect of the Notes (other than amounts required to be paid, deducted or
     withheld in accordance with any applicable law or regulation of any
     governmental authority) or assert any claim against

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     any present or future Noteholder by reason of the payment of any taxes
     levied or assessed upon any part of the Assets;

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

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

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

          (vi) amend the Preferred Shares Paying Agency Agreement, except
     pursuant to the terms thereof;

          (vii) dissolve or liquidate in whole or in part, except as permitted
     hereunder;

          (viii) make or incur any capital expenditures, except as reasonably
     required to perform its functions in accordance with the terms of this
     Indenture;

          (ix) become liable in any way, whether directly or by assignment or as
     a guarantor or other surety, for the obligations of the lessee under any
     lease, hire any employees or pay any dividends to its shareholders, except
     with respect to the Preferred Shares in accordance with the Priority of
     Payments;

          (x) maintain any bank accounts other than the Accounts and the bank
     account in the Cayman Islands in which (inter alia) the proceeds of the
     Issuer's issued share capital and the transaction fees paid to the Issuer
     for agreeing to issue the Securities will be kept;

          (xi) conduct business under an assumed name, or change its name
     without first delivering at least 30 days' prior written notice to the
     Trustee, the Noteholders and the Rating Agencies, each Hedge Counterparty
     and an Opinion of Counsel to the effect that such name change will not
     adversely affect the security interest hereunder of the Trustee or the
     Secured Parties;

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<PAGE>

          (xii) engage in any activity that would cause the Issuer to be subject
     to U.S. Federal, state or local income or franchise tax; or

          (xiii) except for any agreements involving the purchase and sale of
     Collateral Debt Securities having customary purchase or sale terms and
     documented with customary loan trading documentation, enter into any
     agreements unless such agreements contain "non-petition" and "limited
     recourse" provisions.

          (b) Neither the Issuer nor the Trustee shall sell, transfer, exchange
or otherwise dispose of Assets, or enter into or engage in any business with
respect to any part of the Assets, except as expressly permitted or required by
this Indenture or the Collateral Management Agreement.

          (c) The Co-Issuer shall not invest any of its assets in "securities"
(as such term is defined in the Investment Company Act) and shall keep all of
the Co-Issuer's assets in Cash.

          (d) For so long as any of the Notes are Outstanding, the Co-Issuer
shall not issue any limited liability company membership interests of the
Co-Issuer to any Person other than the Arbor Parent or a wholly-owned subsidiary
of the Arbor Parent.

          (e) The Issuer shall not enter into any material new agreements (other
than any Hedge Agreement, Hedge Counterparty Credit Support, Collateral Debt
Security, Collateral Debt Security Purchase Agreement or other agreement
(including, without limitation, in connection with the sale of Assets by the
Issuer) contemplated by this Indenture) without the prior written consent of the
Holders of a Majority of the Notes (or if there are no Notes Outstanding, a
Majority of the Preferred Shares) and shall provide notice of all new agreements
(other than any Hedge Agreement, Collateral Debt Security or other agreement
specifically contemplated by this Indenture) to the Holders of the Notes and
each Hedge Counterparty. The foregoing notwithstanding, the Issuer may agree to
any material new agreements; provided that (i) the Issuer (or the Collateral
Manager on behalf of the Issuer) determines that such new agreements would not,
upon or after becoming effective, adversely affect the rights or interests of
any Class or Classes of Noteholders and (ii) subject to satisfaction of the
Rating Agency Condition.

          (f) As long as any Note is Outstanding, ARMS Equity may not transfer
the Preferred Shares to any other Person.

          Section 7.9 Statement as to Compliance.

          (a) On or before January 31, in each calendar year, commencing in 2007
or immediately if there has been a Default in the fulfillment of an obligation
under this Indenture, the Issuer shall deliver to the Trustee (which will
deliver a copy to each Hedge Counterparty and each Rating Agency) an Officer's
Certificate given on behalf of the Issuer and without personal liability
stating, as to each signer thereof, that, since the date of the last certificate
or, in the case of the first certificate, the Closing Date, to the best of the
knowledge, information and belief of such Officer, the Issuer has fulfilled all
of its obligations under this Indenture or,

                                     -155-

<PAGE>

if there has been a Default in the fulfillment of any such obligation,
specifying each such Default known to them and the nature and status thereof.

          Section 7.10 Issuer and Co-Issuer May Consolidate or Merge Only on
Certain Terms.

          (a) The Issuer shall not consolidate or merge with or into any other
Person or transfer or convey all or substantially all of its assets to any
Person, unless permitted by the Governing Documents and Cayman Islands law and
unless:

               (i) the Issuer shall be the surviving entity, or the Person (if
          other than the Issuer) formed by such consolidation or into which the
          Issuer is merged or to which all or substantially all of the assets of
          the Issuer are transferred shall be an entity organized and existing
          under the laws of the Cayman Islands or such other jurisdiction
          approved by a Majority of each and every Class of the Notes (each
          voting as a separate Class), a Majority of the Preferred Shares and
          each Hedge Counterparty; provided that no such approval shall be
          required in connection with any such transaction undertaken solely to
          effect a change in the jurisdiction of registration pursuant to
          Section 7.4 hereof; and provided, further, that the surviving entity
          shall expressly assume, by an indenture supplemental hereto, executed
          and delivered to the Trustee, each Noteholder and each Hedge
          Counterparty, the due and punctual payment of the principal of and
          interest on all Notes and other amounts payable hereunder and under
          each Hedge Agreement and the Collateral Management Agreement and the
          performance and observance of every covenant of this Indenture and
          under each Hedge Agreement and the Collateral Management Agreement on
          the part of the Issuer to be performed or observed, all as provided
          herein;

               (ii) each Rating Agency shall have been notified in writing of
          each proposed consolidation or merger of the Issuer and the Trustee
          shall have received written confirmation from each Rating Agency that
          the ratings issued with respect to each Class of Notes shall not be
          reduced or withdrawn as a result of the consummation of such
          transaction;

               (iii) if the Issuer is not the surviving entity, the Person
          formed by such consolidation or into which the Issuer is merged or to
          which all or substantially all of the assets of the Issuer are
          transferred shall have agreed with the Trustee (A) to observe the same
          legal requirements for the recognition of such formed or surviving
          entity as a legal entity separate and apart from any of its Affiliates
          as are applicable to the Issuer with respect to its Affiliates and (B)
          not to consolidate or merge with or into any other Person or transfer
          or convey all or substantially all of the Assets or all or
          substantially all of its assets to any other Person except in
          accordance with the provisions of this Section 7.10, unless in
          connection with a sale of the Assets pursuant to Article 5, Article 9
          or Article 12;

               (iv) if the Issuer is not the surviving entity, the Person formed
          by such consolidation or into which the Issuer is merged or to which
          all or substantially all of the assets of the Issuer are transferred
          shall have delivered to the Trustee, each Hedge

                                     -156-

<PAGE>

          Counterparty, the Collateral Manager and each Rating Agency an
          Officer's Certificate and an Opinion of Counsel each stating that such
          Person is duly organized, validly existing and in good standing in the
          jurisdiction in which such Person is organized; that such Person has
          sufficient power and authority to assume the obligations set forth in
          subsection (i) above and to execute and deliver an indenture
          supplemental hereto for the purpose of assuming such obligations; that
          such Person has duly authorized the execution, delivery and
          performance of an indenture supplemental hereto for the purpose of
          assuming such obligations and that such supplemental indenture is a
          valid, legal and binding obligation of such Person, enforceable in
          accordance with its terms, subject only to bankruptcy, reorganization,
          insolvency, moratorium and other laws affecting the enforcement of
          creditors' rights generally and to general principles of equity
          (regardless of whether such enforceability is considered in a
          proceeding in equity or at law); that, immediately following the event
          which causes such Person to become the successor to the Issuer, (A)
          such Person has good and marketable title, free and clear of any lien,
          security interest or charge, other than the lien and security interest
          of this Indenture, to the Assets securing, in the case of a
          consolidation or merger of the Issuer, all of the Notes or, in the
          case of any transfer or conveyance of the Assets securing any of the
          Notes, such Notes, (B) the Trustee continues to have a valid perfected
          first priority security interest in the Assets securing, in the case
          of a consolidation or merger of the Issuer, all of the Notes, or, in
          the case of any transfer or conveyance of the Assets securing any of
          the Notes, such Notes and (C) such other matters as the Trustee, each
          Hedge Counterparty, the Collateral Manager or any Noteholder may
          reasonably require;

               (v) immediately after giving effect to such transaction, no
          Default or Event of Default shall have occurred and be continuing;

               (vi) the Issuer shall have delivered to the Trustee, the
          Preferred Shares Paying Agent, each Hedge Counterparty, the Collateral
          Manager and each Noteholder, an Officer's Certificate and an Opinion
          of Counsel each stating that such consolidation, merger, transfer or
          conveyance and such supplemental indenture comply with this Article 7
          and that all conditions precedent in this Article 7 provided for
          relating to such transaction have been complied with and that no
          adverse tax consequences will result therefrom to the Holders of the
          Notes, the Preferred Shareholders and any Hedge Counterparty; and

               (vii) after giving effect to such transaction, the Issuer shall
          not be required to register as an investment company under the
          Investment Company Act.

          (b) The Co-Issuer shall not consolidate or merge with or into any
other Person or transfer or convey all or substantially all of its assets to any
Person, unless no Notes remain Outstanding or:

               (i) the Co-Issuer shall be the surviving entity, or the Person
          (if other than the Co-Issuer) formed by such consolidation or into
          which the Co-Issuer is merged or to which all or substantially all of
          the assets of the Co-Issuer are transferred shall be a company
          organized and existing under the laws of Delaware or such other
          jurisdiction approved by a Majority of the Controlling Class and each
          Hedge Counterparty; provided

                                     -157-

<PAGE>

          that no such approval shall be required in connection with any such
          transaction undertaken solely to effect a change in the jurisdiction
          of formation pursuant to Section 7.4; and provided, further, that the
          surviving entity shall expressly assume, by an indenture supplemental
          hereto, executed and delivered to the Trustee and each Noteholder, the
          due and punctual payment of the principal of and interest on all Notes
          and the performance and observance of every covenant of this Indenture
          on the part of the Co-Issuer to be performed or observed, all as
          provided herein;

               (ii) each Rating Agency shall have been notified in writing of
          each proposed consolidation or merger of the Co-Issuer and the Trustee
          shall have received written confirmation from each Rating Agency that
          the ratings issued with respect to each Class of Notes shall not be
          reduced or withdrawn as a result of the consummation of such
          transaction;

               (iii) if the Co-Issuer is not the surviving entity, the Person
          formed by such consolidation or into which the Co-Issuer is merged or
          to which all or substantially all of the assets of the Co-Issuer are
          transferred shall have agreed with the Trustee (A) to observe the same
          legal requirements for the recognition of such formed or surviving
          entity as a legal entity separate and apart from any of its Affiliates
          as are applicable to the Co-Issuer with respect to its Affiliates and
          (B) not to consolidate or merge with or into any other Person or
          transfer or convey all or substantially all of its assets to any other
          Person except in accordance with the provisions of this Section 7.10;

               (iv) if the Co-Issuer is not the surviving entity, the Person
          formed by such consolidation or into which the Co-Issuer is merged or
          to which all or substantially all of the assets of the Co-Issuer are
          transferred shall have delivered to the Trustee and each Rating Agency
          an Officer's Certificate and an Opinion of Counsel each stating that
          such Person is duly organized, validly existing and in good standing
          in the jurisdiction in which such Person is organized; that such
          Person has sufficient power and authority to assume the obligations
          set forth in subsection (i) above and to execute and deliver an
          indenture supplemental hereto for the purpose of assuming such
          obligations; that such Person has duly authorized the execution,
          delivery and performance of an indenture supplemental hereto for the
          purpose of assuming such obligations and that such supplemental
          indenture is a valid, legal and binding obligation of such Person,
          enforceable in accordance with its terms, subject only to bankruptcy,
          reorganization, insolvency, moratorium and other laws affecting the
          enforcement of creditors' rights generally and to general principles
          of equity (regardless of whether such enforceability is considered in
          a proceeding in equity or at law); such other matters as the Trustee
          or any Noteholder may reasonably require;

               (v) immediately after giving effect to such transaction, no
          Default or Event of Default shall have occurred and be continuing;

               (vi) the Co-Issuer shall have delivered to the Trustee, the
          Preferred Shares Paying Agent, each Hedge Counterparty and each
          Noteholder an Officer's Certificate and an Opinion of Counsel each
          stating that such consolidation, merger, transfer or conveyance and
          such supplemental indenture comply with this Article 7 and that all

                                     -158-

<PAGE>

          conditions precedent in this Article 7 provided for relating to such
          transaction have been complied with and that no adverse tax
          consequences will result therefrom to the Holders of the Notes, each
          Hedge Counterparty or the Preferred Shareholders; and

               (vii) after giving effect to such transaction, the Co-Issuer
          shall not be required to register as an investment company under the
          Investment Company Act.

          Section 7.11 Successor Substituted.

          Upon any consolidation or merger, or transfer or conveyance of all or
substantially all of the assets of the Issuer or the Co-Issuer, in accordance
with Section 7.10 hereof, the Person formed by or surviving such consolidation
or merger (if other than the Issuer or the Co-Issuer), or the Person to which
such consolidation, merger, transfer or conveyance is made, shall succeed to,
and be substituted for, and may exercise every right and power of, the Issuer or
the Co-Issuer, as the case may be, under this Indenture with the same effect as
if such Person had been named as the Issuer or the Co-Issuer, as the case may
be, herein. In the event of any such consolidation, merger, transfer or
conveyance, the Person named as the "Issuer" or the "Co-Issuer" in the first
paragraph of this Indenture or any successor which shall theretofore have become
such in the manner prescribed in this Article 7 may be dissolved, wound-up and
liquidated at any time thereafter, and such Person thereafter shall be released
from its liabilities as obligor and maker on all the Notes and from its
obligations under this Indenture.

          Section 7.12 No Other Business.

          The Issuer shall not engage in any business or activity other than
issuing and selling the Notes pursuant to this Indenture and any supplements
thereto, issuing and selling the Preferred Shares in accordance with its
Governing Documents, entering into any Hedge Agreement, the Collateral
Management Agreement, and acquiring, owning, holding and pledging the Assets in
connection with the Notes and such other activities which are necessary,
suitable or convenient to accomplish the foregoing or are incidental thereto or
connected therewith. The Co-Issuer shall not engage in any business or activity
other than issuing and selling the Notes pursuant to this Indenture and any
supplements thereto and such other activities which are necessary, suitable or
convenient to accomplish the foregoing or are incidental thereto or connected
therewith.

          Section 7.13 Reporting.

          At any time when the Issuer and/or the Co-Issuer is not subject to
Section 13 or 15(d) of the Exchange Act and is not exempt from reporting
pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of a Holder
or beneficial owner of a Note, the Issuer and/or the Co-Issuer shall promptly
furnish or cause to be furnished "Rule 144A Information" (as defined below) to
such holder or beneficial owner, to a prospective purchaser of such Note
designated by such holder or beneficial owner or to the Trustee for delivery to
such holder or beneficial owner or a prospective purchaser designated by such
holder or beneficial owner, as the case may be, in order to permit compliance by
such holder or beneficial owner with Rule 144A under the Securities Act in
connection with the resale of such Note by such holder or beneficial owner.
"Rule 144A Information" shall be such information as is specified pursuant to
Rule

                                     -159-

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144A(d)(4) under the Securities Act (or any successor provision thereto). The
Trustee shall reasonably cooperate with the Issuer and/or the Co-Issuer in
mailing or otherwise distributing (at the Issuer's expense) to such Noteholders
or prospective purchasers, at and pursuant to the Issuer's and/or the
Co-Issuer's written direction the foregoing materials prepared by or on behalf
of the Issuer and/or the Co-Issuer; provided, however, that the Trustee shall be
entitled to prepare and affix thereto or enclose therewith reasonable
disclaimers to the effect that such Rule 144A Information was not assembled by
the Trustee, that the Trustee has not reviewed or verified the accuracy thereof,
and that it makes no representation as to such accuracy or as to the sufficiency
of such information under the requirements of Rule 144A or for any other
purpose.

          Section 7.14 Calculation Agent.

          (a) The Issuer and the Co-Issuer hereby agree that for so long as any
Notes remain Outstanding there shall at all times be an agent appointed to
calculate LIBOR in respect of each Interest Accrual Period in accordance with
the terms of Schedule J hereto (the "Calculation Agent"). The Issuer and the
Co-Issuer have initially appointed the Trustee as Calculation Agent for purposes
of determining LIBOR for each Interest Accrual Period. The Calculation Agent may
be removed by the Issuer and the Co-Issuer at any time. The Calculation Agent
may resign at any time by giving written notice thereof to the Issuer, the
Co-Issuer, the Collateral Manager, each Hedge Counterparty, the Noteholders and
each Rating Agency. If the Calculation Agent is unable or unwilling to act as
such or is removed by the Issuer and the Co-Issuer in respect of any Interest
Accrual Period, the Issuer and the Co-Issuer shall, with the prior written
consent of each Hedge Counterparty, promptly appoint as a replacement
Calculation Agent a leading bank which is engaged in transactions in Eurodollar
deposits in the international Eurodollar market and which does not control or is
not controlled by or under common control with the Issuer or the Co-Issuer. The
Calculation Agent may not resign its duties without a successor having been duly
appointed, and shall promptly inform the Hedge Counterparty of any such
appointment. If no successor Calculation Agent shall have been appointed within
30 days after giving of a notice of resignation, the resigning Calculation
Agent, each Hedge Counterparty, a Majority of the Notes or any Holder of a Note,
on behalf of himself and all others similarly situated, may petition a court of
competent jurisdiction for the appointment of a successor Calculation Agent.

          (b) The Calculation Agent shall be required to agree that, as soon as
practicable after 11:00 a.m. (London time) on each LIBOR Determination Date (as
defined in Schedule J hereto), but in no event later than 11:00 a.m. (New York
time) on the London Banking Day immediately following each LIBOR Determination
Date, the Calculation Agent shall calculate (x) LIBOR for the next Interest
Accrual Period and (y) the amount of interest for such Interest Accrual Period
payable in respect of each U.S. $1,000 principal amount of each Class of Notes
(rounded to the nearest cent, with half a cent being rounded upward) on the
related Payment Date, and will communicate such rates and amounts to the Issuer,
the Co-Issuer, the Trustee, the Collateral Manager, the Paying Agent, each Hedge
Counterparty and, if any Floating Rate Note is in the form of a Regulation S
Global Security, to Euroclear and Clearstream, Luxembourg. The Calculation Agent
shall also specify to the Issuer and the Co-Issuer the quotations upon which
LIBOR is based, and in any event the Calculation Agent shall notify the Issuer
and the Co-Issuer before 5:00 p.m. (New York time) on each LIBOR Determination
Date if it has not determined and is not in the process of determining LIBOR

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and the Interest Distribution Amounts for each Class of Notes, together with the
reasons therefor. The determination of the Class A-1 Rate, Class A-2 Rate, Class
B Rate, Class C Rate, Class D Rate, Class E Rate, Class F Rate, Class G Rate and
Class H Rate and the related Class A-1 Interest Distribution Amount, Class A-2
Interest Distribution Amount, Class B Interest Distribution Amount, Class C
Interest Distribution Amount, Class D Interest Distribution Amount, Class E
Interest Distribution Amount, Class F Interest Distribution Amount, Class G
Interest Distribution Amount and Class H Interest Distribution Amount,
respectively, by the Calculation Agent shall, absent manifest error, be final
and binding on all parties.

          Section 7.15 Certain Tax Forms and Treatment.

          (a) If required to prevent the withholding or imposition of United
States income tax, the Issuer shall deliver or cause to be delivered an Internal
Revenue Service Form W-9 or successor applicable form, to each issuer,
counterparty or paying agent with respect to any Collateral Debt Security at the
time such Collateral Debt Security is purchased or entered into and thereafter
prior to the expiration of obsolescence of such form.

          (b) The Issuer shall not be obligated to pay any additional amounts to
any Holder or beneficial owner of a Note as a result of any withholding or
deduction for, or on account of, any present or future taxes, duties,
assessments or governmental charges.

          Section 7.16 Maintenance of Listing.

          (a) For so long as any of the Notes remain Outstanding, the Issuer and
Co-Issuer shall use all reasonable efforts to arrange and maintain the listing
of the Notes on the Irish Stock Exchange.

          (b) If the Notes are listed on the Irish Stock Exchange, the Issuer
shall:

               (i) in each calendar year commencing in 2006, request from the
          Irish Stock Exchange a waiver of the Irish Stock Exchange's
          requirement to publish annual reports and accounts;

               (ii) submit to the Irish Stock Exchange draft copies of any
          proposed amendments to the Governing Documents which would affect the
          rights of the Holders of the Notes listed on the Irish Stock Exchange;

               (iii) pay the annual fee for listing the Notes on the Irish Stock
          Exchange, if any; and

               (iv) inform the Irish Stock Exchange if the rating assigned to
          any of the Notes is reduced or withdrawn.

          (c) All notices, documents, reports and other announcements delivered
to such Company Announcements Office shall be in the English language.

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<PAGE>

          (d) Notwithstanding the foregoing, if the Collateral Manager on behalf
of the Co-Issuers determines that the maintenance of the listing of any Class of
Notes on the Irish Stock Exchange (or any alternative listing on another
securities exchange) is unduly onerous or burdensome, the Co-Issuers will have
the right to cause such Class of Notes to be delisted from the Irish Stock
Exchange (or such other securities exchange). Without limiting the Collateral
Manager's discretion with respect to any determination that maintaining or
obtaining a listing is unduly onerous or burdensome, the Collateral Manager may
take into account various factors, including any requirement, resulting from a
listing, that either Co-Issuer prepare financial statements of any particular
kind or provide additional disclosure of any particular kind, in each case
including any such requirement arising out of disclosure or transparency
directives of the European Union or any other law or governmental rule.

          Section 7.17 Purchase of Assets.

          The Issuer (or the Collateral Manager on behalf of the Issuer) shall
use reasonable commercial efforts to invest Principal Proceeds and any remaining
Deposit and any Reinvestment Income during the Ramp-Up Period in Collateral Debt
Securities in accordance with the provisions hereof. Subject to the provisions
of this Section 7.17, Principal Proceeds and all or any portion of any remaining
Deposit and any Reinvestment Income thereon may be applied prior to the
Effective Date to purchase Collateral Debt Securities (which shall be, and
hereby are, Granted to the Trustee pursuant to the Granting Clause of this
Agreement) for inclusion in the Assets upon receipt by the Trustee of an Issuer
Order executed by the Issuer (or the Collateral Manager on behalf of the Issuer)
with respect thereto directing the Trustee to pay out the amount specified
therein against delivery of the Collateral Debt Security specified therein and a
certificate of an Authorized Officer of the Issuer (or the Collateral Manager),
dated as of the trade date, and delivered to the Trustee on or prior to the date
of such purchase and Grant, to the effect that the criteria set forth below in
this Section 7.17 will be satisfied (such criteria to be applied as of the trade
date) after giving effect to such purchase and Grant of the Collateral Debt
Securities:

          (a) the Eligibility Criteria are met with respect to the Collateral
Debt Securities purchased;

          (b) the Reinvestment Criteria are satisfied after giving effect to
such investment; and

          (c) the procedures relating to the perfection of the Trustee's
security interest in the Collateral Debt Securities described in this Agreement
have been satisfied.

          Section 7.18 Effective Date Actions.

          (a) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall cause to be delivered to the Trustee and each Rating Agency on the
Effective Date an amended Schedule of Closing Date Collateral Debt Securities
listing all Collateral Debt Securities Granted to the Trustee pursuant to
Section 7.17 on or before the Effective Date and included in the Assets on the
Effective Date, which schedule shall supersede any prior Schedule of Closing
Date Collateral Debt Securities delivered to the Trustee.

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<PAGE>

          (b) Within 10 Business Days after the Effective Date, the Issuer (or
the Collateral Manager on behalf of the Issuer) shall request each Rating Agency
rating a Class of Notes to confirm within 20 Business Days after the Effective
Date, and to so notify in writing the Trustee and any Hedge Counterparty, that
it has not reduced or withdrawn the ratings assigned by it on the Closing Date
to such Class of Notes. In the event that the Issuer fails to obtain a rating
confirmation from each Rating Agency in accordance with this Section 7.18 within
20 Business Days following the Effective Date (a "Rating Confirmation Failure"),
on the first Payment Date thereafter, (i) as provided in Section 10.4, all
amounts remaining on deposit in the Unused Proceeds Account, (ii) as provided in
Section 11.1(a)(i), all Interest Proceeds remaining after payment of the amounts
referred to in subclauses (1) through (23) of Section 11.1(a)(i) and (iii) as
provided in Section 11.1(a)(ii), all Principal Proceeds remaining after payment
of the amounts referred to in subclauses (1) through (6) of Section 11.1(a)(ii),
in each case will be used to pay principal of each such Class of Notes, in each
case sequentially in accordance with the Priority of Payments, until each such
rating is confirmed or reinstated or such Class of Notes has been paid in full.

          (c) The Collateral Manager on behalf of the Issuer shall cause to be
delivered to the Trustee, each Hedge Counterparty and each Rating Agency, within
six Business Days after the Effective Date, an Accountants' Report, dated as of
the Effective Date, confirming that the Collateral Quality Tests and the
Coverage Tests have been satisfied and that the Collateral Debt Securities have
an aggregate par amount equal to at least the Minimum Ramp-Up Amount and
certifying the procedures applied and such accountants' associated findings with
respect to the Eligibility Criteria and specifying the procedures undertaken by
them to review data and computations relating to such information. The
Collateral Manager may on any date, prior to the 180th day following the Closing
Date or the purchase of Collateral Debt Securities having an aggregate par
amount equal to the Minimum Ramp-Up Amount, upon written notice to the Trustee,
the Issuer and the Co-Issuer and each Rating Agency (with a copy to each Hedge
Counterparty), declare that the Effective Date shall occur on the date specified
in such notice; provided that each of the Collateral Quality Tests and the
Coverage Tests will be satisfied as of such Effective Date and the Rating Agency
Condition has been satisfied. The Issuer (or the Collateral Manager on behalf of
the Issuer) shall cause to be delivered to S&P on the Effective Date a Microsoft
Excel file that provides all of the inputs required to determine whether the S&P
CDO Monitor Test has been satisfied.

                                    ARTICLE 8

                             SUPPLEMENTAL INDENTURES

          Section 8.1 Supplemental Indentures Without Consent of
Securityholders.

          Without the consent of the Holders of any Notes or any Preferred
Shareholders, the Issuer, the Co-Issuer, when authorized by Board Resolutions,
and the Trustee, with the written consent of each Hedge Counterparty delivered
to the Issuer, the Co-Issuer and the Trustee, and, at any time and from time to
time subject to the requirement provided below in this Section 8.1, may enter
into one or more indentures supplemental hereto, in form satisfactory to the
Trustee, for any of the following purposes:

                                     -163-

<PAGE>

          (a) to evidence the succession of another Person to the Issuer or the
Co-Issuer and the assumption by any such successor Person of the covenants of
the Issuer or the Co-Issuer herein and in the Notes;

          (b) to add to the covenants of the Issuer, the Co-Issuer or the
Trustee for the benefit of the Holders of the Notes, Preferred Shareholders,
each Hedge Counterparty or to surrender any right or power herein conferred upon
the Issuer or the Co-Issuer;

          (c) to convey, transfer, assign, mortgage or pledge any property to or
with the Trustee, or add to the conditions, limitations or restrictions on the
authorized amount, terms and purposes of the issue, authentication and delivery
of the Notes;

          (d) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee and to add to or change any of the provisions
of this Indenture as shall be necessary to facilitate the administration of the
trusts hereunder by more than one Trustee, pursuant to the requirements of
Sections 6.9, 6.10 and 6.12 hereof;

          (e) to correct or amplify the description of any property at any time
subject to the lien of this Indenture, or to better assure, convey and confirm
unto the Trustee any property subject or required to be subjected to the lien of
this Indenture (including, without limitation, any and all actions necessary or
desirable as a result of changes in law or regulations) or to subject to the
lien of this Indenture any additional property;

          (f) to modify the restrictions on and procedures for resales and other
transfers of Notes to reflect any changes in applicable law or regulation (or
the interpretation thereof) or to enable the Issuer and the Co-Issuer to rely
upon any exemption from registration under the Securities Act or the Investment
Company Act or to remove restrictions on resale and transfer to the extent not
required thereunder;

          (g) to accommodate the issuance, if any, of Notes in global or
book-entry form through the facilities of the Depository Trust Company or
otherwise;

          (h) to enable the Issuer and the Trustee to rely upon any exemption
from registration under the Exchange Act or the Investment Company Act or to
remove certain existing restrictions to the extent not required under such
exemption;

          (i) otherwise to correct any inconsistency or cure any ambiguity or
mistake;

          (j) to take any action commercially reasonably necessary or advisable
to prevent the Issuer from failing to qualify as a qualified REIT subsidiary
(within the meaning of Section 856(i)(2) of the Code) or to prevent the Issuer
from being subject to U.S. federal, state or local income or franchise tax on a
net income tax basis or to prevent the Issuer, the Holders of the Notes, the
Holders of the Preferred Shares or the Trustee from being subject to withholding
or other taxes, fees or assessments; and

          (k) to conform this Indenture to the provisions described in the
Offering Memorandum dated January 6, 2006 (or any supplement thereto).

                                     -164-

<PAGE>

          The Trustee is hereby authorized to join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations which may be therein contained, but the Trustee shall not be
obligated to enter into any such supplemental indenture which affects the
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise, except to the extent required by law.

