Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
 	 	 	
þ	 	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the quarterly period ended March 31, 2009
or
 	 	 	
o	 	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	
For the transition period from                      to                     
Commission file number: 001-32136
Arbor Realty Trust, Inc.
(Exact name of registrant as specified in its charter)
 	 	 	
Maryland
(State or other jurisdiction of
incorporation)	 	20-0057959
(I.R.S. Employer
Identification No.)	
 	 	 	
333 Earle Ovington Boulevard, Suite 900
Uniondale, NY
(Address of principal executive offices)	 	11553
(Zip Code)	
(516) 506-4200
(Registrant’s telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last report)
     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  þ      No  o
     Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o  No  o
     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
 	 	 	 	 	 	 	
Large accelerated filer o 	 	Accelerated filer þ 	 	Non-accelerated filer   o
(Do not check if a smaller reporting company)	 	Smaller reporting company o 	
     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o      No  þ
APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date. Common stock, $0.01 par value per share: 25,387,410 outstanding (excluding 279,400 shares held in the treasury) as of May 11, 2009.

 

 
ARBOR REALTY TRUST, INC.
FORM 10-Q
INDEX
 	 	 	 	 	 	 	 	 	
PART I. FINANCIAL INFORMATION	 	 	2	 	 	 	 	 	
Item 1. Financial Statements	 	 	2	 	 	 	 	 	
Consolidated Balance Sheets at March 31, 2009 (Unaudited) and December 31, 2008	 	 	2	 	 	 	 	 	
Consolidated Statements of Operations (Unaudited) for the Three Months Ended March 31, 2009 and 2008	 	 	3	 	 	 	 	 	
Consolidated Statement of Changes in Equity (Unaudited) for the Three Months Ended March 31, 2009	 	 	4	 	 	 	 	 	
Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2009 and 2008	 	 	5	 	 	 	 	 	
Notes to the Consolidated Financial Statements (Unaudited)	 	 	7	 	 	 	 	 	
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	 	 	36	 	 	 	 	 	
Item 3. Quantitative and Qualitative Disclosures about Market Risk	 	 	54	 	 	 	 	 	
Item 4. Controls and Procedures	 	 	57	 	 	 	 	 	
PART II. OTHER INFORMATION	 	 	57	 	 	 	 	 	
Item 1. Legal Proceedings	 	 	57	 	 	 	 	 	
Item 1A. Risk Factors	 	 	57	 	 	 	 	 	
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	 	 	57	 	 	 	 	 	
Item 3. Defaults Upon Senior Securities	 	 	57	 	 	 	 	 	
Item 4. Submission of Matters to a Vote of Security Holders	 	 	57	 	 	 	 	 	
Item 5. Other Information	 	 	57	 	 	 	 	 	
Item 6. Exhibits	 	 	58	 	 	 	 	 	
Signatures	 	 	61	 	 	 	 	 	
 EX-10.30	
 EX-10.31	
 EX-10.32	
 EX-10.33	
 EX-10.34	
 EX-10.35	
 EX-10.36	
 EX-31.1	
 EX-31.2	
 EX-32.1	
 EX-32.2	

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CAUTIONARY STATEMENTS
     The information contained in this quarterly report on Form 10-Q is not a complete description of our business or the risks associated with an investment in Arbor Realty Trust, Inc. We urge you to carefully review and consider the various disclosures made by us in this report.
     This report contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements relate to, among other things, the operating performance of our investments and financing needs. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue” or other similar words or expressions. Forward-looking statements are based on certain assumptions, discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. These forward-looking statements involve risks, uncertainties and other factors that may cause our actual results in future periods to differ materially from forecasted results. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to, changes in economic conditions generally and the real estate market specifically; adverse changes in the financing markets we access affecting our ability to finance our loan and investment portfolio; changes in interest rates; the quality and size of the investment pipeline and the rate at which we can invest our cash; impairments in the value of the collateral underlying our loans and investments; changes in the markets; legislative/regulatory changes; completion of pending investments; the availability and cost of capital for future investments; competition within the finance and real estate industries; and other risks detailed in our Annual Report on Form 10-K for the year ending December 31, 2008. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our management’s views as of the date of this report. The factors noted above could cause our actual results to differ significantly from those contained in any forward-looking statement. For a discussion of our critical accounting policies, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Arbor Realty Trust, Inc. and Subsidiaries — Significant Accounting Estimates and Critical Accounting Policies” in our Annual Report on Form 10-K for the year ending December 31, 2008.
     Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of this report to conform these statements to actual results.
 i 

Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 	 	 	 	 	 	 	 	 	
 	 	March 31,	 	 	December 31,	 	
 	 	2009	 	 	2008	 	
 	 	(Unaudited)	 	 	 	 	 	
Assets:	 	 	 	 	 	 	 	 	
Cash and cash equivalents	 	$	14,212,369	 	 	$	832,041	 	
Restricted cash	 	 	82,967,024	 	 	 	93,219,133	 	
Loans and investments, net	 	 	2,066,769,327	 	 	 	2,181,683,619	 	
Available-for-sale securities, at fair value	 	 	293,946	 	 	 	529,104	 	
Securities held-to-maturity, net	 	 	57,887,120	 	 	 	58,244,348	 	
Investment in equity affiliates	 	 	87,120,326	 	 	 	29,310,953	 	
Real estate owned, net	 	 	45,752,603	 	 	 	46,478,994	 	
Due from related party	 	 	15,639,345	 	 	 	2,933,344	 	
Prepaid management fee — related party	 	 	26,340,397	 	 	 	26,340,397	 	
Other assets	 	 	98,771,914	 	 	 	139,664,556	 	
 	 	 	 	 	 	 	
Total assets	 	$	2,495,754,371	 	 	$	2,579,236,489	 	

Liabilities and Equity:	 	 	 	 	 	 	 	 	
Repurchase agreements	 	$	46,148,296	 	 	$	60,727,789	 	
Collateralized debt obligations	 	 	1,125,920,483	 	 	 	1,152,289,000	 	
Junior subordinated notes to subsidiary trust issuing preferred securities	 	 	266,680,000	 	 	 	276,055,000	 	
Notes payable	 	 	501,436,161	 	 	 	518,435,437	 	
Note payable — related party	 	 	—	 	 	 	4,200,000	 	
Mortgage note payable	 	 	41,440,000	 	 	 	41,440,000	 	
Due to related party	 	 	234,960	 	 	 	993,192	 	
Due to borrowers	 	 	29,662,628	 	 	 	32,330,603	 	
Deferred revenue	 	 	77,123,133	 	 	 	77,123,133	 	
Other liabilities	 	 	120,656,269	 	 	 	134,647,667	 	
 	 	 	 	 	 	 	
Total liabilities	 	 	2,209,301,930	 	 	 	2,298,241,821	 	

Commitments and contingencies	 	 	—	 	 	 	—	 	
Equity:	 	 	 	 	 	 	 	 	
Arbor Realty Trust, Inc. stockholders’ equity:	 	 	 	 	 	 	 	 	
Preferred stock, $0.01 par value: 100,000,000 shares authorized; no shares issued or outstanding	 	 	—	 	 	 	—	 	
Common stock, $0.01 par value: 500,000,000 shares authorized; 25,421,810 shares issued, 25,142,410 shares outstanding at March 31, 2009 and December 31, 2008	 	 	254,218	 	 	 	254,218	 	
Additional paid-in capital	 	 	447,784,318	 	 	 	447,321,186	 	
Treasury stock, at cost - 279,400 shares	 	 	(7,023,361	)	 	 	(7,023,361	)	
Accumulated deficit	 	 	(67,197,038	)	 	 	(62,939,722	)	
Accumulated other comprehensive loss	 	 	(89,247,870	)	 	 	(96,606,672	)	
 	 	 	 	 	 	 	
Total Arbor Realty Trust, Inc. stockholders’ equity	 	 	284,570,267	 	 	 	281,005,649	 	
 	 	 	 	 	 	 	
Noncontrolling interest in consolidated entity	 	 	1,882,174	 	 	 	(10,981	)	
 	 	 	 	 	 	 	