          If any Class of Notes is Outstanding and rated by a Rating Agency, the
Trustee shall not enter into any such supplemental indenture if, as a result of
such supplemental indenture, such Rating Agency would cause the rating of any
such Notes to be reduced or withdrawn. At the cost of the Issuer, for so long as
any Class of Notes shall remain Outstanding and is rated by a Rating Agency, the
Trustee shall provide to such Rating Agency a copy of any proposed supplemental
indenture at least 15 days prior to the execution thereof by the Trustee, and,
for so long as such Notes are Outstanding and so rated, request written
confirmation that such Rating Agency will not, as a result of such supplemental
indenture, cause the rating of any such Class of Notes to be reduced or
withdrawn, and, as soon as practicable after the execution by the Trustee, the
Issuer and the Co-Issuer of any such supplemental indenture, provide to such
Rating Agency a copy of the executed supplemental indenture.

          The Trustee shall not enter into any such supplemental indenture if
(i) as a result of such supplemental indenture, the interests of any Holder of
Securities would be materially and adversely affected thereby, unless the
Majority of each and every Class of Notes or the Preferred Shares so affected
have approved such supplemental indenture or (ii) such action would cause the
Noteholders to experience any material change to the timing, character or source
of the income from the Notes. The Trustee shall be entitled to rely upon an
Opinion of Counsel provided by and at the expense of the party requesting such
supplemental indenture in determining whether or not the Holders of Securities
would be adversely affected by such change (after giving notice of such change
to the Holders of Securities). Such determination shall be conclusive and
binding on all present and future Holders of Securities. The Trustee shall not
be liable for any such determination made in good faith and in reliance upon an
Opinion of Counsel delivered to the Trustee as described in Section 8.3 hereof.

          Furthermore, the Trustee shall not enter into any such supplemental
indenture unless the Trustee has received an Opinion of Counsel from Cadwalader,
Wickersham & Taft LLP or other nationally recognized U.S. tax counsel
experienced in such matters that the proposed supplemental indenture will not
cause the Issuer to fail to be treated as a qualified REIT subsidiary (within
the meaning of Section 856(i)(2) of the Code) or otherwise cause the Issuer to
be subject to U.S. federal income tax on a net income tax basis.

          Section 8.2 Supplemental Indentures with Consent of Securityholders.

          Except as set forth below, with the written consent of (a) the Holders
of not less than a Majority in Aggregate Outstanding Amount (excluding any Notes
owned by the Collateral Manager or any of its Affiliates, or by any accounts
managed by them) of the Notes of each Class materially and adversely affected
thereby and all of the Holders of Preferred Shares if materially and adversely
affected thereby by Act of said Securityholders delivered to the Trustee and the
Co-Issuers, and (b) the consent of each Hedge Counterparty (to the extent
required by the related Hedge Agreement), and subject to satisfaction of the
Rating Agency Condition, the

                                     -165-

<PAGE>

Trustee and the Co-Issuers may enter into one or more indentures supplemental
hereto to add any provisions to, or change in any manner or eliminate any of the
provisions of, this Indenture or modify in any manner the rights of the Holders
of the Notes of such Class or the Preferred Shares, as the case may be, under
this Indenture. Unless notified by Holders of a Majority of the Notes of any
Class (excluding any Notes owned by the Collateral Manager or any of its
Affiliates, or by any accounts managed by them) that such Class of Notes will be
materially and adversely affected, the Trustee may, based on the satisfaction of
the Rating Agency Condition, determine whether or not such Class of Notes would
be materially and adversely affected by such change (after giving 15 Business
Days' notice of such change to the Holders of such Class of Notes, the Holders
of the Preferred Shares and each Hedge Counterparty). The Trustee may, in
reliance on the consent of the Holders of the Preferred Shares or on a written
Opinion of Counsel provided by and at the expense of the party requesting such
supplemental indenture, determine whether or not the Holders of the Preferred
Shares would be adversely affected by such change (after giving notice of such
change to the Holders of the Preferred Shares). Such determinations shall be
conclusive and binding on all present and future Noteholders and Holders of the
Preferred Shares. The consent of the Holders of the Preferred Shares shall be
binding on all present and future Holders of the Preferred Shares.

          Without the consent of (x) each Hedge Counterparty (except to the
extent required by the related Hedge Agreement) and (y) all of the Holders of
each Outstanding Class of Notes adversely affected, and in each such case
subject to satisfaction of the Rating Agency Condition, no supplemental
indenture may:

          (a) change the Stated Maturity of the principal of or the due date of
any installment of interest on any Note, reduce the principal amount thereof or
the Note Interest Rate thereon or the Redemption Price with respect to any Note,
change the date of any scheduled distribution on the Preferred Shares, or the
Redemption Price with respect thereto, or change the earliest date on which any
Note may be redeemed at the option of the Issuer, change the provisions of this
Indenture that apply the proceeds of any Assets to the payment of principal of
or interest on Notes or of distributions to the Preferred Shares Paying Agent
for the payment of distributions in respect of the Preferred Shares or change
any place where, or the coin or currency in which, any Note or the principal
thereof or interest thereon is payable, or impair the right to institute suit
for the enforcement of any such payment on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the applicable Redemption Date);

          (b) reduce the percentage of the Aggregate Outstanding Amount of
Holders of Notes of each Class or the Notional Amount of Preferred Shares of
Preferred Shareholders whose consent is required for the authorization of any
such supplemental indenture or for any waiver of compliance with certain
provisions of this Indenture or certain Defaults hereunder or their consequences
provided for in this Indenture;

          (c) impair or adversely affect the Assets except as otherwise
permitted in this Indenture;

          (d) permit the creation of any lien ranking prior to or on a parity
with the lien of this Indenture with respect to any part of the Assets or
terminate such lien on any property

                                     -166-

<PAGE>

at any time subject hereto or deprive the Holder of any Note, or the Holder of
any Preferred Share as an indirect beneficiary, of the security afforded to such
Holder by the lien of this Indenture;

          (e) reduce the percentage of the Aggregate Outstanding Amount of
Holders of Notes of each Class whose consent is required to request the Trustee
to preserve the Assets or rescind the Trustee's election to preserve the Assets
pursuant to Section 5.5 or to sell or liquidate the Assets pursuant to Section
5.4 or 5.5 hereof;

          (f) modify any of the provisions of this Section 8.2, except to
increase any percentage of Outstanding Notes whose holders' consent is required
for any such action or to provide that other provisions of this Indenture cannot
be modified or waived without the consent of the Holder of each Outstanding Note
affected thereby;

          (g) modify the definition of the term "Outstanding" or the provisions
of Section 11.1 or Section 13.1 hereof; or

          (h) modify any of the provisions of this Indenture in such a manner as
to affect the calculation of the amount of any payment of interest or principal
on any Note on any Payment Date or of distributions to the Preferred Shares
Paying Agent for the payment of distributions in respect of the Preferred Shares
on any Payment Date (or any other date) or to affect the rights of the Holders
of Securities to the benefit of any provisions for the redemption of such
Securities contained herein;

provided, however, that no supplemental indenture may reduce the permitted
minimum denominations of the Notes or modify any provisions regarding limited
recourse or non-petition covenants with respect to the Issuer and the Co-Issuer.

          If any Class of Notes are Outstanding and rated by a Rating Agency,
the Trustee shall not enter into any such supplemental indenture if, as a result
of such supplemental indenture, such Rating Agency would cause the rating of any
such Notes to be immediately reduced or withdrawn. At the cost of the Issuer,
for so long as any Class of Notes shall remain Outstanding and is rated by a
Rating Agency, the Trustee shall provide to such Rating Agency a copy of any
proposed supplemental indenture at least 15 days prior to the execution thereof
by the Trustee, and, for so long as such Notes are Outstanding and so rated,
request written confirmation that such Rating Agency will not, as a result of
such supplemental indenture, cause the rating of any such Class of Notes to be
reduced or withdrawn.

          The Trustee shall be entitled to rely upon an Opinion of Counsel
provided by and at the expense of the party requesting such supplemental
indenture in determining whether or not the Holders of Securities would be
adversely affected by such change (after giving notice of such change to the
Holders of Securities). Such determination shall be conclusive and binding on
all present and future Holders of Securities. The Trustee shall not be liable
for any such determination made in good faith and in reliance upon an Opinion of
Counsel delivered to the Trustee as described in Section 8.3 hereof.

                                     -167-

<PAGE>

          It shall not be necessary for any Act of Securityholders under this
Section 8.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

          Promptly after the execution by the Issuer, the Co-Issuer and the
Trustee of any supplemental indenture pursuant to this Section 8.2, the Trustee,
at the expense of the Issuer, shall mail to the Securityholders, each Hedge
Counterparty, the Preferred Shares Paying Agent, the Collateral Manager, and, so
long as the Notes are Outstanding and so rated, each Rating Agency a copy
thereof based on an outstanding rating. Any failure of the Trustee to publish or
mail such notice, or any defect therein, shall not, however, in any way impair
or affect the validity of any such supplemental indenture.

          Section 8.3 Execution of Supplemental Indentures.

          In executing or accepting the additional trusts created by any
supplemental indenture permitted by this Article 8 or the modifications thereby
of the trusts created by this Indenture, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture and that all conditions precedent thereto have been
satisfied. The Trustee may, but shall not be obligated to, enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise. The Collateral Manager will be
bound to follow any amendment or supplement to this Indenture of which it has
received written notice at least 10 Business Days prior to the execution and
delivery of such amendment or supplement; provided, however, that with respect
to any amendment or supplement to this Indenture which may, in the judgment of
the Collateral Manager adversely affect the Collateral Manager, the Collateral
Manager shall not be bound (and the Issuer agrees that it will not permit any
such amendment to become effective) unless the Collateral Manager gives written
consent to the Trustee and the Issuer to such amendment. The Issuer and the
Trustee shall give written notice to the Collateral Manager of any amendment
made to this Indenture pursuant to its terms. In addition, the Collateral
Manager's written consent shall be required prior to any amendment to this
Indenture by which it is adversely affected.

          Section 8.4 Effect of Supplemental Indentures.

          Upon the execution of any supplemental indenture under this Article 8,
this Indenture shall be modified in accordance therewith, such supplemental
indenture shall form a part of this Indenture for all purposes and every Holder
of Notes theretofore and thereafter authenticated and delivered hereunder, and
every Holder of Preferred Shares, shall be bound thereby.

          Section 8.5 Reference in Notes to Supplemental Indentures.

          Notes authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article 8 may, and if required by the
Trustee shall, bear a notice in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Issuer and the Co-Issuer
shall so determine, new Notes, so modified as to conform in the opinion of the
Trustee and the Issuer and the Co-Issuer to any such supplemental indenture, may

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<PAGE>

be prepared and executed by the Issuer and the Co-Issuer and authenticated and
delivered by the Trustee in exchange for Outstanding Notes.

                                    ARTICLE 9

                 REDEMPTION OF SECURITIES; REDEMPTION PROCEDURES

          Section 9.1 Clean-up Call; Tax Redemption and Optional Redemption.

          (a) The Notes may be redeemed at the option of and at the direction of
the Collateral Manager (such redemption, a "Clean-up Call"), in whole but not in
part, at a price equal to the applicable Redemption Price on any Payment Date
(the "Clean-up Call Date") on or after the Payment Date on which the Aggregate
Outstanding Amount of the Notes has been reduced to 10% of the Aggregate
Outstanding Amount of the Notes on the Closing Date; provided that any payments
due and payable upon a termination of each Hedge Agreement will be made on the
Clean-up Call Date in accordance with the terms thereof and this Indenture;
provided, further, that the funds available to be used for such Clean-up Call
will be sufficient to pay the Total Redemption Price.

          (b) The Notes and the Preferred Shares shall be redeemable, in whole
but not in part, by Act of a Majority of the Preferred Shares delivered to the
Trustee, on the Payment Date (the "Tax Redemption Date") following the
occurrence of a Tax Event and satisfaction of the Tax Materiality Condition at a
price equal to the applicable Redemption Price (such redemption, a "Tax
Redemption"); provided that any payments due and payable upon a termination of
each Hedge Agreement will be made in accordance with the terms thereof and this
Indenture; provided, further, that the funds available to be used for such Tax
Redemption will be sufficient to pay the Total Redemption Price. Upon the
occurrence of a Tax Event, the Issuer and the Co-Issuer, at the direction of the
Collateral Manager shall provide written notice thereof to the Trustee, the
Irish Paying Agent (for so long as any Notes are listed on the Irish Stock
Exchange), each Hedge Counterparty and each Rating Agency.

          (c) The Notes and the Preferred Shares shall be redeemable, in whole
but not in part, at a price equal to the applicable Redemption Price, on any
Payment Date on or after the Payment Date occurring in April 2009 at the
direction of the Issuer (such redemption, an "Optional Redemption") (i) by Act
of a Majority of the Preferred Shares delivered to the Trustee, or (ii) at the
direction of the Collateral Manager unless a Majority of the Preferred Shares
object; provided, however, that any payments due and payable upon a termination
of each Hedge Agreement will be made in accordance with the terms thereof and
this Indenture; provided, further, that the funds available to be used for such
Optional Redemption will be sufficient to pay the Total Redemption Price.

          (d) The election by the Collateral Manager to redeem the Notes
pursuant to a Clean-up Call shall be evidenced by an Officer's Certificate from
the Collateral Manager directing the Trustee to make the payment to the Paying
Agent of the applicable Redemption Price of all of the Notes to be redeemed from
funds in the Payment Account in accordance with the Priority of Payments. In
connection with a Tax Redemption, the occurrence of a Tax Event and satisfaction
of the Tax Materiality Condition shall be evidenced by an Issuer Order

                                     -169-

<PAGE>

from the Issuer or from the Collateral Manager on behalf of the Issuer
certifying that such conditions for a Tax Redemption have occurred. The election
by the Collateral Manager to redeem the Notes pursuant to an Optional Redemption
shall be evidenced by an Officer's Certificate from the Collateral Manager on
behalf of the Issuer certifying that the conditions for an Optional Redemption
have occurred.

          (e) A redemption pursuant to Sections 9.1(a), 9.1(b) or 9.1(c) shall
not occur unless (i) at least six Business Days before the scheduled Redemption
Date, (A) the Collateral Manager shall have certified to the Trustee that the
Collateral Manager, on behalf of the Issuer, has entered into a binding
agreement or agreements with (1) one or more financial institutions whose
long-term unsecured debt obligations (other than such obligations whose rating
is based on the credit of a person other than such institution) have a credit
rating from each Rating Agency at least equal to the highest rating of any Notes
then Outstanding or whose short-term unsecured debt obligations have a credit
rating of "P-1" by Moody's (as long as the term of such agreement is 90 days or
less) and "A-1" by S&P or (2) one or more Affiliates of the Collateral Manager,
to sell all or part of the Pledged Obligations not later than the Business Day
immediately preceding the scheduled Redemption Date or (B) the Trustee shall
have received written confirmation that the method of redemption satisfies the
Rating Agency Condition and (ii) the related Sale Proceeds (in immediately
available funds), together with all other available funds (including proceeds
from the sale of the Assets, Eligible Investments maturing on or prior to the
scheduled Redemption Date, all amounts in the Collection Accounts and available
Cash), shall be an aggregate amount sufficient to pay all amounts, payments,
fees and expenses in accordance with the Priority of Payments due and owing on
such Redemption Date.

          Section 9.2 Auction Call Redemption.

          (a) During the period from and including the Payment Date occurring in
April 2016 and to but not including the first Payment Date on which the Clean-up
Call may be exercised (the "Auction Call Period"), the Securities shall be
redeemed by the Issuer, in whole but not in part, at their applicable Redemption
Prices if a Successful Auction is completed (such redemption, an "Auction Call
Redemption"); provided that any payments due and payable upon a termination of
each Hedge Agreement will be made on the Auction Call Redemption Date in
accordance with the terms thereof and this Indenture; and provided, further,
that the funds available to be used for such Auction Call Redemption will be
sufficient to pay the Total Redemption Price. An Auction Call Redemption may
occur only on a Payment Date occurring in April or October during the Auction
Call Period (such Payment Date, the "Auction Call Redemption Date").

          (b) The Trustee shall sell and transfer the Collateral Debt Securities
to the highest bidder for all of the Collateral Debt Securities (or to each
highest bidder for one or more (but not all) of the Collateral Debt Securities),
at the Auction, as long as:

               (i) the Auction has been conducted in accordance with the Auction
          Procedures, as evidenced by a certification of the Collateral Manager;

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<PAGE>

               (ii) at least one bidder delivers to the Collateral Manager a bid
          (which bid may be based upon a fixed spread above or below a generally
          recognized price index) for (x) the purchase of all of the Collateral
          Debt Securities or (y) the purchase of each Collateral Debt Security
          (which bid may be for one or more (but not all) of the Collateral Debt
          Securities);

               (iii) based on the Collateral Manager's certification to the
          Trustee of the amount of the Cash purchase price of each bid, the
          Trustee, in consultation with the Collateral Manager, determines that
          the Highest Auction Price would result in a Cash purchase price for
          the Collateral Debt Securities which, together with the balance of all
          Eligible Investments and Cash in the Collection Accounts, the Payment
          Account and the Expense Account, will be at least equal to the Total
          Redemption Price; and

               (iv) each bidder who offered the Highest Auction Price for all of
          the Collateral Debt Securities or for one or more of the Collateral
          Debt Securities enters into a written agreement with the Issuer (which
          the Issuer shall execute if the conditions set forth in clauses (i)
          through (iii) above are satisfied) obligating the highest bidder for
          all of the Collateral Debt Securities (or the highest bidder for one
          or more (but not all) of the Collateral Debt Securities) to purchase
          all (either individually or together with other bidders, as
          applicable) of the Collateral Debt Securities with the closing of such
          purchase (and full payment in Cash to the Trustee) to occur on or
          before the 10th Business Day prior to the scheduled Redemption Date.

          (c) If any of the foregoing conditions is not met with respect to any
Auction, or if the highest bidder or the Collateral Manager, as the case may be,
fails to pay the purchase price on or before the sixth Business Day following
the relevant Auction Date, (i) the Auction Call Redemption shall not occur on
the Payment Date following the relevant Auction Date, (ii) the Trustee shall
give notice of the withdrawal pursuant to Section 9.3, (iii) subject to
subclause (iv) below, the Trustee shall decline to consummate such sale and
shall not solicit any further bids or otherwise negotiate any further sale of
Collateral Debt Securities in relation to such Auction and (iv) unless the Notes
and the Preferred Shares are redeemed in full prior to the next succeeding
Auction Date, or the Collateral Manager notifies the Trustee that market
conditions are such that such Auction is not likely to be successful, the
Trustee shall conduct another Auction on the next succeeding Auction Date.

          Section 9.3 Notice of Redemption.

          (a) In connection with an Optional Redemption, a Clean-up Call or a
Tax Redemption pursuant to Section 9.1 or an Auction Call Redemption pursuant to
Section 9.2, the Trustee on behalf of the Issuer and the Co-Issuer shall (i) set
the applicable Record Date and (ii) at least 45 days prior to the proposed
Redemption Date, notify the Collateral Manager, each Hedge Counterparty, the
Rating Agencies and each Preferred Shareholder at such Preferred Shareholder's
address in the register maintained by the Share Registrar, of such proposed
Redemption Date, the applicable Record Date, the principal amount of Notes to be
redeemed on such Redemption Date and the Redemption Price of such Notes in
accordance with Section 9.1 or Section 9.2. The Redemption Price shall be
determined no earlier than 60 days prior to the proposed Redemption Date.

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          (b) Any such notice of an Auction Call Redemption, an Optional
Redemption, a Clean-up Call or a Tax Redemption may be withdrawn by the Issuer
and the Co-Issuer at the direction of the Collateral Manager up to the fourth
Business Day prior to the scheduled Redemption Date by written notice to the
Trustee, the Irish Paying Agent (for so long as any Notes are listed on the
Irish Stock Exchange), each Hedge Counterparty, to each Holder of Notes to be
redeemed, and the Collateral Manager only if (i) in the case of an Optional
Redemption, a Clean-up Call or a Tax Redemption the Collateral Manager is unable
to deliver the sale agreement or agreements or certifications referred to in
Section 9.1(e), as the case may be or (ii) in the case of an Auction Call
Redemption, the Auction is unable to be consummated pursuant to the Auction
Procedures.

          Section 9.4 Notice of Redemption or Maturity by the Issuer.

          Notice of redemption pursuant to Section 9.1, Section 9.2 or the
Maturity of any Notes shall be given by first class mail, postage prepaid,
mailed not less than 10 Business Days (or four Business Days where the notice of
an Auction Call Redemption, an Optional Redemption, a Clean-up Call or a Tax
Redemption is withdrawn pursuant to Section 9.3(b)) prior to the applicable
Redemption Date or Maturity, to each Holder of Notes to be redeemed, at its
address in the Notes Register.

          All notices of redemption shall state:

          (a) the applicable Redemption Date;

          (b) the applicable Redemption Price;

          (c) that all the Notes are being paid in full, and that interest on
the Notes shall cease to accrue on the Redemption Date specified in the notice;
and

          (d) the place or places where such Notes to be redeemed in whole are
to be surrendered for payment of the Redemption Price which shall be the office
or agency of the Paying Agent as provided in Section 7.2.

          Notice of redemption shall be given by the Issuer and Co-Issuer, or at
their request, by the Trustee in their names, and at the expense of the Issuer.
Failure to give notice of redemption, or any defect therein, to any Holder of
any Note shall not impair or affect the validity of the redemption of any other
Notes. In addition, so long as any Notes are listed on the Irish Stock Exchange,
notice of redemption or Maturity shall be published in the Irish Stock
Exchange's Daily Official List or as otherwise required by the rules of the
Irish Stock Exchange not less than 10 Business Days prior to the applicable
Redemption Date or Maturity.

          Section 9.5 Notes Payable on Redemption Date.

          Notice of redemption having been given as aforesaid, the Notes to be
redeemed shall, on the Redemption Date, become due and payable at the Redemption
Price therein specified, and from and after the Redemption Date (unless the
Issuer shall Default in the payment of the Redemption Price and accrued interest
thereon) the Notes shall cease to bear interest on the Redemption Date. Upon
final payment on a Note to be redeemed, the Holder

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shall present and surrender such Note at the place specified in the notice of
redemption on or prior to such Redemption Date; provided, however, that if there
is delivered to the Issuer, the Co-Issuer and the Trustee such security or
indemnity as may be required by them to hold each of them harmless (an unsecured
indemnity agreement delivered to the Issuer, the Co-Issuer and the Trustee by an
institutional investor with a net worth of at least $200,000,000 being deemed to
satisfy such security or indemnity requirement) and an undertaking thereafter to
surrender such Note, then, in the absence of notice to the Issuer, the Co-Issuer
and the Trustee that the applicable Note has been acquired by a bona fide
purchaser, such final payment shall be made without presentation or surrender.
Payments of interest on Notes of a Class so to be redeemed whose Maturity is on
or prior to the Redemption Date shall be payable to the Holders of such Notes,
or one or more predecessor Notes, registered as such at the close of business on
the relevant Record Date according to the terms and provisions of Section
2.7(n).

          If any Note called for redemption shall not be paid upon surrender
thereof for redemption, the principal thereof shall, until paid, bear interest
from the Redemption Date at the applicable Note Interest Rate for each
successive Interest Accrual Period the Note remains Outstanding.

          Section 9.6 Mandatory Redemption.

          On any Payment Date on which any of the Coverage Tests applicable to
any Class of Notes is not satisfied as of the most recent Measurement Date, the
Notes shall be redeemed (a "Mandatory Redemption"), first from Interest
Proceeds, net of amounts set forth in Section 11.1(a)(i)(1) through (5), and
then from Principal Proceeds, net of amounts set forth in clause (1) of Section
11.1(a)(ii), in an amount necessary, and only to the extent necessary, to cause
each of the Coverage Tests to be satisfied, but only in accordance with the
Priority of Payments. Further, each Hedge Agreement will be terminated in part
in accordance with the terms thereof and any payments due and payable on the
Hedge Agreement in connection with the termination of the Hedge Agreement will
be made on such Payment Date in accordance with the terms thereof and this
Indenture, including satisfaction of the Rating Agency Condition. Such Principal
Proceeds and Interest Proceeds shall be applied to each of the Outstanding
Classes of Notes in accordance with its relative seniority in accordance with
the Priority of Payments. On or promptly after such Mandatory Redemption, the
Issuer and the Co-Issuer shall certify or cause to be certified to each of the
Rating Agencies and the Trustee whether the Coverage Tests have been met.

          Section 9.7 Special Amortization.

          The Notes may be amortized in part by the Issuer (at the election and
direction of the Collateral Manager) if, at any time during the Reinvestment
Period, the Collateral Manager has been unable, for a period of at least 30
consecutive days, to identify Collateral Debt Securities that it determines
would be appropriate and would meet the Eligibility Criteria in sufficient
amounts to permit the reinvestment of all or a portion of the Principal Proceeds
then on deposit in the Principal Collection Account and the amounts on deposit
in the Unused Proceeds Account in Substitute Collateral Debt Securities. The
Collateral Manager shall notify the Trustee, the Issuer, the Co-Issuer and each
Hedge Counterparty (if any) of such election (a "Special Amortization") and the
amount to be amortized (such amount, the "Special

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Amortization Amount"). On the first Payment Date following the date on which
such notice is given, the Special Amortization Amount will be applied to
amortize the Notes in accordance with the Priority of Payments (x) on a pro rata
basis among all Classes of Notes, if each of the S&P Special Amortization Pro
Rata Condition and the Moody's Special Amortization Pro Rata Condition is
satisfied with respect to the related Payment Date; provided that in no event
shall the cumulative principal amount of Notes that is amortized pursuant to
this clause (x) of this Section 9.7 exceed $142,500,000, or (y) sequentially
among all Classes of Notes if either the S&P Special Amortization Pro Rata
Condition or the Moody's Special Amortization Pro Rata Condition is not
satisfied with respect to the related Payment Date. Notwithstanding the
foregoing, all amounts representing recoveries in respect of Defaulted
Securities will be distributed sequentially in any event, in accordance with
Section 11.1(a)(ii)(8).

                                   ARTICLE 10

                       ACCOUNTS, ACCOUNTINGS AND RELEASES

          Section 10.1 Collection of Money; Custodial Account.

          (a) Except as otherwise expressly provided herein, the Trustee may
demand payment or delivery of, and shall receive and collect, directly and
without intervention or assistance of any fiscal agent or other intermediary,
all Money and other property payable to or receivable by the Trustee pursuant to
this Indenture, including all payments due on the Pledged Obligations in
accordance with the terms and conditions of such Pledged Obligations. The
Trustee shall segregate and hold all such Money and property received by it in
trust for the Noteholders and each Hedge Counterparty, and shall apply it as
provided in this Indenture.

          (b) The Trustee shall credit all Collateral Debt Securities and
Eligible Investments to an account designated as the "Custodial Account."

          Section 10.2 Collection Accounts.

          (a) The Trustee shall, prior to the Closing Date, establish a
segregated trust account which shall be designated as the "Collection Account"
(which may be a subaccount of the Custodial Account) and will consist of two
subaccounts, the "Interest Collection Account" and the "Principal Collection
Account" (collectively, the "Collection Accounts"), which shall be held in trust
in the name of the Trustee for the benefit of the Noteholders and each Hedge
Counterparty, into which Collection Accounts, as applicable, the Trustee shall
from time to time deposit (i) all amounts, if any, received by the Issuer
pursuant to the Hedge Agreements (other than amounts received by the Issuer by
reason of an event of default or termination event (each as defined in the
related Hedge Agreement) or other comparable event that are required, pursuant
to Section 16.1(g) to be used for the purchase by the Issuer of a replacement
Hedge Agreement) and amounts held in each Hedge Collateral Account pursuant to
Section 16.1(e), (ii) all Sale Proceeds (unless simultaneously reinvested in
Substitute Collateral Debt Securities, subject to the Reinvestment Criteria and
(iii) all Interest Proceeds and all Principal Proceeds. In addition, the Issuer
may, but under no circumstances shall be required to, deposit from time to time
such Monies in the Collection Accounts as it deems, in its sole discretion, to
be advisable. All Monies deposited from time to time in the Collection Accounts
pursuant to

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this Indenture shall be held by the Trustee as part of the Assets and shall be
applied to the purposes herein provided. The Collection Accounts shall remain at
all times with the Corporate Trust Office or a financial institution having a
long-term debt rating at least equal to "A-" or "A2," as applicable, or a
short-term debt rating at least equal to "A-1," "P-1" or "F1," as applicable.

          (b) All distributions of principal or interest received in respect of
the Assets, and any Sale Proceeds from the sale or disposition of a Collateral
Debt Security or other Assets received by the Trustee in Dollars shall be
immediately deposited into the Interest Collection Account or the Principal
Collection Account, as Interest Proceeds or Principal Proceeds, respectively
(unless, in the case of proceeds received from the sale or disposition of any
Assets, such proceeds are simultaneously reinvested pursuant to Section 10.2(d)
in Substitute Collateral Debt Securities, subject to the Reinvestment Criteria,
or in Eligible Investments). Subject to Sections 10.2(d), 10.2(e) and 11.2, all
such property, together with any securities in which funds included in such
property are or will be invested or reinvested during the term of this
Indenture, and any income or other gain realized from such investments, shall be
held by the Trustee in the Collection Accounts as part of the Assets subject to
disbursement and withdrawal as provided in this Section 10.2. Subject to Section
10.2(e) by Issuer Order (which may be in the form of standing instructions), the
Issuer (or the Collateral Manager on behalf of the Issuer) shall at all times
direct the Trustee to, and, upon receipt of such Issuer Order, the Trustee
shall, invest all funds received into the Collection Accounts during a Due
Period, and amounts received in prior Due Periods and retained in the Collection
Accounts, as so directed in Eligible Investments having stated maturities no
later than the Business Day immediately preceding the next Payment Date. The
Trustee, within one Business Day after receipt of any Scheduled Distribution or
other proceeds in respect of the Assets which is not Cash, shall so notify the
Issuer and the Collateral Manager and the Issuer (or the Collateral Manager on
behalf of the Issuer) shall, within five Business Days of receipt of such notice
from the Trustee, sell such Scheduled Distribution or other non-Cash proceeds
for Cash in an arm's length transaction to a Person which is not an Affiliate of
the Issuer or the Collateral Manager and deposit the proceeds thereof in the
applicable Collection Account for investment pursuant to this Section 10.2;
provided, however, that the Issuer (or the Collateral Manager on behalf of the
Issuer) need not sell such Scheduled Distributions or other non-Cash proceeds if
it delivers an Officer's Certificate to the Trustee certifying that such
Scheduled Distributions or other proceeds constitute Collateral Debt Securities
or Eligible Investments.

          (c) If prior to the occurrence of an Event of Default, the Issuer (or
the Collateral Manager on behalf of the Issuer) shall not have given any
investment directions pursuant to Section 10.2(b), the Trustee shall seek
instructions from the Issuer (or the Collateral Manager on behalf of the Issuer)
within three Business Days after transfer of such funds to the applicable
Collection Account. If the Trustee does not thereupon receive written
instructions from the Issuer (or the Collateral Manager on behalf of the Issuer)
within five Business Days after transfer of such funds to the applicable
Collection Account, it shall invest and reinvest the funds held in the
applicable Collection Account in one or more Eligible Investments described in
clause (ii) of the definition of Eligible Investments maturing no later than the
Business Day immediately preceding the next Payment Date. If after the
occurrence of an Event of Default, the Issuer (or the Collateral Manager on
behalf of the Issuer) shall not have given investment directions to the Trustee
pursuant to Section 10.2(b) for three

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consecutive days, the Trustee shall invest and reinvest such Monies as fully as
practicable in Eligible Investments described in clause (ii) of the definition
of Eligible Investments maturing not later than the earlier of (i) 30 days after
the date of such investment or (ii) the Business Day immediately preceding the
next Payment Date. All interest and other income from such investments shall be
deposited in the applicable Collection Account, any gain realized from such
investments shall be credited to the applicable Collection Account, and any loss
resulting from such investments shall be charged to the applicable Collection
Account. The Trustee shall not in any way be held liable (except as a result of
negligence, willful misconduct or bad faith) by reason of any insufficiency of
such applicable Collection Account resulting from any loss relating to any such
investment, except with respect to investments in obligations of the Trustee or
any Affiliate thereof.

          (d) During the Reinvestment Period (and thereafter to the extent
necessary to acquire Collateral Debt Securities pursuant to contracts entered
into during the Reinvestment Period), the Collateral Manager on behalf of the
Issuer may by Issuer Order direct the Trustee to, and upon receipt of such
Issuer Order the Trustee shall, reinvest Principal Proceeds in Collateral Debt
Securities selected by the Collateral Manager as permitted under and in
accordance with the requirements of Article 12 and such Issuer Order.

          (e) The Trustee shall transfer to the Payment Account for application
pursuant to Section 11.1(a) and in accordance with the calculations and the
instructions contained in the Notes Valuation Report prepared by the Trustee on
behalf of the Issuer pursuant to Section 10.10(e), on or prior to the Business
Day prior to each Payment Date, any amounts then held in the Collection Accounts
other than (i) Interest Proceeds or Principal Proceeds received after the end of
the Due Period with respect to such Payment Date and (ii) amounts that the
Issuer is entitled to reinvest in accordance with Section 12.2 and which the
Issuer so elects to reinvest in accordance with the terms of this Indenture,
except that, to the extent that Principal Proceeds in the Principal Collection
Account as of such date are in excess of the amounts required to be applied
pursuant to the Priority of Payments up to and including the next Payment Date
as shown in the Notes Valuation Report with respect to such Payment Date, the
Issuer may direct the Trustee to retain such excess amounts in the Principal
Collection Account and not to transfer such excess amounts to the Payment
Account and the Trustee shall do so.

          Section 10.3 Payment Account.

          The Trustee shall, prior to the Closing Date, establish a single,
segregated trust account which shall be designated as the "Payment Account,"
which shall be held in trust for the benefit of the Noteholders and each Hedge
Counterparty and over which the Trustee shall have exclusive control and the
sole right of withdrawal. Any and all funds at any time on deposit in, or
otherwise to the credit of, the Payment Account shall be held in trust by the
Trustee for the benefit of the Noteholders and each Hedge Counterparty. Except
as provided in Sections 11.1 and 11.2, the only permitted withdrawal from or
application of funds on deposit in, or otherwise to the credit of, the Payment
Account shall be (i) to pay the interest on and the principal of the Notes and
make other payments in respect of the Notes in accordance with their terms and
the provisions of this Indenture, (ii) to pay the Preferred Share Paying Agent
for deposit into the Preferred Share Distribution Account for distributions to
the Preferred Shareholders in

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<PAGE>

accordance with the terms and the provisions of the Preferred Shares Paying
Agency Agreement, (iii) upon Issuer Order, to pay other amounts specified
therein, and (iv) otherwise to pay amounts payable pursuant to and in accordance
with the terms of this Indenture, each in accordance with the Priority of
Payments. The Trustee agrees to give the Issuer and the Co-Issuer immediate
notice if it becomes aware that the Payment Account or any funds on deposit
therein, or otherwise to the credit of the Payment Account, shall become subject
to any writ, order, judgment, warrant of attachment, execution or similar
process. Neither the Issuer nor the Co-Issuer shall have any legal, equitable or
beneficial interest in the Payment Account other than in accordance with the
Priority of Payments. The Payment Account shall remain at all times with the
Corporate Trust Office or a financial institution having a long-term debt rating
by each Rating Agency at least equal to "A-" or "A2," as applicable, or a
short-term debt rating by each Rating Agency at least equal to "A-1," "P-1" or
"F1," as applicable. Amounts in the Payment Account shall not be invested.

          Section 10.4 Unused Proceeds Account.

          (a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account which shall be designated as the "Unused Proceeds
Account" which shall be held in trust in the name of the Trustee for the benefit
of the Noteholders and each Hedge Counterparty, into which the amount specified
in Section 3.2(g) shall be deposited. All Monies deposited from time to time in
the Unused Proceeds Account pursuant to this Indenture shall be held by the
Trustee as part of the Assets and shall be applied to the purposes herein
provided.

          (b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that the Unused Proceeds Account or any funds on deposit therein,
or otherwise to the credit of the Unused Proceeds Account, shall become subject
to any writ, order, judgment, warrant of attachment, execution or similar
process. The Unused Proceeds Account shall remain at all times with the
Corporate Trust Office of a financial institution having a long-term debt rating
by each Rating Agency at least equal to "A-" or "A2," as applicable, or a
short-term debt rating at least equal to "A-1," "P-1" or "F1," as applicable.

          (c) During the Reinvestment Period, amounts on deposit in the Unused
Proceeds Account may or shall be designated by the Collateral Manager as Special
Amortization Amounts to be included as Principal Proceeds pursuant to Section
9.7. If the Aggregate Principal Balance of the Collateral Debt Securities
exceeds the Minimum Ramp-Up Amount on the Effective Date, amounts remaining on
deposit in the Unused Proceeds Account at the end of the Ramp-Up Period not to
exceed an amount equal to 15% of the Deposit may, at the option of the
Collateral Manager, be designated as Interest Proceeds. Any such election will
be made on a one-time basis and must be made by written notice to the Trustee no
later than the 20th Business Day after the Effective Date, which notice shall
set forth any such amounts in the Unused Proceeds Account so designated (and any
interest or earnings thereon). Upon receipt of such notice, the Trustee shall
transfer such amount to the Interest Collection Account (for subsequent transfer
to the Payment Account), which will be treated as Interest Proceeds and applied
in accordance with the Priority of Payments. Any amounts remaining in the Unused
Proceeds Account on the 20th Business Day after the Effective Date, to the
extent not designated as Interest Proceeds and provided that a Rating
Confirmation Failure has not

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occurred, shall be transferred by the Trustee to the Principal Collection
Account (for subsequent transfer to the Payment Account) and treated as
Principal Proceeds and applied in accordance with the Priority of Payments.

          (d) If a Rating Confirmation Failure occurs, upon receipt of notice
from the Collateral Manager pursuant to Section 7.18, the Trustee shall transfer
amounts in the Unused Proceeds Account to the Payment Account for application on
the immediately following Payment Date to pay principal of the Notes, first, to
the payment of principal of the Class A-1 Notes, second, to the payment of
principal of the Class A-2 Notes, third, to the payment of principal of the
Class B Notes, fourth, to the payment of principal of the Class C Notes, fifth,
to the payment of principal of the Class D Notes, sixth, to the payment of
principal of the Class E Notes, seventh, to the payment of principal of the
Class F Notes, eighth, to the payment of principal of the Class G Notes and
ninth, to the payment of principal of the Class H Notes, in each case until the
ratings assigned on the Closing Date to each Class of Notes have been reinstated
or such Class has been paid in full. Any excess amount shall be treated as
Principal Proceeds and applied in accordance with the Priority of Payments. If
no Rating Confirmation Failure occurs, to the extent the Collateral Manager has
not identified such amounts as Interest Proceeds pursuant to Section 10.4(c),
the Trustee shall transfer the amounts on deposit in the Unused Proceeds Account
to the Principal Collection Account, and such amounts will be treated as
Principal Proceeds and applied in accordance with the Priority of Payments.

          (e) During the Ramp-Up Period, the Issuer (or the Collateral Manager
on behalf of the Issuer) may by Issuer Order direct the Trustee to, and upon
receipt of such Issuer Order the Trustee shall, apply amounts on deposit in the
Unused Proceeds Account to acquire Collateral Debt Securities selected by the
Collateral Manager as permitted under and in accordance with the requirements of
Section 7.17 and such Issuer Order.

          (f) To the extent not applied pursuant to Section 7.17, the Collateral
Manager, on behalf of the Issuer, may direct the Trustee to, and upon such
direction the Trustee shall, invest all funds in the Unused Proceeds Account in
Eligible Investments designated by the Collateral Manager. All interest and
other income from such investments shall be deposited in the Unused Proceeds
Account, any gain realized from such investments shall be credited to the Unused
Proceeds Account, and any loss resulting from such investments shall be charged
to the Unused Proceeds Account. The Trustee shall not in any way be held liable
(except as a result of negligence, willful misconduct or bad faith) by reason of
any insufficiency of the Unused Proceeds Account resulting from any loss
relating to any such investment, except with respect to investments in
obligations of the Trustee or any Affiliate thereof. If the Trustee does not
receive investment instructions from an Authorized Officer of the Collateral
Manager, the Trustee shall invest funds received in the Unused Proceeds Account
in Eligible Investments of the type described in clause (ii) of the definition
thereto.

          Section 10.5 Delayed Funding Obligations Account.

          (a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account (the "Delayed Funding Obligations Account") which shall
be held in trust for the benefit of the Noteholders and each Hedge Counterparty,
into which Delayed Draw Funding

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Obligations Account the Trustee shall deposit funds for any additional funding
commitments of the Issuer under any Delayed Draw Term Loans included in the
Collateral Debt Securities. All amounts in the Delayed Funding Obligations
Account shall be deposited in overnight funds in Eligible Investments and
released to fulfill such commitments. If a Delayed Draw Term Loan is sold or
otherwise disposed before the full commitment thereunder has been drawn, or if
excess funds remain following the termination of the funding obligation giving
rise to the deposit of such funds in the Delayed Funding Obligations Account,
such Eligible Investments on deposit in the Delayed Funding Obligations Account
for the purpose of fulfilling such commitment shall be transferred to the
Principal Collection Account as Principal Proceeds. The Delayed Funding
Obligations Account shall remain at all times with the Corporate Trust Office or
a financial institution having a long-term debt rating from each Rating Agency
at least equal to "A-" or "A2," as applicable, or a short-term debt rating at
least equal to "A-1," "P-1" or "F1," as applicable.

          (b) Funds in the Delayed Funding Obligations Account shall be
available solely to fulfill any additional funding commitments of the Issuer
under any Delayed Draw Term Loans included in the Collateral Debt Securities,
and only funds in the Delayed Funding Obligations Account shall be used for such
purpose. Upon the purchase of any Collateral Debt Security that is a Delayed
Draw Term Loan, the Collateral Manager shall direct the Trustee to deposit
Principal Proceeds into the Delayed Funding Obligations Account in an amount
equal to the Issuer's maximum future funding obligation under the terms of such
Delayed Draw Term Loan, and the Principal Proceeds so deposited shall be
considered part of the purchase price of such Delayed Draw Term Loan for
purposes of Article 12. The Collateral Manager shall not permit all amounts then
on deposit in the Delayed Funding Obligations Account to be less than the
aggregate amount of all future funding obligations outstanding under the terms
of all Delayed Draw Term Loans that constitute Collateral Debt Securities.

          (c) The Collateral Manager shall direct the Trustee to withdraw funds
from the Delayed Funding Obligations Account to fund amounts drawn under any
Delayed Draw Term Loan. Pursuant to an Issuer Order, all or a portion of the
funds, as specified in such Issuer Order, on deposit in the Delayed Funding
Obligations Account at any time in excess of the aggregate principal amount of
commitments which may be drawn upon under the Delayed Draw Term Loan shall be
transferred by the Trustee to the Collection Account as Principal Proceeds.

          Section 10.6 Expense Account.

          (a) The Trustee shall prior to the Closing Date establish a single,
segregated trust account which shall be designated as the "Expense Account"
which shall be held in trust in the name of the Trustee for the benefit of the
Noteholders and each Hedge Counterparty. The only permitted withdrawal from or
application of funds on deposit in, or otherwise standing to the credit of, the
Expense Account shall be to pay (on any day other than a Payment Date) (i)
accrued and unpaid Company Administrative Expenses of the Issuer and the
Co-Issuer (other than accrued and unpaid expenses and indemnities payable to the
Collateral Manager under the Collateral Management Agreement) and (ii) amounts
representing accrued interest in connection with the purchase by the Issuer
during the Ramp-Up Period of Collateral

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Debt Securities. On the Closing Date, the Trustee shall deposit into the Expense
Account an amount equal to approximately U.S.$500,000 from the net proceeds
received by the Issuer on such date from the initial issuance of the Notes. On
or after the Effective Date, any amount remaining in the Expense Account may, at
the election of the Collateral Manager be designated as Interest Proceeds. On
the date on which substantially all of the Issuer's assets have been sold or
otherwise disposed of, the Issuer by Issuer Order executed by an Authorized
Officer of the Collateral Manager shall direct the Trustee to, and, upon receipt
of such Issuer Order, the Trustee shall, transfer all amounts on deposit in the
Expense Account to the Interest Collection Account for application pursuant to
Section 11.1(a)(i) as Interest Proceeds. Amounts credited to the Expense Account
may be applied on or prior to the Determination Date preceding the first Payment
Date to pay amounts due in connection with the offering of the Notes.

          (b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that the Expense Account or any funds on deposit therein, or
otherwise to the credit of the Expense Account, shall become subject to any
writ, order, judgment, warrant of attachment, execution or similar process. The
Issuer shall not have any legal, equitable or beneficial interest in the Expense
Account. The Expense Account shall remain at all times with the Corporate Trust
Office of a financial institution having a long-term debt rating by each Rating
Agency at least equal to "A-" or "Baa1," as applicable.

          (c) The Collateral Manager, on behalf of the Issuer, may direct the
Trustee to, and upon such direction the Trustee shall, invest all funds in the
Expense Account in Eligible Investments designated by the Collateral Manager.
All interest and other income from such investments shall be deposited in the
Expense Account, any gain realized from such investments shall be credited to
the Expense Account, and any loss resulting from such investments shall be
charged to the Expense Account. The Trustee shall not in any way be held liable
(except as a result of negligence, willful misconduct or bad faith) by reason of
any insufficiency of such Expense Account resulting from any loss relating to
any such investment, except with respect to investments in obligations of the
Trustee or any Affiliate thereof. If the Trustee does not receive investment
instructions from an Authorized Officer of the Collateral Manager, the Trustee
shall invest funds received in the Expense Account in Eligible Investments of
the type described in clause (ii) of the definition thereto.

          Section 10.7 Defeased Collateral Accounts.

          (a) The Trustee shall, on or after the Closing Date, at the direction
of the Issuer (or the Collateral Manager on the Issuer's behalf) establish and
maintain one or more segregated trust accounts which will be designated the
"Defeased Collateral Accounts." On each date on which the Issuer receives from
the related borrower in respect of a Loan included in the Assets substitute or
additional collateral in the form of Cash or Eligible Investments in connection
with a defeasance of such Loan, such substitute or additional collateral shall
be transferred by the Issuer (or by the Collateral Manger on behalf of the
Issuer) to the Trustee and the Trustee thereafter shall deposit such substitute
or additional collateral into a Defeased Collateral Account; provided that this
Section 10.7(a) shall not apply to any such substitute or additional collateral
received by the Issuer in connection with the release of any lien on condominium
units to the extent that such additional or substitute collateral is held by the

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<PAGE>

Servicer in an Eligible Account pending application of such collateral to pay
principal of and/or interest on the related Collateral Debt Security in
accordance with the terms of the applicable Underlying Instruments. Amounts on
deposit in each Defeased Collateral Account shall be transferred by the Trustee
for deposit into the Interest Collection Account, the Principal Collection
Account and/or the Payment Account, in each case as directed by the Issuer (or
by the Collateral Manager on behalf of the Issuer) pursuant to an Issuer Order.
All Monies deposited from time to time in the Defeased Collateral Account
pursuant to this Indenture shall be held by the Trustee as part of the Assets
and shall be applied to the purposes herein provided.

          (b) The Trustee agrees to give the Issuer immediate notice if it
becomes aware that a Defeased Collateral Account or any funds on deposit
therein, or otherwise to the credit of a Defeased Collateral Account, shall
become subject to any writ, order, judgment, warrant of attachment, execution or
similar process. The Issuer shall not have any legal, equitable or beneficial
interest in any Defeased Collateral Account. Each Defeased Collateral Account
shall remain at all times with the Corporate Trust Office or a financial
institution having a long-term debt rating from each Rating Agency at least
equal to "A-" or "A2," as applicable, or a short-term debt rating at least equal
to "A-1," "P-1" or "F1," as applicable.

          (c) The Collateral Manager, on behalf of the Issuer, may direct the
Trustee to, and upon such direction the Trustee shall, invest all funds in the
Defeased Collateral Account in Eligible Investments designated by the Collateral
Manager. All interest and other income from such investments shall be deposited
in the Defeased Collateral Account, any gain realized from such investments
shall be credited to the Defeased Collateral Account, and any loss resulting
from such investments shall be charged to the Defeased Collateral Account. The
Trustee shall not in any way be held liable (except as a result of negligence,
willful misconduct or bad faith) by reason of any insufficiency of the Defeased
Collateral Account resulting from any loss relating to any such investment,
except with respect to investments in obligations of the Trustee or any
Affiliate thereof. If the Trustee does not receive investment instructions from
an Authorized Officer of the Collateral Manager, the Trustee shall invest funds
received in the Defeased Collateral Account in Eligible Investments of the type
described in clause (ii) of the definition thereto.

          Section 10.8 Interest Advances.

          (a) With respect to each Determination Date for which the sum of
Interest Proceeds and, if applicable, Principal Proceeds, collected during the
related Due Period that are available to pay interest on the Class A-1 Notes,
the Class A-2 Notes and the Class B Notes in accordance with the Priority of
Payments, are insufficient to remit the interest due and payable with respect to
the Class A-1 Notes, the Class A-2 Notes and the Class B Notes on the following
Payment Date (the amount of such insufficiency, an "Interest Shortfall"), the
Trustee shall provide the Advancing Agent with written notice of such Interest
Shortfall no later than the close of business on the Business Day following such
Determination Date. The Trustee shall provide the Advancing Agent with notice,
prior to any funding of an Interest Advance by the Advancing Agent, of any
additional interest remittances received by the Trustee after delivery of such
initial notice that reduce such Interest Shortfall. No later than 5:00 p.m. (New
York time) on the Business Day immediately preceding the related Payment

                                     -181-

<PAGE>

Date (but in any event no earlier than one Business Day following the Advancing
Agent's receipt of notice of such Interest Shortfall), the Advancing Agent shall
advance the difference between such amounts (each such advance, an "Interest
Advance") by deposit of an amount equal to such Interest Advance in the Payment
Account, subject to a determination of recoverability by the Advancing Agent as
described in Section 10.8(b), and subject to a maximum limit in respect of any
Payment Date equal to the lesser of (i) the aggregate of such Interest
Shortfalls that would otherwise occur on the Class A-1 Notes, the Class A-2
Notes and Class B Notes and (ii) the aggregate of the interest payments not
received in respect of Non-Advancing Collateral Debt Securities. Notwithstanding
the foregoing, in no circumstance will the Advancing Agent be required to make
an Interest Advance in respect of a Non-Advancing Collateral Debt Security (x)
to the extent that the aggregate outstanding amount of all unreimbursed Interest
Advances would exceed the aggregate outstanding principal amount of the Class A
Notes and the Class B Notes or (y) if the Class A/B Par Value Ratio on the
relevant Measurement Date is less than 100%. Any Interest Advance made by the
Advancing Agent with respect to a Payment Date that is in excess of the actual
Interest Shortfall for such Payment Date shall be refunded to the Advancing
Agent by the Trustee on the same Business Day that such Interest Advance was
made (or, if such Interest Advance is made prior to final determination by the
Trustee of such Interest Shortfall, on the Business Day of such final
determination). The Advancing Agent shall provide the Trustee written notice of
a determination by the Advancing Agent that a proposed Interest Advance would
constitute a Nonrecoverable Interest Advance no later than the close of business
on the Business Day immediately preceding the related Payment Date (or, in the
event that the Advancing Agent did not receive notice of the related Interest
Shortfall on the related Determination Date, no later than the close of business
on the Business Day immediately following the Advancing Agent's receipt of
notice of such Interest Shortfall). If the Advancing Agent shall fail to make
any required Interest Advance at or prior to the time at which distributions are
to be made pursuant to Section 11.1(a), the Trustee, in its capacity as Backup
Advancing Agent, shall be required to make such Interest Advance, subject to a
determination of recoverability by the Trustee as described in Section 10.8(b).
The Trustee, in its capacity as Backup Advancing Agent, shall be entitled to
conclusively rely on any affirmative determination by the Advancing Agent that
an Interest Advance would constitute a Nonrecoverable Interest Advance. Based
upon available information at the time, the Trustee, in its capacity as Backup
Advancing Agent, the Collateral Manager or the Advancing Agent will provide 15
days prior notice to each Rating Agency if recovery of a Nonrecoverable Interest
Advance would result in an Interest Shortfall on the next succeeding Payment
Date. No later than the close of business on the Determination Date related to a
Payment Date on which the recovery of a Nonrecoverable Interest Advance would
result in an Interest Shortfall, the Collateral Manager will provide each Rating
Agency notice of such recovery.

          (b) Notwithstanding anything herein to the contrary, neither the
Advancing Agent nor the Trustee, in its capacity as Backup Advancing Agent, as
applicable, shall be required to make any Interest Advance unless such Person
determines, in its sole discretion, exercised in good faith that such Interest
Advance, or such proposed Interest Advance, plus interest expected to accrue
thereon at the Reimbursement Rate, will be recoverable from subsequent payments
or collections with respect to all Collateral Debt Securities and has determined
in its reasonable judgment that the recovery would not result in an Interest
Shortfall. In determining whether any proposed Interest Advance will be, or
whether any

                                     -182-

<PAGE>

Interest Advance previously made is, a Nonrecoverable Interest Advance, the
Advancing Agent or the Trustee, in its capacity as Backup Advancing Agent, as
applicable, will take into account:

               (i) amounts that may be realized on each Underlying Mortgage
          Property in its "as is" or then current condition and occupancy;

               (ii) that the related Senior Tranches of any Collateral Debt
          Security may be required to be fully paid and any advances (and
          interest thereon) made in respect of such Senior Tranches may be
          required to be fully reimbursed, prior to any amounts recovered in
          respect of the Underlying Mortgage Properties are allocated or
          otherwise made available to the Collateral Debt Securities;

               (iii) the possibility and effects of future adverse change with
          respect to the Underlying Mortgage Properties, the potential length of
          time before such Interest Advance may be reimbursed and the resulting
          degree of uncertainty with respect to such reimbursement; and

               (iv) the fact that Interest Advances are intended to provide
          liquidity only and not credit support to the Class A-1 Noteholders,
          the Class A-2 Noteholders and the Class B Noteholders.

          For purposes of any such determination of whether an Interest Advance
constitutes or would constitute a Nonrecoverable Interest Advance, an Interest
Advance will be deemed to be nonrecoverable if the Advancing Agent or the
Trustee, in its capacity as Backup Advancing Agent, as applicable, determines
that future Interest Proceeds and Principal Proceeds may be ultimately
insufficient to fully reimburse such Interest Advance, plus interest thereon at
the Reimbursement Rate within a reasonable period of time. Absent bad faith, the
determination by the Advancing Agent or the Trustee, in its capacity as Backup
Advancing Agent, as applicable, as to the nonrecoverability of any Interest
Advance shall be conclusive and binding on the Holders of the Notes.

          (c) The Advancing Agent and the Trustee, in its capacity as Backup
Advancing Agent, will each be entitled to recover any previously unreimbursed
Interest Advance made by it (including any Nonrecoverable Interest Advance),
together with interest thereon, first, from Interest Proceeds and second (to the
extent that there are insufficient Interest Proceeds for such reimbursement),
from Principal Proceeds to the extent that such reimbursement would not trigger
an additional Interest Shortfall; provided that if at any time an Interest
Advance is determined to be a Nonrecoverable Interest Advance, the Advancing
Agent or the Trustee, in its capacity as Backup Advancing Agent, shall be
entitled to recover all outstanding Interest Advances from the Collection
Accounts on any Business Day during any Interest Accrual Period prior to the
related Determination Date (or on a Payment Date prior to any payment of
interest on or principal of the Notes in accordance with the Priority of
Payments). The Advancing Agent shall be permitted (but not obligated) to defer
or otherwise structure the timing of recoveries of Nonrecoverable Interest
Advances in such manner as the Advancing Agent determines is in the best
interest of the Class A Notes and the Class B

                                     -183-

<PAGE>

Notes, as a collective whole, which may include being reimbursed for
Nonrecoverable Interest Advances in installments.

          (d) The Advancing Agent and the Trustee, in its capacity as Backup
Advancing Agent, will each be entitled with respect to any Interest Advance made
by it (including Nonrecoverable Interest Advances) to interest accrued on the
amount of such Interest Advance for so long as it is outstanding at the
Reimbursement Rate.

          (e) The Advancing Agent's and the Trustee's obligations to make
Interest Advances in respect of the Collateral Debt Securities will continue
through the Stated Maturity, unless the Class A Notes and the Class B Notes are
previously redeemed or repaid in full.

          (f) In no event will the Advancing Agent or the Trustee, in its
capacity as Backup Advancing Agent, be required to advance any payments in
respect of principal or with respect to any Class of Notes other than the Class
A-1 Notes, the Class A-2 Notes and the Class B Notes or with respect to any
Collateral Debt Security other than a Non-Advancing Collateral Debt Security.

          (g) In consideration of the performance of its obligations hereunder,
the Advancing Agent shall be entitled to receive, at the times set forth herein
and subject to the Priority of Payments, to the extent funds are available
therefor, the Advancing Agent Fee. In consideration of the Trustee's backup
advancing obligations hereunder, the Trustee shall be entitled to receive, at
the times set forth herein and subject to the Priority of Payments, to the
extent funds are available therefor, the Backup Advancing Agent Fee.

          (h) The determination by the Advancing Agent or the Trustee, in its
capacity as Backup Advancing Agent, as applicable, (i) that it has made a
Nonrecoverable Interest Advance or (ii) that any proposed Interest Advance, if
made, would constitute a Nonrecoverable Interest Advance, shall be evidenced by
an Officer's Certificate delivered promptly to the Trustee (or, if applicable,
retained thereby), the Issuer, S&P, Fitch and Moody's, setting forth the basis
for such determination; provided that failure to give such notice, or any defect
therein, shall not impair or affect the validity of, or the Advancing Agent or
the Trustee's, in its capacity as Backup Advancing Agent, entitlement to
reimbursement with respect to, any Interest Advance.

          (i) If a Scheduled Distribution on any Collateral Debt Security is not
paid to the Trustee on the Due Date therefor, the Trustee shall provide the
Advancing Agent with notice of such default on the Business Day immediately
following such default. In addition, upon request, the Trustee shall provide the
Advancing Agent (either electronically or in hard-copy format), with copies of
all reports received from any trustee, trust administrator, master servicer or
similar administrative entity with respect to the Collateral Debt Securities and
the Trustee shall promptly make available to the Advancing Agent any other
information reasonably available to the Trustee by reason of its acting as
Trustee hereunder to permit the Advancing Agent to make a determination of
recoverability with respect to any Interest Advance and to otherwise perform its
advancing functions under this Indenture.

                                     -184-

<PAGE>

          Section 10.9 Reports by Parties.