Total equity	 	 	286,452,441	 	 	 	280,994,668	 	
 	 	 	 	 	 	 	
Total liabilities and equity	 	$	2,495,754,371	 	 	$	2,579,236,489	 	
 	 	 	 	 	 	 	
See notes to consolidated financial statements.
2

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended March 31,	 	
 	 	2009	 	 	2008	 	
Revenue:	 	 	 	 	 	 	 	 	
Interest income	 	$	30,500,023	 	 	$	55,416,330	 	
Property operating income	 	 	1,470,796	 	 	 	—	 	
Other income	 	 	16,250	 	 	 	20,693	 	
 	 	 	 	 	 	 	
Total revenue	 	 	31,987,069	 	 	 	55,437,023	 	

Expenses:	 	 	 	 	 	 	 	 	
Interest expense	 	 	19,150,816	 	 	 	31,304,099	 	
Employee compensation and benefits	 	 	2,391,984	 	 	 	1,977,343	 	
Selling and administrative	 	 	2,082,342	 	 	 	1,538,066	 	
Property operating expenses	 	 	1,331,145	 	 	 	—	 	
Depreciation and amortization	 	 	283,022	 	 	 	—	 	
Provision for loan losses	 	 	67,500,000	 	 	 	3,000,000	 	
Loss on restructured loans	 	 	9,036,914	 	 	 	—	 	
Management fee — related party	 	 	722,377	 	 	 	2,579,433	 	
 	 	 	 	 	 	 	
Total expenses	 	 	102,498,600	 	 	 	40,398,941	 	

(Loss) income before gain on exchange of profits interest, gain on extinguishment of debt and income from equity affiliates	 	 	(70,511,531	)	 	 	15,038,082	 	
Gain on exchange of profits interest	 	 	55,988,411	 	 	 	—	 	
Gain on extinguishment of debt	 	 	26,267,033	 	 	 	—	 	
Income from equity affiliates	 	 	2,507,134	 	 	 	—	 	
 	 	 	 	 	 	 	
Net income	 	 	14,251,047	 	 	 	15,038,082	 	
Net income attributable to noncontrolling interest	 	 	18,504,785	 	 	 	2,333,290	 	
 	 	 	 	 	 	 	
Net (loss) income attributable to Arbor Realty Trust, Inc.	 	$	(4,253,738	)	 	$	12,704,792	 	

Basic (loss) earnings per common share	 	$	(0.17	)	 	$	0.62	 	
 	 	 	 	 	 	 	
Diluted (loss) earnings per common share	 	$	(0.17	)	 	$	0.62	 	
 	 	 	 	 	 	 	
Dividends declared per common share	 	$	—	 	 	$	0.62	 	

Weighted average number of shares of common stock outstanding:	 	 	 	 	 	 	 	 	
Basic	 	 	25,142,410	 	 	 	20,571,780	 	
 	 	 	 	 	 	 	
Diluted	 	 	25,142,410	 	 	 	24,403,381	 	
 	 	 	 	 	 	 	
See notes to consolidated financial statements.
3

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the Three Months Ended March 31, 2009
(Unaudited)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Total Arbor	 	Non-	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Accumulated	 	Realty Trust,	 	controlling	 	 	
 	 	 	 	 	 	Common	 	Common	 	 	 	 	 	Treasury	 	 	 	 	 	 	 	 	 	Other	 	Inc.	 	Interest in	 	 	
 	 	Comprehensive	 	Stock	 	Stock	 	Additional	 	Stock	 	Treasury	 	Accumulated	 	Comprehensive	 	Stockholders’	 	Consolidated	 	 	
 	 	Income(1)	 	Shares	 	Par Value	 	Paid-in Capital	 	Shares	 	Stock	 	Deficit	 	Loss	 	Equity	 	Entity	 	Total	
 	 	 	