          (a) The Trustee shall supply, in a timely fashion, to the Issuer, the
Co-Issuer, the Preferred Shares Paying Agent and the Collateral Manager any
information regularly maintained by the Trustee that the Issuer, the Co-Issuer,
the Preferred Shares Paying Agent or the Collateral Manager may from time to
time request with respect to the Pledged Obligations or the Accounts and provide
any other information reasonably available to the Trustee by reason of its
acting as Trustee hereunder and required to be provided by Section 10.10 or to
permit the Collateral Manager to perform its obligations under the Collateral
Management Agreement. The Trustee shall forward to the Collateral Manager and
each Hedge Counterparty copies of notices and other writings received by it from
the issuer of any Collateral Debt Security or from any Clearing Agency with
respect to any Collateral Debt Security advising the holders of such security of
any rights that the holders might have with respect thereto (including, without
limitation, notices of calls and redemptions of securities) as well as all
periodic financial reports received from such issuer and Clearing Agencies with
respect to such issuer. Each of the Issuer and Collateral Manager shall promptly
forward to the Trustee any information in their possession or reasonably
available to them concerning any of the Pledged Obligations that the Trustee
reasonably may request or that reasonably may be necessary to enable the Trustee
to prepare any report or perform any duty or function on its part to be
performed under the terms of this Indenture.

          Section 10.10 Reports; Accountings.

          (a) The Trustee shall monitor the Assets on an ongoing basis and
provide access to the information maintained by the Trustee to, and upon
reasonable request of the Collateral Manager, shall assist the Collateral
Manager in performing its duties under the Collateral Management Agreement, each
in accordance with this Indenture.

          (b) The Trustee shall perform the following functions during the term
of this Agreement:

               (i) Create and maintain a database with respect to the Collateral
          Debt Securities (the "Database");

               (ii) Permit access to the information contained in the Database
          by the Collateral Manager and the Issuer;

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

               (iv) Update the Database for Collateral Debt Securities or
          Eligible Investments acquired or sold or otherwise disposed of;

               (v) Prepare and arrange for the delivery to each Rating Agency,
          the Collateral Manager, each Hedge Counterparty, the Initial
          Purchaser, and upon request therefor, any Holder of a Note shown on
          the Note Registrar, any Preferred Shareholder shown on the register
          maintained by the Share Registrar, and, for so long as any Notes are
          listed on the Irish Stock Exchange, the Irish Paying Agent of the
          Monthly Reports;

                                     -185-

<PAGE>

               (vi) Prepare and arrange for the delivery to the Collateral
          Manager, each Hedge Counterparty, and upon request therefor, any
          Holder of a Note shown on the Notes Register, any Preferred
          Shareholder shown on the register maintained by the Share Registrar,
          the firm of Independent certified public accountants appointed
          pursuant to Section 10.12(a) hereof, each Rating Agency, the
          Depository (with instructions to forward it to each of its
          participants who are holders of any Notes) and, for so long as any
          Notes are listed on the Irish Stock Exchange, the Irish Paying Agent,
          of the Notes Valuation Report;

               (vii) Assist in preparing and arrange for the delivery to the
          Collateral Manager and each Hedge Counterparty of the Redemption Date
          Statement;

               (viii) Arrange for the delivery to each Rating Agency of all
          information or reports required under this Indenture, including, but
          not limited to, providing S&P, Moody's and Fitch with (A) written
          notice of (1) any breaches under any of the Transaction Documents and
          (2) the termination or change of any parties to the Transaction
          Documents, in each case, for which the Trustee has received prior
          written notice pursuant to the terms of the Transaction Document and
          (B) each Monthly Report in Microsoft Excel spreadsheet format; and

               (ix) Assist the Independent certified public accountants in the
          preparation of those reports required under Section 10.12 hereof by
          providing access to the information contained in the Database.

          (c) The Trustee, on behalf of the Issuer, shall compile and provide or
make available on its website initially located at www.cdotrustee.net to each
Rating Agency, the Collateral Manager, each Hedge Counterparty, the Initial
Purchaser, for so long as any Notes are listed on the Irish Stock Exchange, and
upon request therefor, any Holder of a Note shown on the Notes Register, any
Preferred Shareholder shown on the register maintained by the Share Registrar,
not later than the fifth Business Day after the first day of each month
commencing in March 2006 (or solely in the case of the first Monthly Report, the
fifteenth Business Day), determined as of the last Business Day of the preceding
month, a monthly report (the "Monthly Report"). The Monthly Report shall contain
the following information and instructions with respect to the Pledged
Obligations included in the Assets based in part on information provided by the
Collateral Manager:

               (i) The Aggregate Principal Balance of all Collateral Debt
          Securities, together with a calculation, in reasonable detail, of the
          sum of (A) the Aggregate Principal Balance of all Collateral Debt
          Securities (other than Defaulted Securities and Written Down
          Securities) plus (B) the Principal Balance of each Pledged Obligation
          which is Written Down Security and (C) the Principal Balance of each
          Pledged Obligation which is a Defaulted Security;

               (ii) The balance of all Eligible Investments and Cash in each of
          the Interest Collection Account, the Principal Collection Account, the
          Delayed Funding Obligations Account and the Expense Account;

                                     -186-

<PAGE>

               (iii) The nature, source and amount of any proceeds in the
          Collection Accounts, including Interest Proceeds, Principal Proceeds,
          Unscheduled Principal Payments and Sale Proceeds, received since the
          date of determination of the last Monthly Report;

               (iv) With respect to each Collateral Debt Security and each
          Eligible Investment that is part of the Assets, its Principal Balance,
          annual interest rate, average life, issuer, Moody's Rating, S&P Rating
          and Fitch Rating;

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

               (vi) The identity of each Collateral Debt Security which became a
          Defaulted Security, Credit Risk Security or a Written Down Security
          since the date of determination of the last Monthly Report;

               (vii) The identity of each Collateral Debt Security that has been
          upgraded or downgraded by one or more Rating Agencies;

               (viii) The Aggregate Principal Balance of all Fixed Rate
          Securities;

               (ix) The Aggregate Principal Balance of all Floating Rate
          Securities;

               (x) Based on information provided by the Collateral Manager, the
          Aggregate Principal Balance of all Floating Rate Securities that
          constitute Covered Fixed Rate Securities;

               (xi) The Aggregate Principal Balance of all Collateral Debt
          Securities that are guaranteed as to ultimate or timely payment of
          principal or interest;

               (xii) With respect to each Specified Type of Collateral Debt
          Security, the Aggregate Principal Balance of all Collateral Debt
          Securities consisting of such Specified Type of Collateral Debt
          Securities;

               (xiii) Based on information provided by the Collateral Manager,
          the identity of, and the Aggregate Principal Balance of all Collateral
          Debt Securities whose Moody's Rating is determined as provided in each
          clause of the definition of "Moody's Rating" and the identity of, and
          the Aggregate Principal Balance of all Collateral Debt Securities
          whose S&P Rating is determined as provided in each of the clauses of
          the definition of "S&P Rating," identifying in reasonable detail the
          basis for such calculation with respect to Collateral Debt Securities
          with an S&P Rating assigned pursuant to Annex 1, 2 or 3 of Schedule F,
          based on information provided by the Collateral Manager;

                                     -187-

<PAGE>

               (xiv) With respect to each Collateral Debt Security, the
          Aggregate Principal Balance of all Collateral Debt Securities that are
          part of the same issuance;

               (xv) The Aggregate Principal Balance of all Collateral Debt
          Securities that are securities that provide for periodic payments of
          interest less frequently than quarterly;

               (xvi) Based upon the information supplied by the Collateral
          Manager, the Aggregate Principal Balance of all Collateral Debt
          Securities issued by any single issuer (provided that, for avoidance
          of doubt, with respect to any Loan, the issuer of such Loan shall be
          deemed to be the borrower of such Loan);

               (xvii) Based upon the information supplied by the Collateral
          Manager, the Aggregate Collateral Balance of the Collateral Debt
          Securities consisting of CMBS Securities issued in any single calendar
          year;

               (xviii) The Aggregate Principal Balance of all Collateral Debt
          Securities (other than CMBS Securities, CRE CDO Securities and REIT
          Debt Securities) backed by each single Property Type based on
          information provided by the Collateral Manager;

               (xix) The Aggregate Principal Balance of all Collateral Debt
          Securities (other than CMBS Securities, CRE CDO Securities and REIT
          Debt Securities) that are backed or otherwise invested in properties
          located in any single U.S. state (for each such state) based on
          information provided by the Collateral Manager;

               (xx) The Class A/B Par Value Ratio, the Class A/B Interest
          Coverage Ratio, the Class C/D/E Par Value Ratio, the Class C/D/E
          Interest Coverage Ratio, the Class F/G/H Par Value Ratio and the Class
          F/G/H Interest Coverage Ratio, and a statement as to whether the
          Interest Coverage Tests and the Par Value Tests are satisfied;

               (xxi) The Weighted Average Moody's Rating Factor and a statement
          as to whether the Moody's Maximum Tranched Rating Factor Test is
          satisfied;

               (xxii) The Herfindahl Score, the amount of Cash that has been
          received in respect of Principal Proceeds of the Collateral Debt
          Securities since the immediately preceding Measurement Date but has
          not been reinvested in additional Collateral Debt Securities (and what
          the Herfindahl Score would have been had such Cash in respect of such
          Principal Proceeds not existed), a statement as to whether the
          Herfindahl Diversity Test was satisfied or deemed satisfied on the
          immediately preceding Measurement Date and a statement as to whether
          the Herfindahl Diversity Test is satisfied;

               (xxiii) The Weighted Average Coupon and a statement as to whether
          the Minimum Weighted Average Coupon Test is satisfied;

               (xxiv) The Weighted Average Spread and a statement as to whether
          the Minimum Weighted Average Spread Test is satisfied;

               (xxv) The Extended Weighted Average Maturity and a statement as
          to whether the Moody's Weighted Average Extended Maturity Test is
          satisfied;

                                     -188-

<PAGE>

               (xxvi) Based upon information supplied by the Collateral Manager,
          the Average Life of each Collateral Debt Security, the Weighted
          Average Life and a statement as to whether the Weighted Average Life
          Test is satisfied;

               (xxvii) The Class A-1 Loss Differential, the Class A-2 Loss
          Differential, the Class B Loss Differential, the Class C Loss
          Differential, the Class D Loss Differential, the Class E Loss
          Differential, the Class F Loss Differential, the Class G Loss
          Differential and the Class H Loss Differential of the Current
          Portfolio and a statement as to whether the S&P CDO Monitor Test is
          satisfied;

               (xxviii) The S&P Weighted Average Recovery Rate and a statement
          as to whether the S&P Recovery Test is satisfied;

               (xxix) A calculation in reasonable detail necessary to determine
          compliance with each of the other Collateral Quality Tests;

               (xxx) The Principal Balance of each Collateral Debt Security that
          is on credit watch with negative implications;

               (xxxi) The Principal Balance of each Collateral Debt Security
          that is on credit watch with positive implications;

               (xxxii) The amount of the current portion and the unpaid portion,
          if any, of the Senior Collateral Management Fee and the Subordinated
          Collateral Management Fee with respect to the related Payment Date;

               (xxxiii) Based upon information supplied by the Collateral
          Manager, the current ratings of any Hedge Counterparty and any Hedge
          Counterparty Credit Support Provider;

               (xxxiv) The nature and amount of any ARMS Equity Contributions
          received since the date of determination of the last Monthly Report;

               (xxxv) Such other information as the Collateral Manager, the
          Trustee or any Hedge Counterparty may reasonably request.

          (d) The Trustee, on behalf of the Issuer, shall perform the following
functions and report to the Issuer, the Co-Issuer and the Collateral Manager on
each Measurement Date:

               (i) Calculate the Class A/B Par Value Ratio and the Class A/B
          Interest Coverage Ratio and indicate whether the Class A/B Par Value
          Test and the Class A/B Interest Coverage Test are met;

               (ii) Calculate the Class C/D/E Par Value Ratio and the Class
          C/D/E Interest Coverage Ratio and indicate whether the Class C/D/E Par
          Value Test and the Class C/D/E Interest Coverage Test are met; and

                                     -189-

<PAGE>

               (iii) Calculate the Class F/G/H Par Value Ratio and the Class
          F/G/H Interest Coverage Ratio and indicate whether the Class F/G/H Par
          Value Test and the Class F/G/H Interest Coverage Test are met.

          (e) The Trustee, on behalf of the Issuer, shall perform the following
functions and prepare a report thereof relating to the most recently ended Due
Period determined as of each Determination Date not later than the Business Day
preceding the Payment Date (the "Notes Valuation Report"), which shall contain
the following information, based in part on information provided by the
Collateral Manager:

               (i) Calculate the percentage (based on the outstanding Aggregate
          Principal Balances of the Pledged Collateral Debt Securities) of the
          Pledged Collateral Debt Securities which have a maturity date
          occurring on or prior to each Payment Date;

               (ii) Identify the Principal Proceeds and Interest Proceeds;

               (iii) Determine the Net Outstanding Portfolio Balance as of the
          close of business on the last Business Day of each Due Period after
          giving effect to the Principal Proceeds as of the last Business Day of
          such Due Period, principal collections received from Collateral Debt
          Securities in the related Due Period, the reinvestment of such
          proceeds in Eligible Investments during such Due Period and the
          Collateral Debt Securities that were released during such Due Period;

               (iv) Determine the Aggregate Outstanding Amount of the Notes of
          each Class at the beginning of the Due Period and such Aggregate
          Outstanding Amount as a percentage of the original Aggregate
          Outstanding Amount of the Notes of such Class, the amount of principal
          payments to be made on the Notes of each Class on the next Payment
          Date, the amount of any Class C Capitalized Interest on the Class C
          Notes, the amount of any Class D Capitalized Interest on the Class D
          Notes, the amount of any Class E Capitalized Interest on the Class E
          Notes, the amount of any Class F Capitalized Interest on the Class F
          Notes, the amount of any Class G Capitalized Interest on the Class G
          Notes, the amount of any Class H Capitalized Interest on the Class H
          Notes, the Aggregate Outstanding Amount of the Notes of each Class
          after giving effect to the payment of principal (and with respect to
          the Class C Notes, the Class D Notes, the Class E Notes, the Class F
          Notes, the Class G Notes and the Class H Notes, Class C Capitalized
          Interest, Class D Capitalized Interest, Class E Capitalized Interest,
          Class F Capitalized Interest, Class G Capitalized Interest or Class H
          Capitalized Interest, as applicable), on the related Payment Date and
          such Aggregate Outstanding Amount as a percentage of the original
          Aggregate Outstanding Amount of the Notes of such Class;

               (v) Calculate the Class A-1 Interest Distribution Amount, the
          Class A-2 Interest Distribution Amount, the Class B Interest
          Distribution Amount, the Class C Interest Distribution Amount, the
          Class D Interest Distribution Amount, the Class E Interest
          Distribution Amount, the Class F Interest Distribution Amount, the
          Class G Interest Distribution Amount and the Class H Interest
          Distribution Amount, for the related Payment Date and the aggregate
          amount paid for all prior Payment Dates in respect of such amounts;

                                     -190-

<PAGE>

               (vi) With the assistance of the Collateral Manager, determine the
          Company Administrative Expenses on an itemized basis, the Senior
          Collateral Management Fee and the Subordinate Collateral Management
          Fee payable by the Issuer on the related Payment Date;

               (vii) With the assistance of the Collateral Manager as set forth
          in Section 10.10(f), determine (A) the balance on deposit in the
          Interest Collection Account and the Principal Collection Account at
          the end of the related Due Period, (B) the amounts payable from the
          Collection Accounts to the Payment Account in order to make payments
          pursuant to Section 11.1(a) on the related Payment Date (the amounts
          payable pursuant to each such clause to be set forth and identified
          separately) and (C) the balance of Principal Proceeds and the balance
          of Interest Proceeds remaining in the Collection Accounts immediately
          after all payments and deposits to be made on the related Payment
          Date;

               (viii) Calculate the amount to be paid to each Hedge Counterparty
          and the amount to be paid by each Hedge Counterparty in each case,
          specifying (a) the amount to be paid under each Hedge Agreement (other
          than any payments due and payable upon a termination of the related
          Hedge Agreement) and (b) the amount owing as a result of a termination
          with respect to each Hedge Agreement;

               (ix) Calculate the amount to be paid to the Advancing Agent or
          the Trustee, in its capacity as Backup Advancing Agent, as applicable,
          as reimbursement of Interest Advances and Reimbursement Interest and
          calculate the amount of the Nonrecoverable Interest Advances to be
          paid to the Advancing Agent or the Trustee, in its capacity as Backup
          Advancing Agent, as applicable;

               (x) Calculate the amount on deposit in the Expense Account, the
          Unused Proceeds Account, the Delayed Funding Obligations Account, each
          Hedge Collateral Account and each Hedge Termination Account;

               (xi) The nature, source and amount of any proceeds in the
          Collection Accounts, including Interest Proceeds, Principal Proceeds,
          Unscheduled Principal Payments and Sale Proceeds, received since the
          date of determination of the last Monthly Report;

               (xii) With respect to each Collateral Debt Security and each
          Eligible Investment that is part of the Assets, its Principal Balance,
          annual interest rate, average life, issuer, Moody's Rating, S&P Rating
          and Fitch Rating;

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

                                     -191-

<PAGE>

               (xiv) Subject to the availability of such information to the
          Collateral Manager and the delivery of such information by the
          Collateral Manager to the Trustee, with respect to each Collateral
          Debt Security on a semi-annual basis, the net cash flow on each real
          property underlying or related to such Collateral Debt Security;

               (xv) The identity of each Collateral Debt Security which became a
          Defaulted Security, Credit Risk Security or a Written Down Security
          since the date of determination of the last Monthly Report; and

               (xvi) The nature and amount of any ARMS Equity Contributions
          received since the date of determination of the last Monthly Report;

          (f) Upon receipt of each Monthly Report, each Notes Valuation Report
and each Redemption Date Statement, the Collateral Manager shall compare the
information contained in its records with respect to the Pledged Obligations and
shall, within five Business Days after receipt of each such Monthly Report, such
Notes Valuation Report or such Redemption Date Statement, notify the Issuer and
the Trustee whether such information contained in the Monthly Report, the Notes
Valuation Report or the Redemption Date Statement, as the case may be, conforms
to the information maintained by the Collateral Manager with respect to the
Pledged Obligations, or detail any discrepancies. If any discrepancy exists, the
Trustee, the Issuer and the Collateral Manager shall attempt to resolve the
discrepancy. If such discrepancy cannot be promptly resolved, the Trustee shall
cause the firm of Independent certified public accountants appointed by the
Issuer pursuant to Section 10.12 hereof to review such Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, and the
Collateral Manager's records and the Trustee's records to determine the cause of
such discrepancy. If such review reveals an error in the Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, or the
Trustee's or the Collateral Manager's records, the Monthly Report, Notes
Valuation Report or Redemption Date Statement, as the case may be, or the
Trustee's or the Collateral Manager's records, shall be revised accordingly and,
as so revised, shall be utilized in making all calculations pursuant to this
Indenture. Each Rating Agency (in each case only so long as any Class of Notes
is rated), the Initial Purchaser and the Collateral Manager shall be notified in
writing of any such revisions by the Trustee, on behalf of the Issuer.

          (g) The Trustee shall prepare the Notes Valuation Report and shall
deliver or make available on its website initially located at www.cdotrustee.net
such Notes Valuation Report to the Collateral Manager, each Hedge Counterparty,
and upon request therefor, any Holder of a Note shown on the Notes Register, any
Holder of a Preferred Share shown on the register maintained by the Share
Registrar, the firm of Independent certified public accountants appointed
pursuant to Section 10.12(a) hereof, each Rating Agency, the Depository (with
instructions to forward it to each of its participants who are holders of any
Notes) and, for so long as any Notes are listed on the Irish Stock Exchange, the
Irish Paying Agent not later than the related Payment Date. The Notes Valuation
Report shall have attached to it (with the exception of the first Notes
Valuation Report) the most recent Monthly Report.

          The Notes Valuation Report shall also contain the following
statements:

                                     -192-

<PAGE>

                    "Instruction to Participant: Please send
                   this to the beneficial owners of the Notes"

          REMINDER TO OWNERS OF EACH CLASS OF NOTES:

          Each owner or beneficial owner of Notes must be either a U.S. Person
who is a qualified institutional buyer as defined in Rule 144A under the
Securities Act of 1933 and a Qualified Purchaser as defined by the Investment
Company Act of 1940 or not a U.S. Person, and if a U.S. Person, can represent as
follows:

               (i) it is not a broker-dealer which owns and invests on a
          discretionary basis less than $25 million in securities of
          unaffiliated issuers;

               (ii) it is not a participant-directed employee plan such as a
          401(k) plan;

               (iii) it is acting for its own account or for the account of
          another who is a qualified institutional buyer and a qualified
          purchaser that is not included in (i) or (ii) above;

               (iv) it is not formed for the purpose of investing in the Notes;

               (v) it, and each account for which it holds the Notes, shall hold
          at least the minimum denomination therefor; and

               (vi) it will provide notice of these transfer restrictions to any
          transferee from it.

          (h) Each Notes Valuation Report (after approval by the Collateral
Manager after giving effect to any revisions thereto in accordance with Section
10.10(f)) shall constitute instructions from the Collateral Manager, on behalf
of the Issuer, to the Trustee to transfer funds from the Collection Accounts to
the Payment Account pursuant to Section 10.2(d) and to withdraw on the related
Payment Date from the Payment Account and pay or transfer the amounts set forth
in the Notes Valuation Report, as applicable, in the manner specified, and in
accordance with the priorities established, in Section 11.1 hereof.

          (i) Not more than five Business Days after receiving an Issuer Request
requesting information regarding a redemption of the Notes of a Class as of a
proposed Redemption Date set forth in such Issuer Request, the Trustee shall
compute the following information and provide such information in a statement
(the "Redemption Date Statement") delivered to the Collateral Manager (which
shall review such statement in the manner provided for in Section 10.10(f)), the
Preferred Shares Paying Agent and each Hedge Counterparty:

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

               (ii) The amount of accrued interest due on such Notes as of the
          last day of the Interest Accrual Period immediately preceding such
          Redemption Date;

                                     -193-

<PAGE>

               (iii) The Redemption Price;

               (iv) The sum of all amounts due and unpaid under Section 11.1(a)
          (other than amounts payable on the Notes being redeemed or to the
          Noteholders thereof);

               (v) The amount due and payable to each Hedge Counterparty
          pursuant to the applicable Hedge Agreement; and

               (vi) The amount in the Accounts available for application to the
          redemption of such Notes.

          (j) The Trustee shall make available on its website, initially located
at www.cdotrustee.net, to S&P, together with each Monthly Report, any reports
received by the Trustee with respect to the Loans no later than five Business
Days prior to the delivery of such Monthly Report and not previously delivered
to S&P.

          (k) In the event of a sale by the Issuer of any Collateral Debt
Security that is subject to an Asset Specific Hedge, the Issuer (at the
direction Collateral Manager) shall provide written notice to each Hedge
Counterparty under such Asset Specific Hedge at least five Business Days prior
to such sale.

          Section 10.11 Release of Pledged Collateral Debt Securities; Release
of Assets.

          (a) If no Event of Default has occurred and is continuing and subject
to Article 12 hereof, the Issuer (or the Collateral Manager on behalf of the
Issuer) may, by Issuer Order delivered to the Trustee at least two Business Days
prior to the settlement date for any sale of a Pledged Collateral Debt Security
certifying that (i) it has sold such Pledged Collateral Debt Security pursuant
to and in compliance with Article 12 or (ii) in the case of a redemption
pursuant to Section 9.1 or Section 9.2 the proceeds from any such sale of
Pledged Collateral Debt Securities are sufficient to redeem the Notes pursuant
to Section 9.1 or Section 9.2, direct the Trustee to release such Pledged
Collateral Debt Security and, upon receipt of such Issuer Order, the Trustee
shall deliver any such Pledged Collateral Debt Security, if in physical form,
duly endorsed to the broker or purchaser designated in such Issuer Order or, if
such Pledged Collateral Debt Security is represented by a Security Entitlement,
cause an appropriate transfer thereof to be made, in each case against receipt
of the sales price therefor as set forth in such Issuer Order; provided,
however, that the Trustee may deliver any such Pledged Collateral Debt Security
in physical form for examination (prior to receipt of the sales proceeds) in
accordance with street delivery custom. The Trustee shall (i) deliver any
agreements and other documents in its possession relating to such Pledged
Collateral Debt Security and (ii) if applicable, duly assign each such agreement
and other document, in each case, to the broker or purchaser designated in such
Issuer Order.

          (b) The Issuer (or the Collateral Manager on behalf of the Issuer)
may, by Issuer Order, delivered to the Trustee at least three Business Days
prior to the date set for redemption or payment in full of a Pledged Collateral
Debt Security, certifying that such Pledged Collateral Debt Security is being
redeemed or paid in full, direct the Trustee, or at the Trustee's instructions,
the Custodial Securities Intermediary, to deliver such Pledged Collateral Debt
Security, if in physical form, duly endorsed, or, if such Pledged Collateral

                                     -194-

<PAGE>

Debt Security is a Clearing Corporation Security, to cause it to be presented,
to the appropriate paying agent therefor on or before the date set for
redemption or payment, in each case against receipt of the applicable redemption
price or payment in full thereof.

          (c) If no Event of Default has occurred and is continuing and subject
to Article 12, the Issuer (or the Collateral Manager on behalf of the Issuer)
may, by Issuer Order delivered to the Trustee at least two Business Days prior
to the date set for an exchange, tender or sale, certifying that a Collateral
Debt Security is subject to an Offer and setting forth in reasonable detail the
procedure for response to such Offer, direct the Trustee or at the Trustee's
instructions, the Custodial Securities Intermediary, to deliver such security,
if in physical form, duly endorsed, or, if such security is a Clearing
Corporation Security, to cause it to be delivered, in accordance with such
Issuer Order, in each case against receipt of payment therefor.

          (d) The Trustee shall deposit any proceeds received by it from the
disposition of a Pledged Collateral Debt Security in the Principal Collection
Account unless simultaneously applied to the purchase of Substitute Collateral
Debt Securities, subject to the Reinvestment Criteria, or Eligible Investments
under and in accordance with the requirements of Article 12 and this Article 10.
Neither the Trustee nor the Custodial Securities Intermediary shall be
responsible for any loss resulting from delivery or transfer of any security
prior to receipt of payment in accordance herewith.

          (e) The Trustee shall, upon receipt of an Issuer Order at such time as
there are no Notes Outstanding and all obligations of the Issuer hereunder have
been satisfied, release the Assets from the lien of this Indenture.

          Section 10.12 Reports by Independent Accountants.

          (a) On or about the Closing Date, the Issuer shall appoint a firm of
Independent certified public accountants of recognized national reputation for
purposes of preparing and delivering the reports or certificates of such
accountants required by this Indenture. The Collateral Manager, on behalf of the
Issuer, shall have the right to remove such firm or any successor firm. Upon any
resignation by or removal of such firm, the Collateral Manager, on behalf of the
Issuer, shall promptly appoint, by Issuer Order delivered to the Trustee, each
Hedge Counterparty and each Rating Agency, a successor thereto that shall also
be a firm of Independent certified public accountants of recognized national
reputation. If the Collateral Manager, on behalf of the Issuer, shall fail to
appoint a successor to a firm of Independent certified public accountants which
has resigned or been removed, within 30 days after such resignation or removal,
the Issuer shall promptly notify the Trustee of such failure in writing. If the
Collateral Manager, on behalf of the Issuer, shall not have appointed a
successor within 10 days thereafter, the Trustee shall promptly appoint a
successor firm of Independent certified public accountants of recognized
national reputation. The fees of such Independent certified public accountants
and its successor shall be payable by the Issuer or by the Trustee as provided
in the Priority of Payments.

          (b) Within 60 days after December 31 of each year (commencing with
December 31, 2006), the Issuer shall cause to be delivered to the Trustee, the
Collateral

                                     -195-

<PAGE>

Manager, each Hedge Counterparty and each Rating Agency an Accountants' Report
specifying the procedures applied and the associated findings with respect to
the Monthly Reports, the Notes Valuation Reports and any Redemption Date
Statements prepared in the year ending on such date. At least 60 days prior to
the Payment Date in April 2006 (and, if at any time a successor firm of
Independent certified public accountants is appointed, to the Payment Date
following the date of such appointment), the Issuer shall deliver to the Trustee
an Accountant's Report specifying in advance the procedures that such firm will
apply in making the aforementioned findings throughout the term of its service
as accountants to the Issuer. The Trustee shall promptly forward a copy of such
Accountant's Report to the Collateral Manager and each Holder of Notes of the
Controlling Class, at the address shown on the Note Register. The Issuer shall
not approve the institution of such procedures if a Majority of the Aggregate
Outstanding Amount of Notes of the Controlling Class, by written notice to the
Issuer and the Trustee within 30 days after the date of the related notice to
the Trustee, object thereto.

          (c) If any Hedge Counterparty is required to post collateral pursuant
to the related Hedge Agreement during any Due Period, then on or prior to the
Payment Date following such Due Period and on or prior to each anniversary of
such Payment Date the Issuer shall cause a firm of Independent certified public
accountants to review and verify that the value of collateral posted is in
accordance with the applicable provisions of the related Hedge Agreement.

          Section 10.13 Reports to Rating Agencies.

          (a) In addition to the information and reports specifically required
to be provided to each Rating Agency pursuant to the terms of this Indenture,
the Trustee shall provide each Rating Agency and each Hedge Counterparty with
all information or reports delivered by the Trustee hereunder, and such
additional information as each Rating Agency may from time to time reasonably
request and the Trustee determines in its sole discretion may be obtained and
provided without unreasonable burden or expense. The Issuer shall promptly
notify the Trustee and the Preferred Shares Paying Agent if a Rating Agency's
rating of any Class of Notes has been, or it is known by the Issuer that such
rating will be, reduced, or qualified or withdrawn.

          (b) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall provide the Rating Agencies with all information and reports delivered to
the Trustee hereunder, and shall provide to Fitch (i) the Operating Statement
Analysis Report for each applicable Collateral Debt Security and (ii) on a
monthly basis, the file, shown in Exhibit T attached hereto, in Microsoft Excel
format.

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

          The information referenced in paragraph (b) of this Section 10.13
should be sent to Fitch by e-mail to cdo.surveillance@fitchratings.com and
karen.trebach@fitchratings.com or hardcopy to Fitch, Inc., One State Street
Plaza, New York, New York 10004, facsimile no.: (212)

                                     -196-

<PAGE>

908-0500, Attention: Commercial Real Estate Loan CDOs, Performance Analytics, or
such other address that Fitch shall designate in the future.

          Section 10.14 Certain Procedures.

          (a) For so long as the Notes may be transferred only in accordance
with Rule 144A or another exemption from registration under the Securities Act,
the Issuer (or the Collateral Manager on behalf of the Issuer) will ensure that
any Bloomberg screen containing information about the Rule 144A Global Notes
includes the following (or similar) language:

               (i) the "Note Box" on the bottom of the "Security Display" page
          describing the Rule 144A Global Notes will state: "Iss'd Under
          144A/3c7";

               (ii) the "Security Display" page will have the flashing red
          indicator "See Other Available Information"; and

               (iii) the indicator will link to the "Additional Security
          Information" page, which will state that the Notes "are being offered
          in reliance on the exemption from registration under Rule 144A of the
          Securities Act to persons who are both (i) qualified institutional
          buyers (as defined in Rule 144A under the Securities Act) and (ii)
          qualified purchasers (as defined under Section 3(c)(7) under the
          Investment Company Act of 1940).

          (b) For so long as the Rule 144A Global Notes are registered in the
name of DTC or its nominee, the Issuer (or the Collateral Manager on behalf of
the Issuer) will instruct DTC to take these or similar steps with respect to the
Rule 144A Global Notes:

               (i) the DTC 20-character security descriptor and 48-character
          additional descriptor will indicate with marker "3c7" that sales are
          limited to (i) QIBs and (ii) Qualified Purchasers;

               (ii) where the DTC deliver order ticket sent to purchasers by DTC
          after settlement is physical, it will have the 20-character security
          descriptor printed on it. Where the DTC deliver order ticket is
          electronic, it will have a "3c7" indicator and a related user manual
          for participants, which will contain a description of the relevant
          restriction; and

               (iii) DTC will send an "Important Notice" outlining the 3(c)(7)
          restrictions applicable to the Rule 144A Global Notes to all DTC
          participants in connection with the initial offering of Notes by the
          issuers.

                                     -197-

<PAGE>

                                   ARTICLE 11

                              APPLICATION OF MONIES

          Section 11.1 Disbursements of Monies from Payment Account.

          (a) Notwithstanding any other provision in this Indenture, but subject
to the other subsections of this Section 11.1 and Section 13.1 hereof, on each
Payment Date or Redemption Date, the Trustee shall disburse amounts transferred
to the Payment Account from the Interest Collection Account and the Principal
Collection Account pursuant to Section 10.2 hereof in accordance with the
following priorities (the "Priority of Payments"):

               (i) Interest Proceeds. On each Payment Date or Redemption Date,
          (except as otherwise provided in Section 11.1(d)) Interest Proceeds
          with respect to the related Due Period shall be distributed in the
          following order of priority:

                    (1) to the payment of taxes and filing fees (including any
               registered office and government fees) owed by the Issuer, if
               any;

                    (2) (a) first, to the extent not previously reimbursed, to
               the Advancing Agent or the Trustee, in its capacity as Backup
               Advancing Agent, the aggregate amount of any Nonrecoverable
               Interest Advances due and payable to such party, (b) second, to
               the extent not previously reimbursed, to the Collateral Manager,
               the aggregate amount of any Nonrecoverable Cure Advance due and
               payable to the Collateral Manager; (c) third, to the Advancing
               Agent, the Advancing Agent Fee and any previously due but unpaid
               Advancing Agent Fee (provided that the Advancing Agent has not
               failed to make any Interest Advance required to be made in
               respect of such Payment Date pursuant to the terms of this
               Indenture), (d) fourth, to the Advancing Agent and the Trustee,
               in its capacity as Backup Advancing Agent, (i) to the extent due
               and payable to such party, Reimbursement Interest and (ii)
               reimbursement of any outstanding Interest Advances not (in the
               case of this clause (ii)) to exceed the amount that would result
               in an Interest Shortfall with respect to such Payment Date and
               (e) fifth, to the extent due and payable to the Collateral
               Manager, reimbursement of any outstanding Cure Advance (but only
               to the extent that such payment would not result in an Interest
               Shortfall with respect to such Payment Date);

                    (3) (a) first, to the payment to the Trustee, as Backup
               Advancing Agent, the Backup Advancing Agent Fee (or if the
               Advancing Agent has failed to make any Interest Advance required
               to be made by the Advancing Agent in respect of such Payment Date
               pursuant to the terms of this Indenture, the Advancing Agent Fee
               otherwise payable to the Advancing Agent on such Payment Date)
               and any previously due but unpaid Backup Advancing Agent Fees,
               (b) second, to the payment to the Trustee of the accrued and
               unpaid fees in respect of its services equal to the greater of
               (i) 0.015% per annum of the Aggregate Collateral Balance and (ii)
               U.S. $25,000 per annum, (c) third, to the payment of other
               accrued and unpaid Company Administrative Expenses of the
               Trustee, the

                                     -198-

<PAGE>

               Paying Agent, the Preferred Shares Paying Agent and the
               Calculation Agent and (d) fourth, to the payment of any other
               accrued and unpaid Company Administrative Expenses, the aggregate
               of all such amounts in clauses (c) and (d) above (including such
               amounts paid since the previous Payment Date from the Expense
               Account) not to exceed 0.065% per annum of the Aggregate
               Collateral Balance;

                    (4) to the payment of the Senior Collateral Management Fee
               and any previously due but unpaid Senior Collateral Management
               Fees;

                    (5) pro rata on the basis of amounts payable under each
               Hedge Agreement (if any), to the payment of any amounts
               (including, without limitation, any Hedge Payment Amounts)
               scheduled to be paid to each Hedge Counterparty, if any, pursuant
               to any Hedge Agreement, along with any payments (however
               described) due and payable by the Issuer under any Hedge
               Agreement in connection with a termination (in whole or in part)
               of any Hedge Agreement (including any interest that may accrue
               thereon), other than by reason of an Event of Default (as defined
               in the related Hedge Agreement) or Termination Event (other than
               Illegality or Tax Event) (each as defined in the related Hedge
               Agreement) in each case, with respect to which the Hedge
               Counterparty is the Defaulting Party or the sole Affected Party
               (as defined in the related Hedge Agreement);

                    (6) to the payment of the Class A-1 Interest Distribution
               Amount, plus, any Class A-1 Defaulted Interest Amount;

                    (7) to the payment of the Class A-2 Interest Distribution
               Amount, plus, any Class A-2 Defaulted Interest Amount;

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

                    (9) as long as any of the Class A Notes or the Class B Notes
               are Outstanding, to the payment of the following amounts:

                         (a) in the event that the Class A-1 Notes become due
                    and payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon the Stated Maturity of the Class A-1
                    Notes, to the payment in full of principal of the Class A-1
                    Notes;

                         (b) in the event that the Class A-2 Notes become due
                    and payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class A-2
                    Notes, to the payment in full of

                                     -199-

<PAGE>

                    principal of, first, the Class A-1 Notes and second, the
                    Class A-2 Notes;

                         (c) in the event that the Class B Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class B Notes,
                    to the payment in full of principal of, first, the Class A-1
                    Notes, second, the Class A-2 Notes and third, the Class B
                    Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    A Notes and the Class B Notes, first, to the payment of
                    principal of the Class A-1 Notes, second, to the payment of
                    principal of the Class A-2 Notes and third, to the payment
                    of principal of the Class B Notes, to the extent necessary
                    to cause each of the Class A/B Coverage Tests to be
                    satisfied (after giving effect to the payment of all amounts
                    previously paid on such Payment Date pursuant to this
                    Section 11.1(a)(i);

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

                    (11) to the payment of the Class C Capitalized Interest (if
               any);

                    (12) to the payment of the Class D Interest Distribution
               Amount, plus, any Class D Defaulted Interest Amount;

                    (13) to the payment of the Class D Capitalized Interest (if
               any);

                    (14) to the payment of the Class E Interest Distribution
               Amount, plus, any Class E Defaulted Interest Amount;

                    (15) to the payment of the Class E Capitalized Interest (if
               any);

                    (16) as long as any of the Class C Notes, the Class D Notes
               or the Class E Notes are Outstanding, to the payment of the
               following amounts:

                         (a) in the event that the Class C Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class C Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B Notes
                    and fourth, the Class C Notes;

                         (b) in the event that the Class D Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of

                                     -200-

<PAGE>

                    Default, (y) pursuant to an Auction Call Redemption, an
                    Optional Redemption, a Clean-up Call or a Tax Redemption or
                    (z) upon Stated Maturity of the Class D Notes, to the
                    payment in full of principal of first, the Class A-1 Notes,
                    second, the Class A-2 Notes, third, the Class B Notes,
                    fourth, the Class C Notes and fifth, the Class D Notes;

                         (c) in the event that the Class E Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class E Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes
                    and sixth, the Class E Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    C Notes, the Class D Notes and the Class E Notes, first, to
                    the payment of principal of the Class A-1 Notes, second, to
                    the payment of principal of the Class A-2 Notes, third, to
                    the payment of principal of the Class B Notes, fourth, to
                    the payment of principal of the Class C Notes, fifth, to the
                    payment of principal of the Class D Notes and sixth, to the
                    payment of principal of the Class E Notes, to the extent
                    necessary to cause each of the Class C/D/E Coverage Tests to
                    be satisfied (after giving effect to the payment of all
                    amounts previously paid on such Payment Date pursuant to
                    this Section 11.1(a)(i));

                    (17) to the payment of the Class F Interest Distribution
               Amount, plus, any Class F Defaulted Interest Amount;

                    (18) to the payment of the Class F Capitalized Interest (if
               any);

                    (19) to the payment of the Class G Interest Distribution
               Amount, plus, any Class G Defaulted Interest Amount;

                    (20) to the payment of the Class G Capitalized Interest (if
               any);

                    (21) to the payment of the Class H Interest Distribution
               Amount, plus, any Class H Defaulted Interest Amount;

                    (22) to the payment of the Class H Capitalized Interest (if
               any);

                    (23) as long as any of the Class F Notes, Class G Notes or
               Class H Notes are Outstanding, to the payment of the following
               amounts:

                         (a) in the event that the Class F Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of

                                     -201-

<PAGE>

                    Default, (y) pursuant to an Auction Call Redemption, an
                    Optional Redemption, a Clean-up Call or a Tax Redemption or
                    (z) upon Stated Maturity of the Class F Notes, to the
                    payment in full of principal of first, the Class A-1 Notes,
                    second, the Class A-2 Notes, third, the Class B Notes,
                    fourth, the Class C Notes, fifth, the Class D Notes, sixth,
                    the Class E Notes and seventh, the Class F Notes;

                         (b) in the event that the Class G Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class G Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes,
                    sixth, the Class E Notes, seventh, the Class F Notes and
                    eighth, the Class G Notes;

                         (c) in the event that the Class H Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class H Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes,
                    sixth, the Class E Notes, seventh, the Class F Notes,
                    eighth, the Class G Notes and ninth, the Class H Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    F Notes, the Class G Notes and the Class H Notes, first, to
                    the payment of principal of the Class A-1 Notes, second, to
                    the payment of principal of the Class A-2 Notes, third, to
                    the payment of principal of the Class B Notes, fourth, to
                    the payment of principal of the Class C Notes, fifth, to the
                    payment of principal of the Class D Notes, sixth, to the
                    payment of principal of the Class E Notes, seventh, to the
                    payment of principal of the Class F Notes, eighth, to the
                    payment of principal of the Class G Notes and ninth, to the
                    payment of principal of the Class H Notes, to the extent
                    necessary to cause the Class F/G/H Coverage Tests to be
                    satisfied (after giving effect to the payment of all amounts
                    previously paid on such Payment Date pursuant to this
                    Section 11.1(a)(i));

                    (24) on the first Payment Date following the occurrence of a
               Rating Confirmation Failure, to the extent that application of
               any unused proceeds remaining on deposit on the Unused Proceeds
               Account is insufficient to cause the ratings assigned to each
               Class of Notes to be reinstated or any affected Class to be paid
               in full, to the payment of principal of each Class of Notes, (i)
               first, to the

                                     -202-

<PAGE>

               Class A-1 Notes, (ii) second, to the Class A-2 Notes, (iii)
               third, to the Class B Notes, (iv) fourth, to the Class C Notes,
               (v) fifth, to the Class D Notes, (vi) sixth, to the Class E
               Notes, (vii) seventh, to the Class F Notes, (viii) eighth, to the
               Class G Notes and (ix) ninth, to the Class H Notes, in each case
               until the ratings assigned on the Closing Date to each Class of
               Notes have been reinstated or such Class has been paid in full;

                    (25) during the Reinvestment Period, to the pro rata payment
               of principal of the Class C Notes, the Class D Notes, the Class E
               Notes, the Class F Notes, the Class G Notes and the Class H
               Notes, in an amount not to exceed the amount set forth in
               Schedule R;

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

                    (27) to the payment of the Subordinate Collateral Management
               Fee and any accrued and unpaid Subordinate Collateral Management
               Fee;

                    (28) pro rata on the basis of amounts payable under each
               Hedge Agreement (if any), to the payment of (i) any amounts
               (including, without limitation, any Hedge Payment Amounts)
               (including any interest accrued thereon), if any, payable by the
               Issuer to the Hedge Counterparty under the related Hedge
               Agreement following an Event of Default or Termination Event
               (other than Illegality or Tax Event) (each as defined in the
               related Hedge Agreement) with respect to which the Hedge
               Counterparty is the Defaulting Party or the sole Affected Party
               (as defined in the related Hedge Agreement) and (ii) any costs
               attributable to entering into an additional or replacement Hedge
               Agreement in accordance with Section 16.1(g) to the extent such
               amounts are payable but exceed the balance on deposit in the
               related Hedge Termination Account; and

                    (29) any remaining Interest Proceeds to the Preferred Shares
               Paying Agent for deposit into the Preferred Shares Distribution
               Account for distribution to the Holders of the Preferred Shares
               in accordance with the provisions of the Preferred Shares Paying
               Agency Agreement.

               (ii) Principal Proceeds. On each Payment Date or Redemption Date,
          Principal Proceeds with respect to the related Due Period shall be
          distributed in the following order of priority:

                    (1) to the payment of the amounts referred to in subclauses
               (1) through (8) of Section 11.1(a)(i) in the same order of
               priority specified therein, but only to the extent not paid in
               full thereunder;

                    (2) to the extent that the amounts paid pursuant to
               subclause (9) of Section 11.1(a)(i) hereof are insufficient to
               pay such amounts in full thereunder and any Class A Notes or
               Class B Notes are Outstanding, to the payment of the following
               amounts:

                                     -203-

<PAGE>

                         (a) in the event that the Class A-1 Notes become due
                    and payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon the Stated Maturity of the Class A
                    Notes, to the payment in full of principal of the Class A-1
                    Notes;

                         (b) in the event that the Class A-2 Notes become due
                    and payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class A-2
                    Notes, to the payment in full of principal of, first, the
                    Class A-1 Notes and second, the Class A-2 Notes;

                         (c) in the event that the Class B Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class B Notes,
                    to the payment in full of principal of, first, the Class A-1
                    Notes, second, the Class A-2 Notes and third, the Class B
                    Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    A Notes and the Class B Notes, first, to the payment of
                    principal of the Class A-1 Notes, second, to the payment of
                    principal of the Class A-2 Notes and third, to the payment
                    of principal of the Class B Notes, to the extent necessary
                    to cause each of the Class A/B Coverage Tests to be
                    satisfied (after giving effect to the payment of all amounts
                    previously paid on such Payment Date pursuant to Section
                    11.1(a)(i) and this Section 11.1(a)(ii));

                    (3) (a) if the Class A Notes and the Class B Notes are no
               longer Outstanding, to the payment of first, the amounts referred
               to in subclause (10) of Section 11.1(a)(i) and second, the
               amounts referred to in subclause (11) of Section 11.1(a)(i), but
               only to the extent not paid in full thereunder;

                         (b) if the Class A Notes, the Class B Notes and the
                    Class C Notes are no longer Outstanding, to the payment of
                    first, the amounts referred to in subclause (12) of Section
                    11.1(a)(i) and second, the amounts referred to in subclause
                    (13) of Section 11.1(a)(i) but only to the extent not paid
                    in full thereunder;

                         (c) if the Class A Notes, the Class B Notes, the Class
                    C Notes and the Class D Notes are no longer Outstanding, to
                    the payment of first, the amounts referred to in subclause
                    (14) of

                                     -204-

<PAGE>

                    Section 11.1(a)(i) and second, the amounts referred to in
                    subclause (15) of Section 11.1(a)(i) but only to the extent
                    not paid in full thereunder;

                    (4) to the extent that the amounts paid pursuant to
               subclause (16) of Section 11.1(a)(i) above are insufficient to
               pay such amounts in full thereunder and any Class C Notes, Class
               D Notes or Class E Notes are Outstanding, to the payment of the
               following amounts:

                         (a) in the event that the Class C Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class C Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B Notes
                    and fourth, the Class C Notes;

                         (b) in the event that the Class D Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class D Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes and fifth, the Class D
                    Notes;

                         (c) in the event that the Class E Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean-up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class E Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes
                    and sixth, the Class E Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    C Notes, the Class D Notes and the Class E Notes, first, to
                    the payment of principal of the Class A-1 Notes, second, to
                    the payment of principal of the Class A-2 Notes, third, to
                    the payment of principal of the Class B Notes, fourth, to
                    the payment of principal of the Class C Notes, fifth, to the
                    payment of principal of the Class D Notes and sixth, to the
                    payment of principal of the Class E Notes, to the extent
                    necessary to cause the Class C/D/E Coverage Tests to be
                    satisfied (after giving effect to the payment of all amounts
                    previously paid on such Payment Date pursuant to Section
                    11.1(a)(i) and this Section 11.1(a)(ii));

                                     -205-

<PAGE>

                    (5) (a) if the Class A Notes, the Class B Notes, the Class C
               Notes, the Class D Notes and the Class E Notes are no longer
               Outstanding, to the payment of first, the amounts referred to in
               subclause (17) of Section 11.1(a)(i) and second, the amounts
               referred to in subclause (18) of Section 11.1(a)(i), but only to
               the extent not paid in full thereunder;

                         (b) if the Class A Notes, the Class B Notes, the Class
                    C Notes, the Class D Notes, the Class E Notes and the Class
                    F Notes are no longer Outstanding, to the payment of first,
                    the amounts referred to in subclause (19) of Section
                    11.1(a)(i) and second, the amounts referred to in subclause
                    (20) of Section 11.1(a)(i) but only to the extent not paid
                    in full thereunder;

                         (c) if the Class A Notes, the Class B Notes, the Class
                    C Notes, the Class D Notes, the Class E Notes, the Class F
                    Notes and the Class G Notes are no longer Outstanding, to
                    the payment of first, the amounts referred to in subclause
                    (21) of Section 11.1(a)(i) and second, the amounts referred
                    to in subclause (22) of Section 11.1(a)(i), but only to the
                    extent not paid in full thereunder;

                    (6) to the extent that the amounts paid pursuant to
               subclause (23) of Section 11.1(a)(i) are insufficient to pay such
               amounts in full thereunder and any Class F Notes, Class G Notes
               or Class H Notes are Outstanding, to the payment of the following
               amounts:

                         (a) in the event that the Class F Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class F Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes,
                    sixth, the Class E Notes and seventh, the Class F Notes;

                         (b) in the event that the Class G Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of Default, (y) pursuant to an Auction Call
                    Redemption, an Optional Redemption, a Clean up Call or a Tax
                    Redemption or (z) upon Stated Maturity of the Class G Notes,
                    to the payment in full of principal of first, the Class A-1
                    Notes, second, the Class A-2 Notes, third, the Class B
                    Notes, fourth, the Class C Notes, fifth, the Class D Notes,
                    sixth, the Class E Notes, seventh, the Class F Notes and
                    eighth, the Class G Notes;

                         (c) in the event that the Class H Notes become due and
                    payable (x) as a result of an acceleration following an
                    Event of

                                     -206-

<PAGE>

                    Default, (y) pursuant to an Auction Call Redemption, an
                    Optional Redemption, a Clean up Call or a Tax Redemption or
                    (z) upon Stated Maturity of the Class H Notes, to the
                    payment in full of principal of first, the Class A-1 Notes,
                    second, the Class A-2 Notes, third, the Class B Notes,
                    fourth, the Class C Notes, fifth, the Class D Notes, sixth,
                    the Class E Notes, seventh, the Class F Notes, eighth, the
                    Class G Notes and ninth, the Class H Notes; or

                         (d) in the event of a Mandatory Redemption of the Class
                    F Notes, the Class G Notes and the Class H Notes, first, to
                    the payment of principal of the Class A-1 Notes, second, to
                    the payment of principal of the Class A-2 Notes, third, to
                    the payment of principal of the Class B Notes, fourth, to
                    the payment of principal of the Class C Notes, fifth, to the
                    payment of principal of the Class D Notes, sixth, to the
                    payment of principal of the Class E Notes, seventh, to the
                    payment of principal of the Class F Notes, eighth, to the
                    payment of principal of the Class G Notes and ninth, to the
                    payment of principal of the Class H Notes, to the extent
                    necessary to cause the Class F/G/H Coverage Tests to be
                    satisfied (after giving effect to the payment of all amounts
                    previously paid on such Payment Date pursuant to Section
                    11.1(a)(i) and Section 11.1(a)(ii));

                    (7) to the extent that the amounts paid pursuant to
               subclause (24) of Section 11.1(a)(i) above are insufficient to
               pay such amounts in full thereunder and any Notes are
               Outstanding, on the first Payment Date following the occurrence
               of a Rating Confirmation Failure, to the payment of principal of
               each Class of Notes, (i) first, to the Class A Notes, (ii)
               second, to the Class A-2 Notes, (iii) third, to the Class B
               Notes, (iv) fourth, to the Class C Notes, (v) fifth, to the Class
               D Notes, (vi) sixth, to the Class E Notes, (vii) seventh, to the
               Class F Notes, (viii) eighth, to the Class G Notes, and (ix)
               ninth, to the Class H Notes, in each case until the ratings
               assigned on the Closing Date to each Class of Notes have been
               reinstated or such Class has been paid in full;

                    (8) prior to the last day of the Reinvestment Period, to the
               investment in Eligible Investments and reinvestment in Substitute
               Collateral Debt Securities subject to the Reinvestment Criteria
               or, if determined by the Collateral Manager, to pay any Special
               Amortization Amount, to amortize the Class A-1 Notes, the Class
               A-2 Notes, the Class B Notes, the Class C Notes, the Class D
               Notes, the Class E Notes, the Class F Notes, the Class G Notes
               and the Class H Notes as follows: (x) if each of the S&P Special
               Amortization Pro Rata Condition and the Moody's Special
               Amortization Pro Rata Condition is satisfied with respect to such
               Payment Date, on a pro rata basis (based on the Aggregate
               Outstanding Amount of each Class) among all Classes of Notes, or
               (y) if either the S&P Special Amortization Pro Rata Condition or
               the Moody's Special Amortization Pro Rata Condition is not
               satisfied with respect to such Payment Date, sequentially among
               all Classes of Notes; provided, however, that amounts

                                     -207-

<PAGE>

               representing recoveries in respect of Defaulted Securities will
               be distributed sequentially in any event;

                    (9) after the Reinvestment Period (x) on each Payment Date
               that is not also a Redemption Date or the Stated Maturity of the
               Notes and (y) in the absence of an acceleration following an
               Event of Default, to the payment of principal of (i) first, the
               Class A-1 Notes, until the Class A-1 Notes have been paid in
               full, (ii) second, the Class A-2 Notes, until the Class A-2 Notes
               have been paid in full, (iii) third, the Class B Notes, until the
               Class B Notes have been paid in full, (iv) fourth, the Class C
               Notes, until the Class C Notes have been paid in full, (v) fifth,
               the Class D Notes, until the Class D Notes have been paid in
               full, (vi) sixth, the Class E Notes, until the Class E Notes have
               been paid in full, (vii) seventh, the Class F Notes, until the
               Class F Notes have been paid in full, (viii) eighth, the Class G
               Notes, until the Class G Notes have been paid in full, and (ix)
               ninth, the Class H Notes, until the Class H Notes have been paid
               in full;

                    (10) to the payment of amounts referred to in subclause (26)
               of Section 11.1(a)(i) above to the extent not paid thereunder;

                    (11) to the payment of amounts referred to in subclause (27)
               of Section 11.1(a)(i) above to the extent not paid thereunder;

                    (12) to the payment of amounts referred to in subclause (28)
               of Section 11.1(a)(i) above to the extent not paid thereunder;
               and

                    (13) any remaining Principal Proceeds to the Preferred
               Shares Paying Agent for deposit into the Preferred Shares
               Distribution Account for distribution to the Holders of the
               Preferred Shares in accordance with the provisions of the
               Preferred Shares Paying Agency Agreement.

          (b) On or before the Business Day prior to each Payment Date, the
Issuer shall, pursuant to Section 10.2(e), remit or cause to be remitted to the
Trustee for deposit in the Payment Account an amount of Cash sufficient to pay
the amounts described in Section 11.1(a) required to be paid on such Payment
Date.

          (c) If on any Payment Date the amount available in the Payment Account
from amounts received in the related Due Period is insufficient to make the full
amount of the disbursements required by the statements furnished by the Trustee
pursuant to Section 10.10(e) hereof, the Trustee shall make the disbursements
called for in the order and according to the priority set forth under Section
11.1(a) above, subject to Section 13.1 hereof, to the extent funds are available
therefor.

          (d) Except as otherwise expressly provided in this Section 11.1, if on
any Payment Date the amount available in the Payment Account from amounts
received in the related Due Period are insufficient to make the full amount of
the disbursements required by any lettered subclause of Section 11.1(a)(i) or
Section 11.1(a)(ii), the Trustee shall make the disbursements called for by such
subclause ratably in accordance with the respective amounts

                                     -208-

<PAGE>

                    of such disbursements then due and payable to the extent
                    funds are available therefor, unless such subclause provides
                    otherwise.

          (e) On or before the Business Day preceding each Payment Date, the
Issuer shall, pursuant to Section 10.2(e), remit or cause to be remitted to the
Trustee for deposit in the Payment Account an amount of Cash sufficient to pay
the amounts described in Section 11.1(a) required to be paid on such Payment
Date.

          (f) In connection with the payment to each Hedge Counterparty pursuant
to each Hedge Agreement of any amount scheduled to be paid from time to time
between Payment Dates from amounts received with respect to the Collateral Debt
Securities or otherwise as required pursuant to the terms of the related Hedge
Agreement, such amounts shall be distributed to each Hedge Counterparty pursuant
to the related Hedge Agreement.

          (g) In connection with any required payment by the Issuer to the
Servicer pursuant to the Servicing Agreement of any amount scheduled to be paid
from time to time between Payment Dates from amounts received with respect to
the Collateral Debt Securities, such amounts shall be distributed to the
Servicer pursuant to the terms of the Servicing Agreement.

          Section 11.2 Trust Accounts.

          All Monies held by, or deposited with the Trustee in the Collection
Accounts, the Defeased Collateral Accounts, the Payment Account, the Expense
Account, the Unused Proceeds Account or the Delayed Funding Obligations Account
pursuant to the provisions of this Indenture, and not invested in Eligible
Investments as herein provided, shall be deposited in one or more trust
accounts, maintained at the Corporate Trust Office or at a financial institution
whose long-term rating is at least equal to, "A2" by Moody's and "A-" by S&P and
Fitch to be held in trust for the benefit of the Noteholders. To the extent
Monies deposited in such trust account exceed amounts insured by the Bank
Insurance Fund or Savings Association Insurance Fund administered by the Federal
Deposit Insurance Corporation, or any agencies succeeding to the insurance
functions thereof, and are not fully collateralized by direct obligations of the
United States of America, such excess shall be invested in Eligible Investments
as directed by Issuer Order.

                                   ARTICLE 12

                       SALE OF COLLATERAL DEBT SECURITIES

          Section 12.1 Sales of Collateral Debt Securities.