Balance — January 1, 2009	 	 	 	 	 	 	25,421,810	 	 	$	254,218	 	 	$	447,321,186	 	 	 	(279,400	)	 	$	(7,023,361	)	 	$	(62,939,722	)	 	$	(96,606,672	)	 	$	281,005,649	 	 	$	(10,981	)	 	$	280,994,668	 	
Stock-based compensation	 	 	 	 	 	 	 	 	 	 	 	 	 	 	463,132	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	463,132	 	 	 	 	 	 	 	463,132	 	
Distributions — preferred stock of private REIT	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(3,578	)	 	 	 	 	 	 	(3,578	)	 	 	 	 	 	 	(3,578	)	
Net (loss) income	 	$	14,251,047	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(4,253,738	)	 	 	 	 	 	 	(4,253,738	)	 	 	18,504,785	 	 	 	14,251,047	 	
Distribution to non-controlling interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(16,611,630	)	 	 	(16,611,630	)	
Net unrealized loss on securities available-for-sale	 	 	(235,157	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(235,157	)	 	 	(235,157	)	 	 	 	 	 	 	(235,157	)	
Unrealized gain on derivative financial instrument	 	 	7,593,959	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,593,959	 	 	 	7,593,959	 	 	 	 	 	 	 	7,593,959	 	

Balance — March 31, 2009	 	 	$    21,609,849	 	 	 	25,421,810	 	 	$	254,218	 	 	$	447,784,318	 	 	 	(279,400	)	 	$	(7,023,361	)	 	$	(67,197,038	)	 	$	(89,247,870	)	 	$	284,570,267	 	 	$	1,882,174	 	 	$	286,452,441	 	
 	 	 	
(1)  Comprehensive loss for the three months ended March 31, 2008 was $19,565,919.
See notes to consolidated financial statements.
4

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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended March 31,	 	
 	 	2009	 	 	2008	 	
Operating activities:	 	 	 	 	 	 	 	 	
Net income	 	$	14,251,047	 	 	$	15,038,082	 	
Adjustments to reconcile net income to cash provided by operating activities:	 	 	 	 	 	 	 	 	
Depreciation and amortization	 	 	283,022	 	 	 	—	 	
Stock-based compensation	 	 	463,132	 	 	 	581,137	 	
Gain on exchange of profits interest	 	 	(55,988,411	)	 	 	—	 	
Gain on extinguishment of debt	 	 	(26,267,033	)	 	 	—	 	
Provision for loan losses	 	 	67,500,000	 	 	 	3,000,000	 	
Loss on restructured loans	 	 	9,036,914	 	 	 	—	 	
Amortization and accretion of interest	 	 	287,429	 	 	 	493,521	 	
Non-cash incentive compensation to manager — related party	 	 	—	 	 	 	837,424	 	
Income from equity affiliates	 	 	(2,507,134	)	 	 	—	 	
Changes in operating assets and liabilities:	 	 	 	 	 	 	 	 	
Other assets	 	 	14,239,509	 	 	 	3,659,032	 	
Other liabilities	 	 	267,757	 	 	 	(10,908,986	)	
Deferred origination fees	 	 	(19,083	)	 	 	132,518	 	
Due to related party	 	 	(13,464,233	)	 	 	95,612	 	
 	 	 	 	 	 	 	
Net cash provided by operating activities	 	$	8,082,916	 	 	$	12,928,340	 	
 	 	 	 	 	 	 	
Investing activities:	 	 	 	 	 	 	 	 	
Loans and investments originated and purchased, net	 	 	(2,832,878	)	 	 	(226,267,940	)	
Payoffs and paydowns of loans and investments	 	 	41,817,564	 	 	 	238,656,468	 	
Due to borrowers	 	 	(2,667,975	)	 	 	(6,396,078	)	
Principal collection on securities held-to-maturity	 	 	958,712	 	 	 	—	 	
Distributions from equity affiliates	 	 	686,172	 	 	 	125,000	 	
 	 	 	 	 	 	 	