          (a) Except as otherwise expressly permitted or required by this
Indenture, the Issuer shall not sell or otherwise dispose of any Collateral Debt
Security, provided that, subject to satisfaction of any applicable conditions in
Section 10.11, so long as (A) no Event of Default has occurred and is continuing
and (B) on or prior to the trade date for such sale the Collateral Manager has
certified to the Trustee that each of the conditions applicable to such sale set
forth below has been satisfied, the Collateral Manager, on behalf of the Issuer,
acting

                                     -209-

<PAGE>

pursuant to the Collateral Management Agreement may direct the Trustee in
writing to sell, and the Trustee shall sell in the manner directed by the
Collateral Manager in writing (which writing shall specify whether such security
is a Defaulted Security or Credit Risk Security, if applicable, or whether such
security is otherwise permitted to be sold pursuant to this Section 12.1(a)):

               (i) any Defaulted Security at any time;

               (ii) a Credit Risk Security, (a) during the Reinvestment Period,
          if the Collateral Manager has certified to the Trustee that it shall
          use commercially reasonable efforts to purchase one or more Substitute
          Collateral Debt Securities having an Aggregate Principal Balance no
          less than the Sale Proceeds (excluding accrued interest) from such
          sale, and after giving effect to such sale and to the purchase of
          Substitute Collateral Debt Securities with the Sale Proceeds thereof,
          in the judgment of the Collateral Manager (which shall not be called
          into question solely as a result of subsequent events), the
          Reinvestment Criteria shall be satisfied and (b) after the
          Reinvestment Period, at any time;

               (iii) if a Collateral Debt Security that is a Defaulted Security
          is not sold by the Issuer (at the direction of the Collateral Manager)
          within three (3) years of such Collateral Debt Security becoming a
          Defaulted Security, the Collateral Manager, on behalf of the Issuer,
          shall use its commercially reasonable efforts to sell such Collateral
          Debt Security as soon as commercially practicable thereafter; and

               (iv) without limiting the foregoing, any Collateral Debt Security
          that is a CMBS Security, a CRE CDO Security or a REIT Debt Security
          and, in each case, is not a Defaulted Security or a Credit Risk
          Security may be sold during the Reinvestment Period, if (a) the
          Aggregate Principal Balance of Collateral Debt Securities sold
          pursuant to this paragraph for a given calendar year does not exceed
          15% of the Aggregate Collateral Balance at the beginning of that year,
          (b) the Collateral Manager believes in good faith that proceeds from
          the sale of such Collateral Debt Security can be reinvested, within
          five Business Days after the trade date on which such Collateral Debt
          Security is sold in one or more Substitute Collateral Debt Securities
          having an Aggregate Principal Balance of not less than 100% of the
          Principal Balance of the Collateral Debt Security being sold and (c)
          after giving effect to such sale and to the purchase of Substitute
          Collateral Debt Securities with the Sale Proceeds thereof, the
          Reinvestment Criteria will be satisfied.

          (b) Notwithstanding the foregoing, the Collateral Manager (at its
option and at any time) shall be permitted to effect a sale of a Credit Risk
Security or a Defaulted Security hereunder by purchasing (or causing its
Affiliate to purchase) such Defaulted Security or Credit Risk Security from the
Issuer for a Cash purchase price that shall be equal to the sum of (i) the
Aggregate Principal Balance thereof plus (ii) all accrued and unpaid interest
(or, in the case of a Preferred Equity Security, all accrued and unpaid
dividends or other distributions not attributable to the return of capital by
the related Underlying Instruments) thereon. Notwithstanding anything to the
contrary set forth herein, no Advisory Committee consent shall be required in
connection with such Cash purchase (the "Credit Risk/Defaulted Security Cash
Purchase").

                                     -210-

<PAGE>

          In addition and notwithstanding anything to the contrary set forth
herein (and provided that no Event of Default has occurred and is continuing),
the Collateral Manager (at its option but only upon disclosure to, and with the
prior consent of, the Advisory Committee) shall be permitted to effect a sale of
a Defaulted Security or a Credit Risk Security hereunder by directing the Issuer
to exchange such Defaulted Security or Credit Risk Security for (i) a Substitute
Collateral Debt Security (that is not a Defaulted Security or a Credit Risk
Security) owned by an Affiliate of the Collateral Manager (such Substitute
Collateral Debt Security, the "Exchange Security") or (ii) a combination of an
Exchange Security and Cash, provided that:

               (i) (A) the sum of (1) the Principal Balance of such Exchange
          Security plus (2) all accrued and unpaid interest (or, in the case of
          a Preferred Equity Security, all accrued and unpaid dividends or other
          distributions not attributable to the return of capital by its
          governing documents) thereon plus (3) the Cash amount (if any) to be
          paid to the Issuer in respect of such exchange by such Affiliate of
          the Collateral Manager, shall be equal to or greater than (B) the sum
          of (1) the Principal Balance of such Defaulted Security or Credit Risk
          Security sought to be substituted plus (2) all accrued and unpaid
          interest (or, in the case of a Preferred Equity Security, all accrued
          and unpaid dividends or other distributions not attributable to the
          return of capital by its governing documents) thereon;

               (ii) the Eligibility Criteria and the Reinvestment Criteria shall
          be satisfied immediately after such exchange; and

               (iii) the Aggregate Principal Balance of all such Defaulted
          Securities and Credit Risk Securities so exchanged shall not exceed
          10% of the Aggregate Collateral Balance as of the Closing Date (such
          limitation, the "10% Limit").

          (c) After the Issuer has notified the Trustee of an Optional
Redemption, a Clean-Up Call or a Tax Redemption in accordance with Section 9.1
or an Auction Call Redemption in accordance with Section 9.2, the Collateral
Manager, on behalf of the Issuer, and acting pursuant to the Collateral
Management Agreement, may at any time direct the Trustee in writing to sell, and
the Trustee shall sell in the manner directed by the Collateral Manager in
writing, any Collateral Debt Security without regard to the foregoing
limitations in Section 12.1(a); provided that:

               (i) the Sale Proceeds therefrom must be used to pay certain
          expenses and redeem all of the Notes in whole but not in part pursuant
          to Section 9.1 and Section 9.2, and upon any such sale the Trustee
          shall release such Collateral Debt Security pursuant to Section 10.11;

               (ii) the Issuer may not direct the Trustee to sell (and the
          Trustee shall not be required to release) a Collateral Debt Security
          pursuant to this Section 12.1(c) unless:

                    (1) the Collateral Manager certifies to the Trustee that (x)
               in the Collateral Manager's reasonable business judgment based on
               calculations included in the certification (which shall include
               the sales prices of the Collateral Debt Securities), the Sale
               Proceeds from the sale of one or more of the Collateral

                                     -211-

<PAGE>

               Debt Securities and all Cash and proceeds from Eligible
               Investments will be at least equal to the Total Redemption Price,
               and (y) an Independent bond pricing service (which shall be one
               or more broker-dealers selected by the Collateral Manager which
               are rated at least "P-1" by Moody's and at least "A-1+" by
               Standard & Poor's and which make a market in the applicable
               Collateral Debt Securities) has confirmed (which confirmation may
               be in the form of a firm bid) the sales prices contained in the
               certification in clause (x) above (and attaching a copy of such
               confirmation); and

                    (2) the Independent accountants appointed by the Issuer
               pursuant to Section 10.12 shall confirm in writing the
               calculations made in clause (1)(x) above.

               (iii) in connection with an Optional Redemption, an Auction Call
          Redemption, a Clean-up Call or a Tax Redemption, all the Collateral
          Debt Securities to be sold pursuant to this Section 12.1(c) must be
          sold in accordance with the requirements set forth in Section 9.1(e)
          and Section 9.2, as applicable.

          (d) In the event that any Collateral Debt Security becomes the subject
of a conversion, exchange, redemption or offer, whether voluntary or
involuntary, the Issuer (or the Collateral Manager on behalf of the Issuer)
shall take no action to acquire the asset or instrument into which such
Collateral Debt Security is convertible or exchangeable unless such asset or
instrument would qualify as a Substitute Collateral Debt Security. In the event
of an involuntary exchange or conversion of a Collateral Debt Security, if the
resulting asset or instrument would not qualify as a Substitute Collateral Debt
Security, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
use its best efforts to sell such Collateral Debt Security prior to conversion
or exchange and, in any event, shall refuse to accept, and shall not acquire or
hold, the asset or instrument offered in exchange.

          (e) In the event that any Notes remain Outstanding as of the Payment
Date occurring six months prior to the Stated Maturity of the Notes, the
Collateral Manager will be required to determine whether the proceeds expected
to be received on the Assets prior to the Stated Maturity of the Notes will be
sufficient to pay in full the principal amount of (and accrued interest on) the
Notes on the Stated Maturity. If the Collateral Manager determines, in its sole
discretion, that such proceeds will not be sufficient to pay the outstanding
principal amount of and accrued interest on the Notes (a "Note Liquidation
Event") on the Stated Maturity of the Notes, the Issuer will, at the direction
of the Collateral Manager, be obligated to liquidate the portion of Collateral
Debt Securities sufficient to pay the remaining principal amount of and interest
on the Notes on or before the Stated Maturity. The Collateral Debt Securities to
be liquidated by the Issuer will be selected by the Collateral Manager.

          (f) Notwithstanding anything herein to the contrary, in the event that
a "buy/sell" arrangement has been initiated with respect to a Collateral Debt
Security as a dispute resolution mechanism and the Collateral Manager determines
in accordance with the Collateral Manager Servicing Standard that the sale of
such Collateral Debt Security is in the best interest of the Noteholders, the
Collateral Manager may, on behalf of the Issuer, direct the Trustee to sell such
Collateral Debt Security in accordance with the related Underlying

                                     -212-

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Instruments; provided that, in the event any such sale is to be made to an
Affiliate of the Issuer or the Collateral Manager, such sale may be made only
upon disclosure to, and with the prior consent of, the Advisory Committee.

          Section 12.2 Reinvestment Criteria and Trading Restrictions.

          (a) Except as provided in Section 12.3(c), during the Reinvestment
Period, Unscheduled Principal Payments, Sale Proceeds and other Principal
Proceeds (including any ARMS Equity Cash Contributions and ARMS Equity EI
Contributions) will be reinvested in Substitute Collateral Debt Securities
(which shall be, and hereby are, Granted to the Trustee pursuant to the Granting
Clause of this Agreement) only if after giving effect to such reinvestment, the
following criteria (which criteria shall also apply with respect to investments
in Collateral Debt Securities during the Ramp-Up Period) (the "Reinvestment
Criteria") are satisfied, as evidenced by an Officer's Certificate of the Issuer
or the Collateral Manager delivered to the Trustee, as of the date of the
commitment to purchase such Substitute Collateral Debt Securities:

               (i) such security satisfies the Eligibility Criteria;

               (ii) the Collateral Quality Tests are satisfied, or, if any
          Collateral Quality Test was not satisfied immediately prior to such
          reinvestment, the extent of compliance with such Collateral Quality
          Test will be maintained or improved following such reinvestment,
          except as otherwise specified in the Reinvestment Criteria below;

               (iii) the Coverage Tests are satisfied (or, if not satisfied, are
          maintained or improved);

               (iv) if immediately prior to such investment the S&P CDO Monitor
          Test or the S&P Recovery Test was not satisfied, such test result is
          maintained or improved after giving effect to such reinvestment;
          provided, however, that notwithstanding the foregoing, Sale Proceeds
          of Collateral Debt Securities may be reinvested as long as the
          Collateral Manager provides written notice of each such sale and
          reinvestment to S&P within three Business Days after such
          reinvestment; and

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

          (b) Notwithstanding the foregoing provisions, (i) Cash on deposit in
the Collection Accounts may be invested in Eligible Investments, pending
investment in Substitute Collateral Debt Securities and (ii) if an Event of
Default shall have occurred and be continuing, no Substitute Collateral Debt
Security may be acquired unless it was the subject of a commitment entered into
by the Issuer prior to the occurrence of such Event of Default.

          Section 12.3 Conditions Applicable to all Transactions Involving Sale
or Grant.

          (a) Any transaction effected after the Closing Date under this Article
12 or Section 10.11 shall be conducted in accordance with the requirements of
the Collateral Management Agreement; provided that (1) the Collateral Manager
shall not direct the Trustee to acquire any Substitute Collateral Debt Security
for inclusion in the Assets from the

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Collateral Manager or any of its Affiliates as principal or to sell any
Collateral Debt Security from the Assets to the Collateral Manager or any of its
Affiliates as principal unless the transaction is effected in accordance with
the Collateral Management Agreement and (2) the Collateral Manager shall not
direct the Trustee to acquire any Substitute Collateral Debt Security for
inclusion in the Assets from any account or portfolio for which the Collateral
Manager serves as investment adviser or direct the Trustee to sell any
Collateral Debt Security to any account or portfolio for which the Collateral
Manager serves as investment adviser unless such transactions comply with the
requirements of any applicable laws. The Trustee shall have no responsibility to
oversee compliance with this clause by the other parties.

          (b) Upon any Grant pursuant to this Article 12, all of the Issuer's
right, title and interest to the Pledged Obligation or Securities shall be
Granted to the Trustee pursuant to this Indenture, such Pledged Obligation or
Securities shall be registered in the name of the Trustee, and, if applicable,
the Trustee shall receive such Pledged Collateral Debt Security or Securities.
The Trustee shall also receive, not later than the date of delivery of any
Collateral Debt Security delivered after the Closing Date, an Officer's
Certificate of the Collateral Manager certifying that, as of the date of such
Grant, such Grant complies with the applicable conditions of and is permitted by
this Article 12 (and setting forth, to the extent appropriate, calculations in
reasonable detail necessary to determine such compliance).

          (c) Notwithstanding anything contained in this Article 12 to the
contrary, the Issuer shall, subject to this Section 12.3(c), have the right to
effect any transaction which has been consented to (i) by the Holders of Notes
evidencing 100% of the Aggregate Outstanding Amount of each and every Class of
Notes (or if there are no Notes Outstanding, 100% of the Preferred Shares) and
(ii) each Hedge Counterparty, and of which each Rating Agency has been notified.

          Section 12.4 Sale of Collateral Debt Securities with respect to an
Auction Call Redemption.

          (a) Pre-Auction Process.

               (i) Each Auction will occur on the Business Day that is at least
          13 Business Days prior to the proposed Auction Call Redemption Date
          (such date, the "Auction Date").

               (ii) The Collateral Manager will initiate the Auction Procedures
          at least 24 Business Days before the proposed Auction Call Redemption
          Date by: (a) preparing a list of Collateral Debt Securities (including
          CUSIP Number, if any, par amount and issuer name for each Collateral
          Debt Security); (b) deriving a list of not less than three qualified
          bidders (the "Listed Bidders") and requesting from each Listed Bidder
          bids by the applicable Auction Date; and (c) notifying the Trustee of
          the list of Listed Bidders (the "List").

               (iii) The Collateral Manager will deliver a general solicitation
          package to the Listed Bidders consisting of: (a) a form of a purchase
          agreement ("Auction Purchase Agreement") provided to the Trustee by
          the Collateral Manager (which shall provide that

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          (I) upon satisfaction of all conditions precedent therein, the
          purchaser is irrevocably obligated to purchase, and the Issuer is
          irrevocably obligated to sell, the Collateral Debt Securities on the
          date and on the terms stated therein, (II) each bidder may tender a
          separate bid for one or more Collateral Debt Securities in an Auction,
          (III) if the Collateral Debt Securities are to be sold to different
          bidders, that the consummation of the purchase of all Collateral Debt
          Securities must occur simultaneously and that the closing of each
          purchase is conditional on the closing of the other purchases, (IV) if
          for any reason whatsoever the Trustee has not received, by a specified
          Business Day (which shall be more than 10 Business Days before the
          proposed Auction Call Redemption Date), payment in full in immediately
          available funds of the purchase price for all Collateral Debt
          Securities, the obligations of the parties shall terminate and the
          Issuer shall have no obligation or liability whatsoever and (V) any
          prospective purchasers will be subject to the "limited recourse" and
          "non-petition" provisions set forth in this Indenture), (b) the
          minimum aggregate Cash purchase price (which shall be determined by
          the Collateral Manager as the Total Redemption Price less the balance
          of all Eligible Investments and Cash in the Collection Accounts, the
          Payment Account, the Delayed Funding Obligations Account, each Hedge
          Termination Account and the Expense Account); (c) the list of
          Collateral Debt Securities; (d) a formal bid sheet (which will permit
          a bidder to bid for all of the Collateral Debt Securities or
          separately for any one or more (but not all) Collateral Debt
          Securities and will include a representation from the bidder that it
          is eligible to purchase all of the Collateral Debt Securities or any
          one or more (but not all) Collateral Debt Securities) to be provided
          to the Trustee by the Collateral Manager; (e) a detailed timetable;
          and (f) copies of all transfer documents provided to the Trustee by
          the Collateral Manager (including transfer certificates and
          subscription agreements which a bidder must execute pursuant to the
          underlying instruments and a list of the requirements which the bidder
          must satisfy under the underlying instruments (i.e., QIB status,
          Qualified Purchaser status, etc.)).

               (iv) The Collateral Manager will send solicitation packages to
          all Listed Bidders on the List at least 20 Business Days before the
          proposed Auction Call Redemption Date. The Listed Bidders will be
          required to submit any due diligence questions (or comments on the
          draft purchase agreement) in writing to the Collateral Manager by a
          date specified in the solicitation package. The Collateral Manager
          will be required to answer all reasonable and relevant questions by
          the date specified in the solicitation package and the Collateral
          Manager will distribute the questions and answers and the revised
          final Auction Purchase Agreement to all Listed Bidders (with a copy to
          the Issuer and the Trustee).

          (b) Auction Process.

               (i) LaSalle Bank National Association or its Affiliates may, but
          shall not be required to, bid at the Auction. The Collateral Manager
          and its Affiliates may bid in the Auction if the Collateral Manager
          deems such bidding to be appropriate but is not required to do so.

               (ii) On the Second Business Day prior to the Auction Date (the
          "Auction Bid Date"), all bids will be due by facsimile at the offices
          of the Trustee by 11:00 a.m. New

                                     -215-

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          York City time, with the winning bidder or bidders to be notified by
          2:00 p.m. New York City time. All bids from Listed Bidders on the List
          will be due on the bid sheet contained in the solicitation package.
          Each bid shall be for the purchase and delivery to one purchaser (A)
          of all (but not less than all) of the Collateral Debt Securities or
          (B) of one or more (but not all) of the Collateral Debt Securities.

               (iii) Unless the Trustee receives (A) at least one bid from a
          Listed Bidder to purchase all of the Collateral Debt Securities or (B)
          receives bids from one or more Listed Bidders (to purchase one or more
          (but not all) Collateral Debt Securities) for all Collateral Debt
          Securities in the aggregate, the Trustee will decline to consummate
          the sale.

               (iv) Subject to clause (iii) above, with the advice of the
          Collateral Manager, the Trustee shall select the bid or bids which
          result in the Highest Auction Price from one or more Listed Bidders
          (in excess of the specified minimum purchase price). "Highest Auction
          Price" means the higher of (A) the highest price bid by any Listed
          Bidder for all of the Collateral Debt Securities or (B) the sum of the
          highest prices bid by one or more Listed Bidders (for one or more (but
          not all) Collateral Debt Securities) for all Collateral Debt
          Securities in the aggregate. In each case, the price bid by a Listed
          Bidder will be the dollar amount which the Collateral Manager
          certifies to the Trustee based on the Collateral Manager's review of
          the bids, which certification shall be binding and conclusive.

               (v) Upon notification to the winning bidder or bidders, the
          winning bidder (or, if the Highest Auction Price requires the sale of
          the Collateral Debt Securities to more than one bidder, each winning
          bidder) will be required to deliver to the Trustee a signed
          counterpart of the Auction Purchase Agreement no later than 4:00 p.m.
          New York City time on the Auction Date. The winning bidder (or, if the
          Highest Auction Price requires the sale of the Collateral Debt
          Securities to more than one bidder, each winning bidder) will make
          payment in full of the purchase price on the Business Day (the
          "Auction Purchase Closing Date") specified in the general solicitation
          package (which will be no later than 10 Business Days prior to the
          proposed Auction Call Redemption Date). If a winning bidder so
          requests, the Trustee and the Issuer will enter into a bailee letter
          in the form agreed upon by the Trustee and the Collateral Manager to
          this Indenture (a "Bailee Letter") with each winning bidder and its
          designated bank (which bank will be subject to approval by the Issuer
          (or the Collateral Manager on behalf of the Issuer)); provided that
          such bank enters into an account control agreement with the Trustee
          and the Issuer and has a long term debt rating of at least "BBB+" by
          Standard & Poor's and (if rated by Fitch) at least "BBB+" by Fitch and
          (if rated by Moody's) at least "A2" by Moody's. If the above
          requirements are satisfied, the Trustee will deliver the Collateral
          Debt Securities (to be sold to such bidder) pursuant thereto to the
          bailee bank at least one Business Day prior to the closing on the sale
          of the Collateral Debt Securities and accept payment of the purchase
          price pursuant thereto. If payment in full of the purchase price is
          not made by the Auction Purchase Closing Date for any reason
          whatsoever (or, if the Collateral Debt Securities are to be sold to
          more than one bidder, if any bidder fails to make payment in full of
          the purchase price by the Auction Purchase Closing Date for any reason
          whatsoever), the Issuer will decline to consummate the sale of all
          Collateral Debt

                                     -216-

<PAGE>

          Securities, the Trustee and the Issuer will direct the bailee bank to
          return the Collateral Debt Securities to the Trustee, and (if notice
          of redemption has been given by the Trustee) the Trustee will give
          notice (in accordance with the terms of this Indenture) that the
          Auction Call Redemption will not occur.

               (vi) Notwithstanding the foregoing, but subject to the
          satisfaction of the conditions set forth in Section 9.2(b), the Holder
          of the Preferred Shares or any of its Affiliates, although it may not
          have been the highest bidder, will have the option to purchase any one
          or more Collateral Debt Securities for a purchase price equal to the
          highest bid therefor.

          (c) Notwithstanding anything to the contrary set forth in this Section
12.4, at the election of the Holder of the Preferred Shares, in lieu of
initiating or conducting any Auction, the Holder of the Preferred Shares or any
of its Affiliates will have the option to purchase all of the Collateral Debt
Securities that would otherwise be subject to such Auction for a price equal to
the Total Redemption Price. Such purchase of Collateral Debt Securities by the
Holder of the Preferred Shares or its Affiliates pursuant to this Section
12.4(c) will be deemed to be a Successful Auction pursuant to this Indenture and
the Notes and the Preferred Shares shall be redeemed, in whole and not in part,
at their applicable Redemption Prices in accordance with the applicable
provisions of Article 9.

          Section 12.5 Modifications to Collateral Quality Tests or Coverage
Tests.

          In the event any of the Rating Agencies modifies the definitions or
calculations relating to (i) the method of calculating any of its respective
Collateral Quality Tests (a "Collateral Quality Test Modification") or (ii) any
of the Coverage Tests (a "Coverage Test Modification"), in either case in order
to correspond with published changes in the guidelines, methodology or standards
established by such Rating Agency, the Issuer may, but is under no obligation
solely as a result of this Section 12.5 to, incorporate corresponding changes
into this Indenture by an amendment hereto without the consent of the Holders of
the Notes (but with written notice to the Noteholders) or the Preferred Shares
if (x)(1) in the case of a Collateral Quality Test Modification, the Rating
Agency Condition is satisfied with respect to the Rating Agency that made such
modification or (2) in the case of a Coverage Test Modification, the Rating
Agency Condition is satisfied with respect to each Rating Agency then rating the
Notes and (y) written notice of such modification is delivered by the Collateral
Manager to the Trustee, each Hedge Counterparty and to the Holders of the Notes
and Preferred Shares (which notice may be included in the next regularly
scheduled report to Noteholders). Any such Collateral Quality Test Modification
or Coverage Test Modification, as the case may be, shall be effected without
execution of a supplemental indenture; provided, however, that such amendment
shall be (i) evidenced by a written instrument executed and delivered by each of
the Co-Issuers and the Collateral Manager and delivered to the Trustee and each
Hedge Counterparty, (ii) accompanied by delivery by the Issuer to the Trustee of
(A) an Officer's Certificate of the Issuer certifying that such amendment has
been made pursuant to and in compliance with this Section 12.5 and (B) if
requested by the Trustee, an Opinion of Counsel stating that such amendment is
authorized or permitted by this Section 12.5 and that all applicable conditions
precedent under this Section 12.5 have been satisfied, on which such Officer's
Certificate or such Officer's Certificate and Opinion of Counsel, as the case
may be, the Trustee shall be entitled to rely. Notwithstanding

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<PAGE>

the foregoing, any such amendment reasonably determined by the Trustee to be
unduly burdensome to the Trustee, shall not take effect without the Trustee's
express written consent.

          Section 12.6 ARMS Equity Contributions.

          (a) General. For so long as ARMS Equity continues to hold 100% of the
Preferred Shares, on any Business Day prior to the end of the Reinvestment
Period ARMS Equity shall be permitted to contribute to the Issuer (for further
Grant to the Trustee) ARMS Equity Cash Contributions, ARMS Equity EI
Contributions and/or ARMS Equity CDS Contributions, in accordance with the
provisions of this Section 12.6. Any such ARMS Equity Contribution shall be
deemed to have been received by the Issuer for inclusion in the Pledged
Obligations on the date such ARMS Equity Contribution was received by the
Issuer. ARMS Equity shall provide written notice to the Issuer, the Collateral
Manager and the Trustee of its election to make an ARMS Equity Contribution not
less than one Business Day prior to its making of any such contribution.
Following any such contribution by ARMS Equity, all right, title and interest of
ARMS Equity, in, to and under such ARMS Equity Contribution shall thereupon
immediately transfer and convey to the Issuer (for further Grant to the Trustee)
and ARMS Equity shall not thereafter be entitled to receive any interest,
repayment or additional return thereon.

          (b) ARMS Equity Cash Contributions. All ARMS Equity Cash
Contributions, upon receipt thereof by the Issuer, shall be (i) deemed to
constitute additional Principal Collections during the related Due Period
pursuant to the definition thereof, (ii) deposited to the Principal Collection
Account and (iii) subject to the provisions of this Indenture applicable to
Principal Collections without distinction thereafter from any other Principal
Collections.

          (c) ARMS Equity EI Contributions. All ARMS Equity EI Contributions,
upon receipt thereof by the Issuer, shall be (i) deemed to constitute additional
Principal Collections during the related Due Period pursuant to the definition
thereof, (ii) deposited to and held in the Principal Collection Account and
(iii) subject to the provisions of this Indenture applicable to Principal
Collections without distinction thereafter from any other Principal Collections.

          (d) ARMS Equity CDS Contributions. All ARMS Equity CDS Contributions,
upon receipt thereof by the Issuer, shall be deemed to constitute Collateral
Debt Securities subject to the provisions of this Indenture applicable to
Collateral Debt Securities without distinction thereafter from any other
Collateral Debt Securities; provided that (i) each such ARMS Equity CDS
Contribution shall have complied with the Eligibility Criteria at the time it
was received or deemed to have been received by the Issuer pursuant to Section
12.6(a) and (ii) for the avoidance of doubt, the initial contribution pursuant
to this Section 12.6 of any such ARMS Equity CDS Contribution shall not be
subject to the Reinvestment Criteria or be deemed to constitute a Substitute
Collateral Debt Security hereunder.

                                     -218-

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                                   ARTICLE 13

                             NOTEHOLDERS' RELATIONS

          Section 13.1 Subordination.

          (a) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes agree for the benefit of the
Holders of the Class A-1 Notes and each Hedge Counterparty that the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes and the
Issuer's rights in and to the Assets (the "Class A-2 Subordinate Interests")
shall be subordinate and junior to the Class A-1 Notes to the extent and in the
manner set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes
shall be paid in full before any further payment or distribution is made on
account of the Class A-2 Subordinate Interests. The Holders of the Class A-2
Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes agree for the
benefit of the Holders of the Class A-1 Notes and each Hedge Counterparty, not
to cause the filing of a petition in bankruptcy against the Issuer for failure
to pay to them amounts due under the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes hereunder until the payment in full of the
Class A-1 Notes and not before one year and one day, or, if longer, the
applicable preference period then in effect, has elapsed since such payment.

          (b) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes and the Class H Notes agree for the benefit of the Holders of the Class
A-1 Notes, the Class A-2 Notes and each Hedge Counterparty that the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes and the Issuer's rights in and to
the Assets (the "Class B Subordinate Interests") shall be subordinate and junior
to the Class A-1 Notes and the Class A-2 Notes to the extent and in the manner
set forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes and
the Class A-2 Notes shall be paid in full before any further payment or
distribution is made on account of the Class B Subordinate Interests. The
Holders of the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes agree for the
benefit of the Holders of the Class A-1 Notes, the Class A-2 Notes and each
Hedge Counterparty, not to cause the filing of a petition in bankruptcy against
the Issuer for failure to pay to them amounts due under the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes hereunder until the payment in full of the
Class A-1 Notes and the Class A-2 Notes and not

                                     -219-

<PAGE>

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

          (c) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes agree for the benefit of the Holders of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes and each Hedge Counterparty that the Class C Notes, the
Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes, the
Class H Notes and the Issuer's rights in and to the Assets (the "Class C
Subordinate Interests") shall be subordinate and junior to the Class A-1 Notes,
the Class A-2 Notes and the Class B Notes to the extent and in the manner set
forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the
Class A-2 Notes and the Class B Notes shall be paid in full before any further
payment or distribution is made on account of the Class C Subordinate Interests.
The Holders of the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes, the Class G Notes and the Class H Notes agree, for the benefit of
the Holders of the Class A-1 Notes, the Class A-2 Notes and the Class B Notes
and each Hedge Counterparty, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes and the Class H Notes hereunder until the payment in full of the Class A-1
Notes, the Class A-2 Notes and the Class B Notes and not before one year and one
day, or, if longer, the applicable preference period then in effect, has elapsed
since such payment.

          (d) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class D Notes, the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes agree for the
benefit of the Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes and each Hedge Counterparty that the Class D Notes, the
Class E Notes, the Class F Notes, the Class G Notes, the Class H Notes and the
Issuer's rights in and to the Assets (the "Class D Subordinate Interests") shall
be subordinate and junior to the Class A-1 Notes, the Class A-2 Notes, the Class
B Notes and the Class C Notes to the extent and in the manner set forth in this
Indenture including as set forth in Section 11.1(a) and hereinafter provided. If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event of Default
specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes and the Class C Notes shall be paid in full before any further
payment or distribution is made on account of the Class D Subordinate Interests.
The Holders of the Class D Notes, the Class E Notes, the Class F Notes, the
Class G Notes and the Class H Notes agree, for the benefit of the Holders of the
Class A-1 Notes, the Class A-2 Notes, the Class B Notes, and the Class C Notes
and each Hedge Counterparty, not to cause the filing of a petition in bankruptcy
against the Issuer for failure to pay to them amounts due under the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes hereunder until the payment in full of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes and the Class C Notes and not before one year and one
day, or, if longer, the applicable preference period then in effect, has elapsed
since such payment.