Net cash provided by investing activities	 	$	37,961,595	 	 	$	6,117,450	 	
 	 	 	 	 	 	 	
Financing activities:	 	 	 	 	 	 	 	 	
Proceeds from notes payable and repurchase agreements	 	 	1,657,709	 	 	 	63,906,967	 	
Payoffs and paydowns of notes payable and repurchase agreements	 	 	(28,390,668	)	 	 	(108,706,193	)	
Payoff of junior subordinated notes to subsidiary trust issuing preferred securities	 	 	(1,265,625	)	 	 	—	 	
Payoff of notes payable — related party	 	 	(4,200,000	)	 	 	—	 	
Proceeds from collateralized debt obligations	 	 	—	 	 	 	27,000,000	 	
Payoffs and paydowns of collateralized debt obligations	 	 	(8,271,212	)	 	 	(45,180,000	)	
Change in restricted cash	 	 	10,252,109	 	 	 	62,565,822	 	
Payments on swaps to hedge counterparties	 	 	(26,450,588	)	 	 	(51,110,000	)	
Receipts on swaps from hedge counterparties	 	 	24,200,000	 	 	 	38,340,000	 	
Distributions paid to noncontrolling interest	 	 	(111,630	)	 	 	(2,341,163	)	
Distributions paid on stock	 	 	(3,578	)	 	 	(12,779,404	)	
Payment of deferred financing costs	 	 	(80,700	)	 	 	—	 	
 	 	 	 	 	 	 	
Net cash used in financing activities	 	$	(32,664,183	)	 	$	(28,303,971	)	
 	 	 	 	 	 	 	
Net increase/(decrease) in cash and cash equivalents	 	$	13,380,328	 	 	$	(9,258,181	)	
Cash and cash equivalents at beginning of period	 	 	832,041	 	 	 	22,219,541	 	
 	 	 	 	 	 	 	
Cash and cash equivalents at end of period	 	$	14,212,369	 	 	$	12,961,360	 	
 	 	 	 	 	 	 	
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOW (Continued)
For the Three Months Ended March 31, 2009 and 2008
(Unaudited)
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended March 31,	 	
 	 	2009	 	 	2008	 	
Supplemental cash flow information:	 	 	 	 	 	 	 	 	
Cash used to pay interest	 	$	14,788,103	 	 	$	32,202,467	 	
 	 	 	 	 	 	 	
Cash used to pay taxes	 	$	89,731	 	 	$	34,664	 	
 	 	 	 	 	 	 	
Supplemental schedule of non-cash financing activities:	 	 	 	 	 	 	 	 	
Margin calls applied to repurchase agreements	 	$	4,845,810	 	 	$	—	 	
 	 	 	 	 	 	 	
Partial termination of swap	 	$	5,090,000	 	 	$	—	 	
 	 	 	 	 	 	 	
Collateral on swaps to hedge counterparties	 	$	—	 	 	$	3,500,000	 	
 	 	 	 	 	 	 	
Issuance of common stock for management incentive fee	 	$	—	 	 	$	1,397,889	 	
 	 	 	 	 	 	 	
See notes to consolidated financial statements.
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Note 1 —Description of Business/Form of Ownership
          Arbor Realty Trust, Inc. (the “Company”) is a Maryland corporation that was formed in June 2003 to invest in a diversified portfolio of multi-family and commercial real estate related assets, primarily consisting of bridge loans, mezzanine loans, junior participating interests in first mortgage loans, and preferred and direct equity. The Company may also directly acquire real property and invest in real estate-related notes and certain mortgage-related securities. The Company conducts substantially all of its operations through its operating partnership, Arbor Realty Limited Partnership (“ARLP”), and ARLP’s wholly-owned subsidiaries. The Company is externally managed and advised by Arbor Commercial Mortgage, LLC (“ACM”).
          The Company is organized and conducts its operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. A REIT is generally not subject to federal income tax on its REIT-taxable income that it distributes to its stockholders, provided that it distributes at least 90% of its REIT-taxable income and meets certain other requirements. Certain assets of the Company that produce non-qualifying income are owned by its taxable REIT subsidiaries, the income of which is subject to federal and state income taxes.
          The Company’s charter provides for the issuance of up to 500 million shares of common stock, par value $0.01 per share, and 100 million shares of preferred stock, par value $0.01 per share. The Company was incorporated in June 2003 and was initially capitalized through the sale of 67 shares of common stock for $1,005.
          On July 1, 2003, Arbor Commercial Mortgage, LLC (“ACM”) contributed $213.1 million of structured finance assets and $169.2 million of borrowings supported by $43.9 million of equity in exchange for a commensurate equity ownership in ARLP. In addition, certain employees of ACM were transferred to ARLP. These assets, liabilities and employees represent a substantial portion of ACM’s structured finance business (the “SF Business”). The Company is externally managed and advised by ACM and pays ACM a management fee in accordance with a management agreement. ACM also sources originations, provides underwriting services and services all structured finance assets on behalf of ARLP, and its wholly owned subsidiaries.
          On July 1, 2003, the Company completed a private equity offering of 1,610,000 units (including an overallotment option), each consisting of five shares of common stock and one warrant to purchase one share of common stock at $75.00 per unit. The Company sold 8,050,000 shares of common stock in the offering. Gross proceeds from the private equity offering totaled $120.2 million. Gross proceeds from the private equity offering combined with the concurrent equity contribution by ACM totaled approximately $164.1 million in equity capital. The Company paid and accrued offering expenses of $10.1 million resulting in Arbor Realty Trust, Inc. stockholders’ equity and noncontrolling interest of $154.0 million as a result of the private placement.
          In April 2004, the Company sold 6,750,000 shares of its common stock in a public offering at a price of $20.00 per share, for net proceeds of approximately $124.4 million after deducting the underwriting discount and other estimated offering expenses. The Company used the proceeds to pay down indebtedness. In May 2004, the underwriters exercised a portion of their over-allotment option, which resulted in the issuance of 524,200 additional shares. The Company received net proceeds of approximately $9.8 million after deducting the underwriting discount. In October 2004, ARLP received proceeds of approximately $9.4 million from the exercise of warrants for 629,345 operating partnership units. Additionally, in 2004 and 2005, the Company issued 973,354 and 282,776 shares of common stock, respectively, from the exercise of warrants under its Warrant Agreement dated July 1, 2003, the (“Warrant Agreement”) and received net proceeds of $12.9 million and $4.2 million, respectively.
          On March 2, 2007, the Company filed a shelf registration statement on Form S-3 with the SEC under the Securities Act of 1933, as amended (the “1933 Act”) with respect to an aggregate of $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants, that may be sold by the Company from time to time pursuant to Rule 415 of the 1933 Act. On April 19, 2007, the Commission declared this shelf registration statement effective.
          In June 2007, the Company completed a public offering in which it sold 2,700,000 shares of its common stock registered for $27.65 per share, and received net proceeds of approximately $73.6 million after deducting the
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
underwriting discount and the other estimated offering expenses. The Company used the proceeds to pay down debt and finance its loan and investment portfolio. The underwriters did not exercise their over allotment option for additional shares. At March 31, 2009, the Company had $425.3 million remaining under the previously mentioned shelf registration.
          In June 2008, the Company’s external manager exercised its right to redeem its approximate 3.8 million operating partnership units in the Company’s operating partnership for shares of the Company’s common stock on a one-for-one basis. In addition, the special voting preferred shares paired with each operating partnership unit, pursuant to a pairing agreement, were redeemed simultaneously and cancelled by the Company.
          The Company had 25,142,410 shares outstanding at March 31, 2009 and December 31, 2008.
Note 2 — Summary of Significant Accounting Policies
          Basis of Presentation and Principles of Consolidation
          The accompanying unaudited consolidated interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial statements and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements, although management believes that the disclosures presented herein are adequate to make the accompanying unaudited consolidated interim financial statements presented not misleading.