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<PAGE>

          (e) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class E Notes, the Class F
Notes, the Class G Notes and the Class H Notes agree for the benefit of the
Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes and the Class D Notes and each Hedge Counterparty that the Class E
Notes, the Class F Notes, the Class G Notes and the Class H Notes and the
Issuer's rights in and to the Assets (the "Class E Subordinate Interests") shall
be subordinate and junior to the Class A-1 Notes, the Class A-2 Notes, the Class
C Notes and the Class D Notes to the extent and in the manner set forth in this
Indenture including as set forth in Section 11.1(a) and hereinafter provided. If
any Event of Default has not been cured or waived and acceleration occurs in
accordance with Article 5, including as a result of an Event of Default
specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the Class A-2 Notes,
the Class B Notes, the Class C Notes, and the Class D Notes shall be paid in
full before any further payment or distribution is made on account of the Class
E Subordinate Interests. The Holders of the Class E Notes, the Class F Notes,
the Class G Notes and the Class H Notes agree, for the benefit of the Holders of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes
and the Class D Notes and each Hedge Counterparty, not to cause the filing of a
petition in bankruptcy against the Issuer for failure to pay to them amounts due
under the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes hereunder until the payment in full of the Class A-1 Notes, the Class A-2
Notes, the Class B Notes, the Class C Notes and the Class D Notes and not before
one year and one day, or, if longer, the applicable preference period in effect,
has elapsed since such payment.

          (f) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class F Notes, the Class G
Notes and the Class H Notes agree for the benefit of the Holders of the Class
A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, the Class E Notes and each Hedge Counterparty that the Class F Notes,
the Class G Notes and the Class H Notes and the Issuer's rights in and to the
Assets (the "Class F Subordinate Interests") shall be subordinate and junior to
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes and the Class E Notes to the extent and in the manner set
forth in this Indenture including as set forth in Section 11.1(a) and
hereinafter provided. If any Event of Default has not been cured or waived and
acceleration occurs in accordance with Article 5, including as a result of an
Event of Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the
Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes and the
Class E Notes shall be paid in full before any further payment or distribution
is made on account of the Class F Subordinate Interests. The Holders of the
Class F Notes, the Class G Notes and the Class H Notes agree, for the benefit of
the Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes and each Hedge Counterparty,
not to cause the filing of a petition in bankruptcy against the Issuer for
failure to pay to them amounts due under the Class F Notes, the Class G Notes
and the Class H Notes hereunder until the payment in full of the Class A-1
Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D
Notes and the Class E Notes and not before one year and one day, or, if longer,
the applicable preference period then in effect, has elapsed since such payment.

          (g) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class G Notes and the Class H
Notes agree for the benefit of

                                     -221-

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the Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and each
Hedge Counterparty that the Class G Notes, the Class H Notes and the Issuer's
rights in and to the Assets (the "Class G Subordinate Interests") shall be
subordinate and junior to the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes and the Class F
Notes to the extent and in the manner set forth in this Indenture including as
set forth in Section 11.1(a) and hereinafter provided. If any Event of Default
has not been cured or waived and acceleration occurs in accordance with Article
5, including as a result of an Event of Default specified in Section 5.1(f) or
5.1(g), the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes and the Class F Notes shall be paid
in full before any further payment or distribution is made on account of the
Class G Subordinate Interests. The Holders of the Class G Notes and the Class H
Notes agree, for the benefit of the Holders of the Class A-1 Notes, the Class
A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes and the Class F Notes and each Hedge Counterparty, not to cause the filing
of a petition in bankruptcy against the Issuer for failure to pay to them
amounts due under the Class G Notes and the Class H Notes hereunder until the
payment in full of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes,
the Class C Notes, the Class D Notes, the Class E Notes and the Class F Notes
and not before one year and one day, or, if longer, the applicable preference
period then in effect, has elapsed since such payment.

          (h) Anything in this Indenture or the Notes to the contrary
notwithstanding, the Issuer and the Holders of the Class H Notes agree for the
benefit of the Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes, the Class D Notes, the Class E Notes, the Class F
Notes, the Class G Notes and each Hedge Counterparty that the Class H Notes and
the Issuer's rights in and to the Assets (the "Class H Subordinate Interests")
shall be subordinate and junior to the Class A-1 Notes, the Class A-2 Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes and the Class G Notes to the extent and in the manner set forth in
this Indenture including as set forth in Section 11.1(a) and hereinafter
provided. If any Event of Default has not been cured or waived and acceleration
occurs in accordance with Article 5, including as a result of an Event of
Default specified in Section 5.1(f) or 5.1(g), the Class A-1 Notes, the Class
A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes, the Class E
Notes, the Class F Notes and the Class G Notes shall be paid in full before any
further payment or distribution is made on account of the Class H Subordinate
Interests. The Holders of the Class H Notes agree, for the benefit of the
Holders of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the
Class C Notes, the Class D Notes, the Class E Notes, the Class F Notes and the
Class G Notes and each Hedge Counterparty, not to cause the filing of a petition
in bankruptcy against the Issuer for failure to pay to them amounts due under
the Class H Notes hereunder until the payment in full of the Class A-1 Notes,
the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes and the Class G Notes and not before one
year and one day, or if longer, the applicable preference period then in effect,
has elapsed since such payment.

          (i) In the event that notwithstanding the provisions of this
Indenture, any holder of any Subordinate Interests shall have received any
payment or distribution in respect of such Subordinate Interests contrary to the
provisions of this Indenture, then, unless and until

                                     -222-

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the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes and
the Class H Notes, as the case may be, shall have been paid in full in
accordance with this Indenture, such payment or distribution shall be received
and held in trust for the benefit of, and shall forthwith be paid over and
delivered to, the Trustee, which shall pay and deliver the same to the Holders
of the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C
Notes, the Class D Notes, the Class E Notes, the Class F Notes, the Class G
Notes and the Class H Notes, as the case may be, in accordance with this
Indenture.

          (j) Each Holder of Subordinate Interests agrees with all Holders of
the Class A-1 Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes,
the Class D Notes, the Class E Notes, the Class F Notes, the Class G Notes, and
the Class H Notes, as the case may be, that such Holder of Subordinate Interests
shall not demand, accept, or receive any payment or distribution in respect of
such Subordinate Interests in violation of the provisions of this Indenture
including this Section 13.1; provided, however, that after the Class A-1 Notes,
the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class F Notes, the Class G Notes and the Class H Notes,
as the case may be, have been paid in full, the Holders of Subordinate Interests
shall be fully subrogated to the rights of the Holders of the Class A-1 Notes,
the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D Notes,
the Class E Notes, the Class E Notes, the Class F Notes, the Class G Notes and
the Class H Notes, as the case may be. Nothing in this Section 13.1 shall affect
the obligation of the Issuer to pay Holders of Subordinate Interests.

          Section 13.2 Standard of Conduct.

          In exercising any of its or their voting rights, rights to direct and
consent or any other rights as a Securityholder under this Indenture, subject to
the terms and conditions of this Indenture, including, without limitation,
Section 5.9, a Securityholder or Securityholders shall not have any obligation
or duty to any Person or to consider or take into account the interests of any
Person and shall not be liable to any Person for any action taken by it or them
or at its or their direction or any failure by it or them to act or to direct
that an action be taken, without regard to whether such action or inaction
benefits or adversely affects any Securityholder, the Issuer, or any other
Person, except for any liability to which such Securityholder may be subject to
the extent the same results from such Securityholder's taking or directing an
action, or failing to take or direct an action, in bad faith or in violation of
the express terms of this Indenture.

                                   ARTICLE 14

                                  MISCELLANEOUS

          Section 14.1 Form of Documents Delivered to the Trustee.

          In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters

                                     -223-

<PAGE>

and one or more other such Persons as to other matters, and any such Person may
certify or give an opinion as to such matters in one or several documents.

          Any certificate or opinion of an Authorized Officer of the Issuer or
the Co-Issuer may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless such
Authorized Officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which his certificate or opinion is based are erroneous. Any such
certificate of an Authorized Officer of the Issuer or the Co-Issuer or Opinion
of Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, the Issuer, the Co-Issuer, the
Collateral Manager or any other Person, stating that the information with
respect to such factual matters is in the possession of the Issuer, the
Co-Issuer, the Collateral Manager or such other Person, unless such Authorized
Officer of the Issuer or the Co-Issuer or such counsel knows that the
certificate or opinion or representations with respect to such matters are
erroneous. Any Opinion of Counsel may also be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
Authorized Officer of the Issuer or the Co-Issuer, stating that the information
with respect to such matters is in the possession of the Issuer or the
Co-Issuer, unless such counsel knows that the certificate or opinion or
representations with respect to such matters are erroneous.

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

          Whenever in this Indenture it is provided that the absence of the
occurrence and continuation of a Default or Event of Default is a condition
precedent to the taking of any action by the Trustee at the request or direction
of the Issuer or the Co-Issuer, then notwithstanding that the satisfaction of
such condition is a condition precedent to the Issuer's or the Co-Issuer's
rights to make such request or direction, the Trustee shall be protected in
acting in accordance with such request or direction if it does not have
knowledge of the occurrence and continuation of such Default or Event of Default
as provided in Section 6.1(e).

          Section 14.2 Acts of Securityholders.

          (a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Securityholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Securityholders in person or by an
agent duly appointed in writing; and, except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
are delivered to the Trustee, and, where it is hereby expressly required, to the
Issuer and/or the Co-Issuer. Such instrument or instruments (and the action or
actions embodied therein and evidenced thereby) are herein sometimes referred to
as the "Act" of the Securityholders signing such instrument or instruments.
Proof of execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Indenture and conclusive in
favor of the Trustee, the Issuer and the Co-Issuer, if made in the manner
provided in this Section 14.2.

                                      -224-

<PAGE>

          (b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Trustee deems
sufficient.

          (c) The principal amount and registered numbers of Notes held by any
Person, and the date of his holding the same, shall be proved by the Notes
Register. The Notional Amount and registered numbers of the Preferred Shares
held by any Person, and the date of his holding the same, shall be proved by the
register maintained with respect to the Preferred Shares.

          (d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Securityholder shall bind such Securityholder (and
any transferee thereof) of such Security and of every Security issued upon the
registration thereof or in exchange therefor or in lieu thereof, in respect of
anything done, omitted or suffered to be done by the Trustee, the Preferred
Shares Paying Agent, the Shares Registrar, the Issuer or the Co-Issuer in
reliance thereon, whether or not notation of such action is made upon such
Security.

          Section 14.3 Notices, etc., to the Trustee, the Issuer, the Co-Issuer,
the Advancing Agent, the Collateral Manager, the Initial Purchaser, each Hedge
Counterparty and each Rating Agency.

          Any request, demand, authorization, direction, notice, consent, waiver
or Act of Securityholders or other documents provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with:

          (a) the Trustee by any Securityholder or by the Issuer or the
Co-Issuer shall be sufficient for every purpose hereunder if made, given,
furnished or filed in writing to and mailed, by certified mail, return receipt
requested, hand delivered, sent by overnight courier service guaranteeing next
day delivery or by facsimile in legible form, to the Trustee addressed to it at
135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603, Attention: CDO
Trust Services Group - Arbor Realty Mortgage Securities Series 2005-1, Facsimile
Number: (312) 904-0524, or at any other address previously furnished in writing
to the Issuer, the Co-Issuer or Securityholders by the Trustee;

          (b) the Issuer by the Trustee or by any Securityholder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to the Issuer
addressed to it c/o Arbor Realty Mortgage Securities Series 2005-1, Ltd. at
Maples Finance Limited, P.O. Box 1093GT, Queensgate House, South Church Street,
George Town, Grand Cayman, Cayman Islands, facsimile number: 345-945-7100,
Attention: The Director, or at any other address previously furnished in writing
to the Trustee by the Issuer, with a copy to the Collateral Manager at its
address set forth below;

          (c) the Co-Issuer by the Trustee or by any Securityholder shall be
sufficient for every purpose hereunder (unless otherwise herein expressly
provided) if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to the
Co-Issuer addressed to it in c/o Puglisi & Associates, 830 Library Avenue, Suite
204, Newark, Delaware 19711, Attention: Donald J. Puglisi, or at any

                                     -225-

<PAGE>

other address previously furnished in writing to the Trustee by the Co-Issuer,
with a copy to the Collateral Manager at its address set forth below;

          (d) the Advancing Agent by the Trustee, the Issuer or the Co-Issuer
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, hand
delivered, sent by overnight courier service or by facsimile in legible form, to
the Advancing Agent addressed to it at Arbor Realty SR, Inc., 333 Earle Ovington
Boulevard, 9th Floor, Uniondale, New York 11553, Attention: Executive Vice
President - Structured Securitization, or at any other address previously
furnished in writing to the Trustee and the Co-Issuers, with a copy to the
Collateral Manager at its address set forth below.

          (e) the Preferred Shares Paying Agent shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to and mailed,
by certified mail, return receipt requested, hand delivered, sent by overnight
courier service guaranteeing next day delivery or by facsimile in legible form,
to the Preferred Shares Paying Agent addressed to it at its Corporate Trust
Office at 135 South LaSalle Street, Suite 1511, Chicago, Illinois 60603,
Attention: CDO Trust Services Group - Arbor Realty Mortgage Securities Series
2005-1, Facsimile Number: (312) 904-0524 or at any other address previously
furnished in writing by the Trustee;

          (f) the Collateral Manager by the Issuer, the Co-Issuer or the Trustee
shall be sufficient for every purpose hereunder if in writing and mailed, first
class postage prepaid, hand delivered, sent by overnight courier service or by
facsimile in legible form, to the Collateral Manager addressed to it at Arbor
Realty Collateral Management, LLC, 333 Earle Ovington Boulevard, 9th Floor,
Uniondale, New York 11553, Attention: Executive Vice President - Structured
Securitization, or at any other address previously furnished in writing to the
Issuer, the Co-Issuer or the Trustee;

          (g) each Rating Agency, as applicable, by the Issuer, the Co-Issuer,
the Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder (unless otherwise herein expressly provided) if in writing and mailed,
first class postage prepaid, hand delivered, sent by overnight courier service
or by facsimile in legible form, to each Rating Agency addressed to it at
Standard & Poor's Services, a division of The McGraw-Hill Companies, Inc., 55
Water Street, 41st Floor, New York, New York 10041-0003, telecopy no. (212)
438-2664, Attention: Structured Finance Ratings, Asset-Backed Securities CBO/CLO
Surveillance (and by electronic mail at cdosurveillance@standardandpoors.com;
provided that all reports required to be submitted to S&P pursuant to this
Indenture only shall be provided in electronic form to such e-mail address);
Moody's Investor Services, Inc., 99 Church Street, New York, New York 10007,
facsimile no.: (212) 553-4170, Attention: CBO/CLO Monitoring (or by electronic
mail at cdomonitoring@moodys.com) and Fitch, Inc., One State Street Plaza, New
York, New York 10004, facsimile no.: (212) 908-0500, Attention: Commercial Real
Estate Loan CDOs, Performance Analytics (or by electronic mail at
cdo.surveillance@fitchratings.com and karen.trebach@fitchratings.com) or such
other address that a Rating Agency shall designate in the future;

                                     -226-

<PAGE>

          (h) each Hedge Counterparty by the Issuer, the Co-Issuer, the
Collateral Manager or the Trustee shall be sufficient for every purpose
hereunder if in writing and mailed, first class postage prepaid, hand delivered,
sent by overnight courier service or by facsimile in legible form, to each Hedge
Counterparty addressed to it at the address specified in the related Hedge
Agreement or at any other address previously furnished in writing to the Issuer,
the Co-Issuer, the Collateral Manager and the Trustee by each Hedge
Counterparty;

          (i) the Initial Purchaser by the Issuer, the Co-Issuer, the Trustee or
the Collateral Manager shall be sufficient for every purpose hereunder if in
writing and mailed, first class postage prepaid, hand delivered, sent by
overnight courier service or by facsimile in legible form to the Initial
Purchaser c/o at Wachovia Capital Markets, LLC, 12 East 49th Street, 45th Floor,
New York, NY 10017, Attention: Michelle Tan, facsimile no.: (212) 909-0047.

          Section 14.4 Notices to Noteholders; Waiver.

          Except as otherwise expressly provided herein, where this Indenture
provides for notice to Holders of Notes of any event,

          (a) such notice shall be sufficiently given to Holders of Notes if in
writing and mailed, first class postage prepaid, to each Holder of a Note
affected by such event, at the address of such Holder as it appears in the Notes
Register, not earlier than the earliest date and not later than the latest date,
prescribed for the giving of such notice;

          (b) such notice shall be in the English language;

          (c) such notice shall also be provided to the Irish Paying Agent (for
so long as any Notes are listed on the Irish Stock Exchange); and

          (d) all reports or notices to Preferred Shareholders shall be
sufficiently given if provided in writing and mailed, first class postage
prepaid, to the Preferred Shares Paying Agent.

          Notwithstanding clause (a) above, a Holder of Notes may give the
Trustee a written notice that it is requesting that notices to it be given by
facsimile transmissions and stating the facsimile number for such transmission.
Thereafter, the Trustee shall give notices to such Holder by facsimile
transmission; provided that if such notice also requests that notices be given
by mail, then such notice shall also be given by mail in accordance with clause
(a) above.

          The Trustee shall deliver to the Holders of the Notes any information
or notice requested to be so delivered by at least 25% of the Holders of any
Class of Notes.

          Neither the failure to mail any notice, nor any defect in any notice
so mailed, to any particular Holder of a Note shall affect the sufficiency of
such notice with respect to other Holders of Notes. In case by reason of the
suspension of regular mail service or by reason of any other cause, it shall be
impracticable to give such notice by mail, then such notification to Holders of
Notes shall be made with the approval of the Trustee and shall constitute
sufficient notification to such Holders of Notes for every purpose hereunder.

                                     -227-

<PAGE>

          Where this Indenture provides for notice in any manner, such notice
may be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.

          In the event that, by reason of the suspension of the regular mail
service as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Trustee shall be
deemed to be a sufficient giving of such notice.

          For so long as any Notes are listed on the Irish Stock Exchange and
the rules of such exchange so require, all notices to Noteholders of such Notes
will be published in the Daily Official List of the Irish Stock Exchange.

          Section 14.5 Effect of Headings and Table of Contents.

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

          Section 14.6 Successors and Assigns.

          All covenants and agreements in this Indenture by the Issuer and the
Co-Issuer shall bind their respective successors and assigns, whether so
expressed or not.

          Section 14.7 Severability.

          In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality, and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.

          Section 14.8 Benefits of Indenture.

          Nothing in this Indenture or in the Securities, expressed or implied,
shall give to any Person, other than (i) the parties hereto and their successors
hereunder and (ii) the Collateral Manager, each Hedge Counterparty, the
Preferred Shareholders, the Preferred Shares Paying Agent, the Shares Registrar
and the Noteholders (each of whom, in the case of this subclause (ii), shall be
an express third party beneficiary hereunder), any benefit or any legal or
equitable right, remedy or claim under this Indenture.

          Section 14.9 Governing Law.

          THIS INDENTURE AND EACH NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO
BE PERFORMED THEREIN WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

                                     -228-

<PAGE>

          Section 14.10 Submission to Jurisdiction.

          Each of the Issuer and the Co-Issuer hereby irrevocably submits to the
non-exclusive jurisdiction of any New York State or federal court sitting in the
Borough of Manhattan in The City of New York in any action or proceeding arising
out of or relating to the Notes or this Indenture, and each of the Issuer and
the Co-Issuer hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New York State or
federal court. Each of the Issuer and the Co-Issuer hereby irrevocably waives,
to the fullest extent that they may legally do so, the defense of an
inconvenient forum to the maintenance of such action or proceeding. Each of the
Issuer and the Co-Issuer irrevocably consents to the service of any and all
process in any action or proceeding by the mailing or delivery of copies of such
process to it at the office of the Issuer's and the Co-Issuer's agent set forth
in Section 7.2. Each of the Issuer and the Co-Issuer agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.

          Section 14.11 Counterparts.

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

          Section 14.12 Liability of Co-Issuers.

          Notwithstanding any other terms of this Indenture, the Notes or any
other agreement entered into between, inter alios, the Issuer and the Co-Issuer
or otherwise, neither the Issuer nor the Co-Issuer shall have any liability
whatsoever to the Co-Issuer or the Issuer, respectively, under this Indenture,
the Notes, any such agreement or otherwise and, without prejudice to the
generality of the foregoing, neither the Issuer nor the Co-Issuer shall be
entitled to take any steps to enforce, or bring any action or proceeding, in
respect of this Indenture, the Notes, any such agreement or otherwise against
the other Co-Issuer or the Issuer, respectively. In particular, neither the
Issuer nor the Co-Issuer shall be entitled to petition or take any other steps
for the winding up or bankruptcy of the Co-Issuer or the Issuer, respectively or
shall have any claim in respect of any assets of the Co-Issuer or the Issuer,
respectively.

                                   ARTICLE 15

          ASSIGNMENT OF COLLATERAL DEBT SECURITIES PURCHASE AGREEMENTS
                       AND COLLATERAL MANAGEMENT AGREEMENT

          Section 15.1 Assignment of Collateral Debt Securities Purchase
Agreement and the Collateral Management Agreements.

          (a) The Issuer, in furtherance of the covenants of this Indenture and
as security for the Notes and amounts payable to the Secured Parties hereunder
and the performance and observance of the provisions hereof, hereby collaterally
assigns, transfers, conveys and sets over to the Trustee, for the benefit of the
Noteholders and each Hedge

                                     -229-

<PAGE>

Counterparty, all of the Issuer's estate, right, title and interest in, to and
under each Collateral Debt Securities Purchase Agreement (now or hereafter
entered into) and the Collateral Management Agreement (each, an "Article 15
Agreement"), including, without limitation, (i) the right to give all notices,
consents and releases thereunder, (ii) the right to give all notices of
termination and to take any legal action upon the breach of an obligation of a
Seller or the Collateral Manager thereunder, including the commencement, conduct
and consummation of proceedings at law or in equity, (iii) the right to receive
all notices, accountings, consents, releases and statements thereunder and (iv)
the right to do any and all other things whatsoever that the Issuer is or may be
entitled to do thereunder; provided, however, that the Trustee hereby grants the
Issuer a license to exercise all of the Issuer's rights pursuant to the Article
15 Agreements without notice to or the consent of the Trustee (except as
otherwise expressly required by this Indenture, including, without limitation,
as set forth in subsection (f) of this Section 15.1) which license shall be and
is hereby deemed to be automatically revoked upon the occurrence of an Event of
Default hereunder until such time, if any, that such Event of Default is cured
or waived.

          (b) The assignment made hereby is executed as collateral security, and
the execution and delivery hereby shall not in any way impair or diminish the
obligations of the Issuer under the provisions of each of the Article 15
Agreements, nor shall any of the obligations contained in each of the Article 15
Agreements be imposed on the Trustee.

          (c) Upon the retirement of the Notes, the payment by the Issuer of all
amounts payable under each Hedge Agreement and the release of the Assets from
the lien of this Indenture, this assignment and all rights herein assigned to
the Trustee for the benefit of the Noteholders and each Hedge Counterparty shall
cease and terminate and all the estate, right, title and interest of the Trustee
in, to and under each of the Article 15 Agreements shall revert to the Issuer
and no further instrument or act shall be necessary to evidence such termination
and reversion.

          (d) The Issuer represents that it has not executed any assignment of
any of the Article 15 Agreements other than this collateral assignment.

          (e) The Issuer agrees that this assignment is irrevocable, and that it
shall not take any action which is inconsistent with this assignment or make any
other assignment inconsistent herewith. The Issuer shall, from time to time upon
the request of the Trustee, execute all instruments of further assurance and all
such supplemental instruments with respect to this assignment as the Trustee may
specify.

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

               (i) each of the Sellers and the Collateral Manager consents to
          the provisions of this collateral assignment and agrees to perform any
          provisions of this Indenture made expressly applicable to each of the
          Sellers and the Collateral Manager pursuant to the applicable Article
          15 Agreement;

                                     -230-

<PAGE>

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

               (iii) each of the Sellers and the Collateral Manager, as
          applicable, shall deliver to the Trustee duplicate original copies of
          all notices, statements, communications and instruments delivered or
          required to be delivered to the Issuer pursuant to the applicable
          Article 15 Agreement;

               (iv) none of the Issuer, the Sellers or the Collateral Manager
          shall enter into any agreement amending, modifying or terminating the
          applicable Article 15 Agreement, (other than in respect of an
          amendment or modification to cure any inconsistency, ambiguity or
          manifest error) or selecting or consenting to a successor collateral
          manager, without notifying each Rating Agency and without the prior
          written consent and written confirmation of each Rating Agency that
          such amendment, modification or termination will not cause its
          then-current ratings of the Notes to be reduced;

               (v) except as otherwise set forth herein and therein (including,
          without limitation, pursuant to Sections 12 and 13 of the Collateral
          Management Agreement), the Collateral Manager shall continue to serve
          as Collateral Manager under the Collateral Management Agreement,
          notwithstanding that the Collateral Manager shall not have received
          amounts due it under the Collateral Management Agreement because
          sufficient funds were not then available hereunder to pay such amounts
          pursuant to the Priority of Payments. The Collateral Manager agrees
          not to cause the filing of a petition in bankruptcy against the Issuer
          for the nonpayment of the fees or other amounts payable to the
          Collateral Manager under the Collateral Management Agreement until the
          payment in full of all Notes issued under this Indenture and the
          expiration of a period equal to the applicable preference period under
          the Bankruptcy Code plus 10 days following such payment; and

               (vi) the Collateral Manager irrevocably submits to the
          non-exclusive jurisdiction of any New York State or federal court
          sitting in the Borough of Manhattan in The City of New York in any
          action or proceeding arising out of or relating to the Notes or this
          Indenture, and the Collateral Manager irrevocably agrees that all
          claims in respect of such action or proceeding may be heard and
          determined in such New York State or federal court. The Collateral
          Manager irrevocably waives, to the fullest extent it may legally do
          so, the defense of an inconvenient forum to the maintenance of such
          action or proceeding. The Collateral Manager irrevocably consents to
          the service of any and all process in any action or Proceeding by the
          mailing by certified mail, return receipt requested, or delivery
          requiring signature and proof of delivery of copies of such initial
          process to it at Arbor Realty Trust, Inc., 333 Earle Ovington
          Boulevard, 9th Floor,

                                     -231-

<PAGE>

          Uniondale, New York 11553, Attention: Executive Vice
          President--Structured Securitization. The Collateral Manager agrees
          that a final and non-appealable judgment by a court of competent
          jurisdiction in any such action or proceeding shall be conclusive and
          may be enforced in other jurisdictions by suit on the judgment or in
          any other manner provided by law.

                                   ARTICLE 16

            HEDGE AGREEMENT; CURE RIGHTS; PURCHASE RIGHTS; SUBSEQUENT
                           COLLATERAL DEBT SECURITIES

          Section 16.1 Issuer's Obligations under Hedge Agreement.

          (a) On the Closing Date and thereafter, and on and after any date on
which the Issuer enters into an additional or replacement Hedge Agreement
(including any related Hedge Counterparty Credit Support), the Issuer, as
directed by the Collateral Manager, shall (i) require that each Hedge
Counterparty thereto, or any third party (including an Affiliate of such Hedge
Counterparty) that (A) has absolutely and unconditionally guaranteed the
obligations of the Hedge Counterparty under the related Hedge Agreement (with
such form of guaranty as shall be satisfactory to each Rating Agency then rating
any Notes hereunder), (B) has entered into credit intermediation arrangements in
respect of the obligations of the Hedge Counterparty under the related Hedge
Agreement satisfactory to each Rating Agency then rating any Notes hereunder,
(C) is the issuing bank on one or more letters of credit supporting the
obligations of the Hedge Counterparty under the related Hedge Agreement and that
shall be reasonably acceptable to each Rating Agency then rating any Notes
hereunder or (D) has provided any other additional credit support and such
inclusion of additional credit support shall have satisfied the Rating Agency
Condition (any such third party, including an Affiliate of such Hedge
Counterparty, a "Hedge Counterparty Credit Support Provider") has, at the time
the Hedge Agreement is executed, with respect to itself as an issuer or with
respect to its indebtedness, credit ratings at least equal to the Hedge
Counterparty Collateral Threshold Ratings by each Rating Agency then rating any
Notes hereunder, (ii) obtain a written confirmation from each Rating Agency then
rating any Notes hereunder that any additional or replacement Hedge Agreement
and the related Hedge Counterparty would not cause such Rating Agency's
then-current rating on any Class of Notes to be adversely qualified, reduced,
suspended or withdrawn (provided that the Issuer shall not be required to obtain
the foregoing written confirmation if (x) such additional or replacement Hedge
Agreement is an Asset Specific Hedge and (y) the Issuer is not required to make
any up-front payment in connection with such Asset Specific Hedge) and (iii)
assign and grant a security interest in such Hedge Agreement to the Trustee
pursuant to this Indenture. Each Hedge Agreement will provide that no amendment,
modification or waiver in respect of such Hedge Agreement, including any
additional or replacement Hedge Agreement, will be effective unless (A)
evidenced by a writing executed by each party thereto, (B) the Trustee has
acknowledged its consent thereto in writing and (C) each Rating Agency confirms
that such amendment, modification or waiver will not cause the reduction or
withdrawal of its then current rating on any Class of Notes. For the avoidance
of doubt, the Issuer may enter into any Hedge Agreement with respect to which
the Rating Agency Condition is satisfied.