          The accompanying unaudited consolidated financial statements include the financial statements of the Company, its wholly owned subsidiaries, and partnerships or other joint ventures which the Company controls. Entities which the Company does not control and entities which are variable interest entities in which the Company is not the primary beneficiary, are accounted for under the equity method. In the opinion of management, all adjustments (consisting only of normal recurring accruals) considered necessary for a fair presentation have been included. All significant inter-company transactions and balances have been eliminated in consolidation. Certain prior year amounts have been reclassified to conform to current period presentation. Upon adoption of SFAS No. 160 “Noncontrolling Interest in Consolidated Financial Statements — an Amendment of ARB No. 51,” noncontrolling interest in consolidated entity is classified in the Company’s Consolidated Balance Sheet in the “Equity” section of the current quarter’s presentation and was disclosed as a separate mezzanine section in prior quarter’s presentation and net (loss) income is split out between noncontrolling interest and Arbor Realty Trust, Inc. and was disclosed as one line in prior quarter’s presentation.
          The preparation of consolidated interim financial statements in conformity with Generally Accepted Accounting Principals in the United States (“GAAP”) requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated interim financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
          The results of operations for the three months ended March 31, 2009 are not necessarily indicative of results that may be expected for the entire year ending December 31, 2009. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated annual financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2008.
          Cash and Cash Equivalents
          All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The Company places its cash and cash equivalents in high quality financial institutions. The
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
consolidated account balances at each institution periodically exceeds FDIC insurance coverage and the Company believes that this risk is not significant.
          Restricted Cash
          At March 31, 2009 and December 31, 2008, the Company had restricted cash of $83.0 million and $93.2 million, respectively, on deposit with the trustees for the Company’s collateralized debt obligations (“CDOs”), see Note 8 — “Debt Obligations.” Restricted cash primarily represents proceeds from loan repayments which will be used to purchase replacement loans as collateral for the CDOs and interest payments received from loans in the CDOs which are remitted to the Company quarterly in the month following the quarter.
          Loans and Investments
          Statement of Financial Accounting Standards (“SFAS”) No. 115 “Accounting for Certain Investments in Debt and Equity Securities,” (“SFAS 115”) requires that at the time of purchase, the Company designate a security as held-to-maturity, available-for-sale, or trading depending on ability and intent. The Company does not have any securities designated as trading at this time. Securities available-for-sale are reported at fair value with the net unrealized gains or losses reported as a component of accumulated other comprehensive loss, while securities and investments held to maturity are reported at amortized cost. Unrealized losses that are determined to be other-than-temporary are recognized in earnings in accordance with SFAS 115. The determination of other-than-temporary impairment is a subjective process requiring judgments and assumptions. The process may include, but is not limited to, assessment of recent market events and prospects for near term recovery, assessment of cash flows, internal review of the underlying assets securing the investments, credit of the issuer and the rating of the security, as well as the Company’s ability and intent to hold the investment. Management closely monitors market conditions on which it bases such decisions.
          In accordance with Emerging Issues Task Force (“EITF”) 99-20, “Recognition of Interest Income and Impairment on Purchased and Retained Beneficial Interests in Securitized Financial Assets” as amended by FSP EITF 99-20-1 “Amendments to the Impairment Guidance of EITF Issue No. 99-20” the Company also assesses certain of its held-to-maturity securities, other than those of high credit quality, to determine whether significant changes in estimated cash flows or unrealized losses on these securities, if any, reflect a decline in value which is other-than-temporary and, accordingly, written down to its fair value against earnings. On a quarterly basis, the Company reviews these changes in estimated cash flows, which could occur due to actual prepayment and credit loss experience, to determine if an other-than-temporary impairment is deemed to have occurred. The determination of other-than-temporary impairment is a subjective process requiring judgments and assumptions. The Company calculates a revised yield based on the current amortized cost of the investment, including any other-than-temporary impairments recognized to date, and the revised yield is then applied prospectively to recognize interest income.
          In January 2009, the FASB issued FASB Staff Position No. EITF 99-20-1 (“FSP EITF 99-20-1”), “Amendments to the Impairment Guidance of EITF Issue No. 99-20.” FSP EITF 99-20-1 amends the impairment guidance in EITF Issue No. 99-20, “Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in Securitized Financial Assets,” to achieve a more consistent determination of whether an other-than-temporary impairment has occurred. It also retains and emphasizes the objective of an other-than-temporary impairment assessment and related disclosure in SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” and requires judgment in assessing the probability of collecting future cash flows. FSP EITF 99-20-1 is effective for interim and annual reporting periods ending after December 15, 2008, and shall be applied prospectively. The adoption of FSP EITF 99-20-1 did not have a material effect on the Company’s Consolidated Financial Statements.
          Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for loan losses when such loan or investment is deemed to be impaired. The Company invests in preferred equity interests that, in some cases, allow the Company to participate in a percentage of the underlying property’s cash flows from operations and proceeds from a sale or refinancing. At the inception of each such investment, management must determine whether