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<PAGE>

          (b) The Trustee shall, on behalf of the Issuer, pay amounts due to
each Hedge Counterparty under the related Hedge Agreements in accordance with
the Priority of Payments, Section 11.1(f) hereof and Section 16.1(g) hereof.

          (c) The notional amount schedule of each Hedge Agreement providing for
floating rate payments to the Issuer will be calculated as a percentage of the
principal amount of the Notes originally anticipated to be Outstanding on each
Payment Date based on certain assumptions. In accordance with the terms of each
Hedge Agreement, such notional amount schedule will be reduced by the Issuer (or
the Collateral Manager on behalf of the Issuer) or each Hedge Counterparty on
each Payment Date to the extent that (i) the outstanding principal amount of the
Notes is less than the scheduled aggregate notional amount of the related Hedge
Agreements for such Payment Date and/or (ii) the Net Outstanding Portfolio
Balance is less than the scheduled aggregate notional amount of the related
Hedge Agreements for such Payment Date; provided that if any Notes are then
Outstanding, the Trustee shall first have received written evidence that the
Rating Agency Condition with respect to Moody's and S&P has been satisfied with
respect to such reduction and Fitch shall have been notified of such reduction
other than a scheduled reduction. Additionally, subject to satisfaction of the
Rating Agency Condition with respect to Moody's and S&P and the notification of
Fitch in respect thereof, a termination in part of a Hedge Agreement and a
corresponding reduction in the notional amount of the Hedge Agreement may occur,
in the event of a Mandatory Redemption or Special Amortization of the Notes. The
Issuer's remaining obligations in accordance with the Priority of Payments will
not be affected by any such reduction. Notwithstanding any right of the Issuer
to terminate each Hedge Agreement or related Hedge Counterparty Credit Support
upon the occurrence of a Termination Event or an Event of Default (each as
defined in each Hedge Agreement) or otherwise pursuant to a Hedge Agreement, the
Issuer shall not (x) terminate any Hedge Agreement or Hedge Counterparty Credit
Support or (y) cause the non-replacement of any terminated Hedge Agreement,
unless in each case the Issuer notifies Fitch thereof and obtains a written
confirmation from Moody's and S&P that such termination or non-replacement, as
applicable, would not cause such Rating Agency's then-current rating on any
Class of Notes, as applicable, to be adversely qualified, reduced, suspended or
withdrawn. For the avoidance of doubt, subject to the consent of the related
Hedge Counterparty if required in the Hedge Agreement, the Issuer may terminate,
reduce the notional amount of or otherwise modify the terms of any Hedge
Agreement if the Rating Agency Condition is satisfied in connection therewith.

          (d) Each Hedge Agreement shall provide for termination, and shall be
capable of being terminated (i) by or on behalf of the Issuer upon the failure
of the related Hedge Counterparty to post collateral under a Hedge Counterparty
Credit Support within the time period specified in the related Hedge Agreement
or provide other alternate credit enhancement in accordance with the related
Hedge Agreement, or upon the failure of the related Hedge Counterparty to
transfer (at the Hedge Counterparty's sole cost and expense) all of its rights
and obligations under the related Hedge Agreement to a Qualified Hedge Party
within the time period specified in the related Hedge Agreement, after the
failure of the related Hedge Counterparty (or any Hedge Counterparty Credit
Support Provider) to have the Hedge Counterparty Collateral Threshold Ratings;
(ii) by or on behalf of the Issuer upon the failure of the related Hedge
Counterparty to transfer (at the related Hedge Counterparty's sole cost and
expense) all of its rights and obligations under the related Hedge Agreement to
a Qualified

                                     -233-

<PAGE>

Hedge Party within the time period specified in the related Hedge Agreement
after the failure of the related Hedge Counterparty (or any Hedge Counterparty
Credit Support Provider) to have the Hedge Counterparty Required Ratings
(provided, however, that the related Hedge Counterparty shall continue to post
collateral and use its best efforts to find a replacement pursuant to the
related Hedge Agreement until the earlier to occur of termination of the related
Hedge Agreement by or on behalf of the Issuer or consummation of a Permitted
Transfer (as defined in and in accordance with the terms of the related Hedge
Agreement)) unless the Issuer has received written confirmation from each Rating
Agency that such failure would not cause such Rating Agency's then-current
rating on any Class of Notes to be adversely qualified, reduced, suspended or
withdrawn, (iii) by the related Hedge Counterparty, upon the failure of the
Issuer to make, when due, any scheduled periodic payments under the related
Hedge Agreement, (iv) in whole or in part, as provided in the related Hedge
Agreement, upon the final sale of the Assets, an Auction Call Redemption, an
Optional Redemption, a Clean-up Call or a Tax Redemption, (v) in part, as
provided in the related Hedge Agreement, subject to satisfaction of the Rating
Agency Condition with respect to Moody's and S&P, upon a Mandatory Redemption or
a Special Amortization, (vi) by the related Hedge Counterparty upon any
declaration by the Trustee that the Notes have become due and payable or (vii)
as otherwise expressly provided for in the related Hedge Agreement. The Issuer
shall satisfy the Rating Agency Condition with respect to Moody's and S&P with
respect to any such termination of any provision of Hedge Counterparty Credit
Support and of any transfer of all of the rights and obligations of any Hedge
Counterparty under any Hedge Agreement.

          (e) The Trustee shall, prior to the Closing Date, establish a single,
segregated trust account with respect to each Hedge Counterparty in the name of
the Trustee, each designated as the "Hedge Collateral Account," which shall be
held in trust for the benefit of the Noteholders and the applicable Hedge
Counterparty, over which the Trustee shall have exclusive control and the sole
right of withdrawal, and in which no Person other than the Trustee and the
Noteholders and the applicable Hedge Counterparty shall have any legal or
beneficial interest. The Trustee shall deposit all collateral received from the
related Hedge Counterparty under the related Hedge Agreement in the related
Hedge Collateral Account. Any and all funds at any time on deposit in, or
otherwise to the credit of, each Hedge Collateral Account shall be held in trust
by the Trustee for the benefit of the Noteholders and for the related Hedge
Counterparty in accordance with the terms of the Hedge Agreement. The only
permitted withdrawal from or application of funds on deposit in, or otherwise to
the credit of, each Hedge Collateral Account shall be (i) for application to
obligations of the applicable Hedge Counterparty to the Issuer under the related
Hedge Agreement in accordance with the terms of such Hedge Agreement or (ii) to
return collateral to the applicable Hedge Counterparty when and as required by
the related Hedge Agreement, which the Trustee shall return to the applicable
Hedge Counterparty in accordance with the related Hedge Agreement. Each Hedge
Collateral Account shall remain at all times with the Corporate Trust Office or
a financial institution having a long-term debt rating at least equal to "A-" or
"A2," as applicable, or a short-term debt rating at least equal to "A-1," "P-1"
or "F1," as applicable.

          (f) Upon the default by a Hedge Counterparty in the payment when due
of its obligations to the Issuer under the related Hedge Agreement (following
the expiration of any applicable grace period), the Trustee or the Collateral
Manager shall forthwith provide facsimile notice thereof to the Issuer, each of
the Rating Agencies and, if applicable, any

                                     -234-

<PAGE>

Hedge Counterparty Credit Support Provider. When the Trustee becomes aware of
such default, the Trustee shall make a demand on the applicable Hedge
Counterparty, or any Hedge Counterparty Credit Support Provider, if applicable,
demanding payment forthwith. The Trustee shall give notice to the Noteholders
and further notice to the Collateral Manager upon the continuing failure by such
Hedge Counterparty or any Hedge Counterparty Credit Support Provider to perform
its obligations during the two Business Days following a demand made by the
Trustee on such Hedge Counterparty or any such Hedge Counterparty Credit Support
Provider.

          (g) Upon the termination or partial termination of each Hedge
Agreement, the Issuer at the direction of the Collateral Manager and the Trustee
shall take such commercially reasonable actions (following the expiration of any
applicable grace period and after the expiration of the applicable time period
set forth in the related Hedge Agreement) to enforce the rights of the Issuer
and the Trustee thereunder as may be permitted by the terms of the related Hedge
Agreement and consistent with the terms hereof, and shall apply the proceeds of
any such actions (including, without limitation, the proceeds of the liquidation
of any collateral pledged by or on behalf of each Hedge Counterparty) to enter
into an additional or replacement Hedge Agreements within 30 days of the
expiration of any such grace period and such applicable time period as set forth
in the related Hedge Agreement on substantially identical terms or on such other
terms as required by the related Hedge Counterparty to any such additional or
replacement Hedge Agreement as each Rating Agency may confirm in writing would
not cause such Rating Agency's then-current rating of any Class of Notes, as
applicable, to be adversely qualified, reduced, suspended or withdrawn. The
Trustee shall, promptly after the Closing Date, in respect of each Hedge
Counterparty, establish a single segregated trust account in the name of the
Trustee, each designated the "Hedge Termination Account," which shall be held in
trust for the benefit of the Noteholders and each Hedge Counterparty and over
which the Trustee will have exclusive control and the sole right of withdrawal,
and in each of which no person other than the Trustee, the Noteholders and the
Hedge Counterparty will have any legal or beneficial interest. Each Hedge
Termination Account shall remain at all times with the Corporate Trust Office or
a financial institution having a long-term debt rating at least equal to "A-" or
"A2," as applicable, or a short-term debt rating at least equal to "A-1," "P-1"
or "F1," as applicable. Notwithstanding anything contained in this Indenture to
the contrary, any payments (other than payments relating to past-due scheduled
payments on a Hedge Agreement) received by the Issuer or Trustee in connection
with either (x) the termination (in whole or in part) of a related Hedge
Agreement or (y) the execution of an additional or replacement Hedge Agreements
shall be immediately transferred to the Trustee for deposit into the related
Hedge Termination Account. Any costs attributable to entering into an additional
or replacement Hedge Agreements (other than in connection with a Permitted
Transfer as provided for and defined in the related Hedge Agreement) with
respect to the related Hedge Counterparty shall be paid from the related Hedge
Termination Account, and any such amounts which are payable but exceed the
balance on deposit in the related Hedge Termination Account shall be borne
solely by the Issuer and constitute amounts payable under subclause (28) of
Section 11.1(a)(i) hereof. Additionally, any amounts that are due and payable to
a Hedge Counterparty upon a termination of a Hedge Agreement shall be paid from
any amounts on deposit in the related Hedge Termination Account, and, to the
extent the amounts on deposit in such Hedge Termination Account are insufficient
to pay all such amounts, then such amounts will be payable in accordance with

                                     -235-

<PAGE>
Section 11.1(a) hereof. Any amounts remaining on deposit in a Hedge Termination
Account related to a Hedge Agreement following payment to the Hedge Counterparty
shall be transferred to the Principal Collection Account and shall constitute
Principal Proceeds. If determining the amount payable under the terminated Hedge
Agreement, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
seek quotations in accordance with the terms of the related Hedge Agreement from
reference market-makers who satisfy the definition of Qualified Hedge Party
herein. Each Hedge Agreement may provide that the applicable Hedge Counterparty
is responsible for determining the amounts payable in certain circumstances. In
addition, the Issuer (or the Collateral Manager on behalf of the Issuer) shall
use commercially reasonable efforts to cause the termination of the related
Hedge Agreement to become effective simultaneously with the effectiveness of a
replacement thereto, described as aforesaid.

          Section 16.2 Collateral Debt Securities Purchase Agreements.

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

          Section 16.3 Cure Rights.

          (a) If the Issuer, as holder of a Loan, has the right pursuant to the
related Underlying Instruments to cure an event of default on the Underlying
Term Loan, the Collateral Manager may, in accordance with the Collateral Manager
Servicing Standard and subject to the applicable provisions of the Servicing
Agreement, advance from its own funds with respect to the Loan as a reimbursable
Cure Advance, all such amounts as are necessary to effect the timely cure of
such event of default pursuant to the terms of the related Underlying
Instruments; provided that (i) such advances may only be made to the extent that
the Collateral Manager reasonably believes that such Cash advance can be repaid
from future payments on the related underlying commercial mortgage loan (subject
to the Collateral Manager Servicing Standard and to the applicable provisions of
the Servicing Agreement) and (ii) the particular advance would not, if made,
constitute a Nonrecoverable Cure Advance. The determination by the Collateral
Manager that it has made a Nonrecoverable Cure Advance or that any proposed Cure
Advance, if made, would constitute a Nonrecoverable Cure Advance shall be made
by the Collateral Manager in its reasonable, good faith judgment (subject to the
Collateral Manager Servicing Standard and to the applicable provisions of the
Servicing Agreement) and shall be evidenced by an Officer's Certificate
delivered promptly to the Trustee, setting forth the basis for such
determination, accompanied by an appraisal, if available, or an independent
broker's opinion of the value of the Underlying Mortgage Property and any
information that the Collateral Manager may have obtained and that supports such
determination. The Collateral Manager will be entitled to reimbursement from any

                                     -236-

<PAGE>

subsequent payments or recoveries on each Collateral Debt Security in respect of
which it makes a Cure Advance in accordance with the Priority of Payments if
such reimbursement would not cause an Interest Shortfall; provided that, if at
any time the Collateral Manager shall determine (subject to the applicable
provisions of the Servicing Agreement) that a Cure Advance previously made is a
Nonrecoverable Cure Advance, the Collateral Manager shall be entitled to
reimbursements for such Nonrecoverable Cure Advance from subsequent payments or
collections with respect to the Assets on any Business Day during any Interest
Accrual Period prior to the related Determination Date (or on a Payment Date
prior to any payment of interest on or principal of the Notes in accordance with
the Priority of Payments). Notwithstanding the foregoing, the Collateral Manager
will be permitted (but not obligated) to defer or otherwise structure the timing
of recovery of any Nonrecoverable Cure Advance in such manner as the Collateral
Manager determines is in the best interest of the Holders of the Class A Notes
and the Class B Notes, as a collective whole, which may include being reimbursed
for such Nonrecoverable Cure Advance in installments.

          (b) No later than 11:00 a.m. on the Business Day preceding each
Determination Date, the Collateral Manager may request by Officer's Certificate
delivered to the Trustee, reimbursement for any (i) Cure Advance or (ii)
Nonrecoverable Cure Advance, from any amounts received with respect to the
related Collateral Debt Security or the Assets, respectively. No later than the
Payment Date related to the Determination Date for which the Collateral Manager
has delivered an Officer's Certificate requesting reimbursement of a Cure
Advance or a Nonrecoverable Cure Advance, the Trustee shall transfer to the
Collateral Manager, by wire transfer to an account identified to the Trustee in
writing, the amount of such Cure Advance or Nonrecoverable Cure Advance, as
applicable.

          (c) Notwithstanding anything to the contrary set forth herein, the
Collateral Manager shall not be required to make any Cure Advance that it
determines in its reasonable, good faith judgment would constitute a
Nonrecoverable Cure Advance as determined pursuant to Section 16.3(a).

          Section 16.4 Purchase Right; Holder of a Majority of the Preferred
Shares.

          If the Issuer, as holder of a Participation or B Note, has the right
pursuant to the related Underlying Instruments to purchase any related Senior
Tranche(s), the Issuer may, and shall if directed by the Holder of a Majority of
the Preferred Shares, exercise such right, if the Collateral Manager determines,
in accordance with the Collateral Manager Servicing Standard, that the exercise
of the option would be in the best interest of the Noteholders, but may not
exercise such right if the Collateral Manager determines otherwise. The
Collateral Manager shall deliver to the Trustee an Officer's Certificate
certifying such determination, accompanied by an Act of the Holder of a Majority
of the Preferred Shares directing the Issuer to exercise such right. In
connection with the purchase of any such Senior Tranche(s), the Issuer shall
assign to the Holder of a Majority of the Preferred Shares or its designee all
of its right, title and interest in such Senior Tranche(s) in exchange for a
purchase price (such price and any other associated expense of such exercise to
be paid by the Holder of a Majority of the Preferred Shares) of the Senior
Tranche(s) (or, if the Underlying Instruments permit, the Issuer may assign the
purchase right to the Holder of a Majority of the Preferred Shares or its
designee; otherwise the Holder of a Majority of the Preferred Shares or its
designee shall fund the purchase by the Issuer, which

                                     -237-

<PAGE>

shall then assign the Senior Tranche(s) to the Holder of a Majority of the
Preferred Shares or its designee) (the "Purchase Option Purchase Price"), which
amount shall be delivered by such Holder or its designee from its own funds to
or upon the instruction of the Collateral Manager in accordance with terms of
the Underlying Instruments related to the acquisition of such Senior Tranche(s).
The Trustee or the Issuer shall execute and deliver at the direction of such
Holder of a Majority of the Preferred Shares such instruments of transfer or
assignment prepared by such Holder, in each case without recourse, as shall be
necessary to transfer title to such Holder of the Majority of Preferred Shares
or its designee of the Senior Tranche(s) and the Trustee shall have no
responsibility with regard to such Senior Tranche(s).

          Section 16.5 Representations and Warranties Related to Subsequent
Collateral Debt Securities.

          (a) If the Collateral Debt Security is a Subsequent Collateral Debt
Security, upon the acquisition of such Subsequent Collateral Debt Security by
the Issuer, the related seller has made or assigned to the Issuer the following:

               (i) (A) representations and warranties in form and substance
          substantially similar to the representations and warranties set forth
          as Schedule L with respect to the Underlying Term Loan and the
          Underlying Mortgage Property (except with respect to Mezzanine Loans)
          and (B) representations and warranties regarding good title, no liens,
          no modifications, no defaults and valid assignment with respect to the
          Loan itself; and

               (ii) in the case of a B Note, the representations and warranties
          in form and substance substantially similar to the representations and
          warranties set forth as Schedule M with respect to such B Note;

               (iii) in the case of a Participation, the representations and
          warranties in form and substance substantially similar to the
          representations and warranties set forth as Schedule N with respect to
          such Participation;

               (iv) in the case of a Mezzanine Loan, the representations and
          warranties in form and substance substantially similar to the
          representations and warranties set forth as Schedule O with respect to
          such Mezzanine Loan;

               (v) in the case of a Preferred Equity Security, the
          representations and warranties in form and substance substantially
          similar to the representations and warranties set forth as Schedule P
          with respect to such Preferred Equity Security;

               (vi) in the case of a CMBS Security, the representations and
          warranties in form and substance substantially similar to the
          representations and warranties set forth as Schedule Q with respect to
          such CMBS Security; and

               (vii) in the case of a CRE CDO Security, the representations and
          warranties in form and substance substantially similar to the
          representations and warranties set forth as Schedule Q with respect to
          such CRE CDO Security.

                                     -238-

<PAGE>

          (b) The representations and warranties in Section 16.5(a) with respect
to the acquisition of a Subsequent Collateral Debt Security may be subject to
any modification, limitation or qualification that the Collateral Manager
determines to be acceptable in accordance with the Collateral Manager Servicing
Standard; provided that the Collateral Manager will provide each Rating Agency
with a report attached to each Monthly Report identifying each such
modification, exception, limitation or qualification received with respect to
the acquisition of any Subsequent Collateral Debt Security during the period
covered by the Monthly Report, which report may contain explanations by the
Collateral Manager as to its determinations.

          (c) The Issuer (or the Collateral Manager on behalf of the Issuer)
shall obtain a covenant from the Person making any representation or warranty to
the Issuer pursuant to Section 16.5(a) that such Person shall repurchase the
related Collateral Debt Security if any such representation or warranty is
breached (but only after the expiration of any permitted cure periods and
failure to cure such breach). The purchase price for any Collateral Debt
Security repurchased (the "Repurchase Price") shall be a price equal to the sum
of the following (in each case, without duplication) as of the date of such
repurchase: (i) the outstanding principal amount thereof or, in the case of any
Collateral Debt Security that the Issuer purchased (excluding, for this purpose,
any payment by the Issuer for accrued and unpaid interest on such Collateral
Debt Security) at a discount from the outstanding principal amount of such
Collateral Debt Security at the time it was acquired by the Issuer, the lesser
of (x) the outstanding principal amount thereof, and (y) the greater of (A) the
price originally paid by the Issuer for such Collateral Debt Security
(excluding, for this purpose, any payment by the Issuer for accrued and unpaid
interest on such Collateral Debt Security) less any principal payments received
by the Issuer on account of such Collateral Debt Security and (B) the Market
Value of such Collateral Debt Security at the time it is repurchased, plus (ii)
accrued and unpaid interest on such Collateral Debt Security, plus (iii) any
unreimbursed advances, plus (iv) accrued and unpaid interest on advances on the
Collateral Debt Security, plus (v) any reasonable costs and expenses (including,
but not limited to, the cost of any enforcement action, incurred by the Issuer
or the Trustee in connection with any such purchase by a seller).

          Section 16.6 Operating Advisor; Additional Debt.

          If the Issuer, as holder of a B Note, a Participation, Preferred
Equity Security or a Mezzanine Loan, has the right pursuant to the related
Underlying Instruments to appoint the operating advisor, directing holder or
Person serving a similar function under the Underlying Instruments, each of the
Issuer, the Trustee and the Collateral Manager shall take such actions as are
reasonably necessary to appoint the Collateral Manager to such position. If the
Issuer, as holder of a B Note, a Participation or a Mezzanine Loan, has the
right pursuant to the related Underlying Instruments to consent to the related
borrower incurring any additional debt, such consent will be subject to
satisfaction of the Rating Agency Condition.

                                     -239-

<PAGE>

                                   ARTICLE 17

                                 ADVANCING AGENT

          Section 17.1 Liability of the Advancing Agent.

          The Advancing Agent shall be liable in accordance herewith only to the
extent of the obligations specifically imposed upon and undertaken by the
Advancing Agent. Section 17.2 Merger or Consolidation of the Advancing Agent.

          (a) The Advancing Agent will keep in full effect its existence, rights
and franchises as a corporation under the laws of the jurisdiction in which it
was formed, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of this Indenture to
perform its duties under this Indenture.

          (b) Any Person into which the Advancing Agent may be merged or
consolidated, or any corporation resulting from any merger or consolidation to
which the Advancing Agent shall be a party, or any Person succeeding to the
business of the Advancing Agent shall be the successor of the Advancing Agent,
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding (it being understood and agreed by the parties hereto that the
consummation of any such transaction by the Advancing Agent shall have no effect
on the Trustee's obligations under Section 10.8, which obligations shall
continue pursuant to the terms of Section 10.8).

          Section 17.3 Limitation on Liability of the Advancing Agent and
Others.

          None of the Advancing Agent or any of its affiliates, directors,
officers, employees or agents shall be under any liability for any action taken
or for refraining from the taking of any action in good faith pursuant to this
Indenture, or for errors in judgment; provided, however, that this provision
shall not protect the Advancing Agent against liability to the Issuer or
Noteholders for any breach of warranties or representations made herein or any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of negligent
disregard of obligations and duties hereunder. The Advancing Agent and any
director, officer, employee or agent of the Advancing Agent may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder. The Advancing Agent and any
director, officer, employee or agent of the Advancing Agent shall be indemnified
by the Issuer pursuant to the priorities set forth in Section 11.1(a) and held
harmless against any loss, liability or expense incurred in connection with any
legal action relating to this Indenture or the Notes, other than any loss,
liability or expense (i) specifically required to be borne by the Advancing
Agent pursuant to the terms hereof or otherwise incidental to the performance of
obligations and duties hereunder (except as any such loss, liability or expense
shall be otherwise reimbursable pursuant to this Indenture); or (ii) incurred by
reason of any breach of a representation, warranty or covenant made herein, any
misfeasance, bad faith or negligence by

                                     -240-

<PAGE>

the Advancing Agent in the performance of or negligent disregard of, obligations
or duties hereunder or any violation of any state or federal securities law.

          Section 17.4 Representations and Warranties of the Advancing Agent.

          The Advancing Agent represents and warrants that:

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

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

          (c) neither the execution and delivery of this Indenture nor the
performance by the Advancing Agent of its duties hereunder conflicts with or
will violate or result in a breach or violation of any of the terms or
provisions of, or constitutes a default under: (i) the Articles of Incorporation
and bylaws of the Advancing Agent, (ii) the terms of any indenture, contract,
lease, mortgage, deed of trust, note agreement or other evidence of indebtedness
or other agreement, obligation, condition, covenant or instrument to which the
Advancing Agent is a party or is bound, (iii) any law, decree, order, rule or
regulation applicable to the Advancing Agent of any court or regulatory,
administrative or governmental agency, body or authority or arbitrator having
jurisdiction over the Advancing Agent or its properties, and which would have,
in the case of any of (i), (ii) or (iii) of this subsection (c), either
individually or in the aggregate, a material adverse effect on the business,
operations, assets or financial condition of the Advancing Agent or the ability
of the Advancing Agent to perform its obligations under this Indenture;

          (d) no litigation is pending or, to the best of the Advancing Agent's
knowledge, threatened, against the Advancing Agent that would materially and
adversely affect the execution, delivery or enforceability of this Indenture or
the ability of the Advancing Agent to perform any of its obligations under this
Indenture in accordance with the terms hereof; and

                                     -241-

<PAGE>

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

          Section 17.5 Resignation and Removal; Appointment of Successor.

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

          (b) The Advancing Agent may resign at any time by giving written
notice thereof to the Issuer, the Co-Issuer, the Trustee, the Collateral
Manager, each Hedge Counterparty, the Noteholders and each Rating Agency.

          (c) The Advancing Agent may be removed at any time by Act of 66-2/3%
of the Preferred Shares upon written notice delivered to the Trustee and to the
Issuer and the Co-Issuer.

          (d) If the Advancing Agent fails to make an Interest Advance required
by this Indenture with respect to a Distribution Date, the Trustee, in its
capacity as Backup Advancing Agent, shall be required to make such Interest
Advance and shall be entitled to receive, in consideration thereof, the
Advancing Agent Fee (in lieu of the Backup Advancing Agent Fee) in accordance
with the Priority of Payments. If the Advancing Agent fails to make a required
Interest Advance and it has not determined such Interest Advance to be a
Nonrecoverable Interest Advance, the Collateral Manager may, and at the
direction of the Controlling Class shall, terminate such Advancing Agent and
replace such Advancing Agent with a successor advancing agent the appointment of
which satisfies the Rating Agency Condition. In the event that the Collateral
Manager has not terminated and replaced such Advancing Agent within 30 days of
such Advancing Agent's failure to make a required Interest Advance, the Trustee
may terminate such Advancing Agent and appoint a successor Advancing Agent.

          (e) Subject to Section 17.5(d), if the Advancing Agent shall resign or
be removed, upon receiving such notice of resignation or removal, the Issuer and
the Co-Issuer shall promptly appoint a successor advancing agent by written
instrument, in duplicate, executed by an Authorized Officer of the Issuer and an
Authorized Officer of the Co-Issuer, one copy of which shall be delivered to the
Advancing Agent so resigning and one copy to the successor Advancing Agent,
together with a copy to each Noteholder, the Trustee, each Hedge Counterparty
and the Collateral Manager; provided that such successor Advancing Agent shall
be appointed only subject to satisfaction of the Rating Agency Condition and
upon the written consent of a Majority of the Preferred Shares. If no successor
Advancing Agent shall have been appointed and an instrument of acceptance by a
successor Advancing Agent shall not have been delivered to the Advancing Agent
within 30 days after the giving of such notice of resignation, the resigning
Advancing Agent, the Trustee or any Preferred Shareholder, on behalf of himself
and all others similarly situated, may petition any court of competent
jurisdiction for the appointment of a successor Advancing Agent.

                                     -242-

<PAGE>

          (f) The Issuer and the Co-Issuer shall give prompt notice of each
resignation and each removal of the Advancing Agent and each appointment of a
successor Advancing Agent by mailing written notice of such event by first class
mail, postage prepaid, to each Rating Agency, each Hedge Counterparty and to the
Holders of the Notes as their names and addresses appear in the Notes Register.

          (g) No resignation or removal of the Advancing Agent and no
appointment of a Successor Advancing Agent shall become effective until the
acceptance of appointment by the Successor Advancing Agent.

          Section 17.6 Acceptance of Appointment by Successor Advancing Agent.

          (a) Every successor Advancing Agent appointed hereunder shall execute,
acknowledge and deliver to the Issuer, the Co-Issuer, each Hedge Counterparty,
the Collateral Manager, the Trustee and the retiring Advancing Agent an
instrument accepting such appointment. Upon delivery of the required
instruments, the resignation or removal of the retiring Advancing Agent shall
become effective and such successor Advancing Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts,
duties and obligations of the retiring Advancing Agent.

          (b) No appointment of a successor Advancing Agent shall become
effective unless each Rating Agency has confirmed in writing that the employment
of such successor would not adversely affect the rating on the Notes.

                                     -243-

<PAGE>

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

                                        Executed as a Deed

                                        ARBOR REALTY MORTGAGE SECURITIES
                                        SERIES 2005-1, LTD., as Issuer

                                        By /s/ Martin Couch
                                           -------------------------------------
                                        Name: Martin Couch
                                        Title: Director

                                        Witness:

                                        /s/ [Illegible]
                                        ----------------------------------------
                                        ARBOR REALTY MORTGAGE SECURITIES
                                        SERIES 2005-1 LLC, as Co-Issuer

                                        By: /s/ Guy R. Milone, Jr.
                                            ------------------------------------
                                        Name: Guy R. Milone, Jr.
                                        Title: Authorized Signatory

                                        LASALLE BANK NATIONAL ASSOCIATION,
                                        solely as Trustee, Paying Agent,
                                        Calculation Agent, Transfer Agent,
                                        Custodial Securities Intermediary,
                                        Backup Advancing Agent and Notes
                                        Registrar and not in its individual
                                        capacity

                                        By: /s/ Mat Thomason
                                            ------------------------------------
                                        Name: Mat Thomason
                                        Title: Assistant Vice President

<PAGE>

                                        ARBOR REALTY SR, INC.,
                                        as Advancing Agent

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

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