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
such investment should be accounted for as a loan, joint venture or as real estate. To date, management has determined that all such investments are properly accounted for and reported as loans.
          Impaired Loans and Allowance for Loan Losses
          The Company considers a loan impaired when, based upon current information and events, it is probable that it will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. Specific valuation allowances are established for impaired loans based on the fair value of collateral on an individual loan basis. The fair value of the collateral is determined by selecting the most appropriate valuation methodology, or methodologies, among several generally available and accepted in the commercial real estate industry. The determination of the most appropriate valuation methodology is based on the key characteristics of the collateral type. These methodologies include the evaluation of operating cash flow from the property during the projected holding period, and the estimated sales value of the collateral computed by applying an expected capitalization rate to the stabilized net operating income of the specific property, less selling costs, discounted at market discount rates.
          If upon completion of the valuation, the fair value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, an allowance is created with a corresponding charge to the provision for loan losses. The allowance for each loan is maintained at a level believed adequate by management to absorb probable losses. The Company had an allowance for loan losses of $198.0 million relating to 18 loans with an aggregate carrying value, before reserves, of approximately $588.8 million at March 31, 2009 and $130.5 million in allowance for loan losses relating to ten loans with an aggregate carrying value, before reserves, of approximately $443.2 million at December 31, 2008.
          Revenue Recognition
     Interest Income — Interest income is recognized on the accrual basis as it is earned from loans, investments, and securities. In many instances, the borrower pays an additional amount of interest at the time the loan is closed, an origination fee, and deferred interest upon maturity. In some cases interest income may also include the amortization or accretion of premiums and discounts arising from the purchase or origination of the loan or security. This additional income, net of any direct loan origination costs incurred, is deferred and accreted into interest income on an effective yield or “interest” method adjusted for actual prepayment activity over the life of the related loan or security as a yield adjustment. Income recognition is suspended for loans when in the opinion of management a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Several of the loans provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination regarding collectibility, interest income above the current pay rate is recognized only upon actual receipt. Additionally, interest income is recorded when earned from equity participation interests, referred to as equity kickers. These equity kickers have the potential to generate additional revenues to the Company as a result of excess cash flows being distributed and/or as appreciated properties are sold or refinanced. The Company did not record interest income on such investments for the three months ended March 31, 2009 as compared to $0.3 million for the three months ended March 31, 2008. These amounts represent profits interest received in accordance with the contractual agreement with the borrower.
     Property operating income — Property operating income represents operating income associated with the operations of an office building recorded as real estate owned, net. For the three months ended March 31, 2009, the Company recorded approximately $1.5 million of property operating income relating to the Company’s real estate owned. There was no property operating income for the three months ended March 31, 2008.
     Other income — Other income represents fees received for loan structuring and miscellaneous asset management fees associated with the Company’s loans and investments portfolio.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          Income or Losses from Equity Affiliates
          The Company invests in joint ventures that are formed to acquire, develop, and/or sell real estate assets. These joint ventures are not majority owned or controlled by the Company, and are not consolidated in its financial statements. These investments are recorded under either the equity or cost method of accounting as appropriate. The Company records its share of the net income and losses from the underlying properties on a single line item in the Consolidated Statements of Operations as income from equity affiliates.
          Stock Based Compensation
          The Company records stock-based compensation expense at the grant date fair value of the related stock-based award in accordance with SFAS No. 123R, “Accounting for Stock-Based Compensation” (“SFAS 123R”). The Company measures the compensation costs for these shares as of the date of the grant, with subsequent remeasurement for any unvested shares granted to non-employees of the Company with such amounts expensed against earnings, at the grant date (for the portion that vest immediately) or ratably over the respective vesting periods. The cost of these grants is amortized over the vesting term using an accelerated method in accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 28 “Accounting for Stock Appreciation Rights and Other Variable Stock Options or Award Plans” (“FIN 28”), and SFAS 123R. Dividends are paid on the restricted shares as dividends are paid on shares of the Company’s common stock whether or not they are vested. Stock based compensation was disclosed in the Company’s Consolidated Statements of Operations under “employee compensation and benefits” for employees and under “selling and administrative” expense for non-employees.
          Income Taxes
          The Company is organized and conducts its operations to qualify as a REIT for federal income tax purposes. A REIT is generally not subject to federal income tax on its REIT-taxable income that it distributes to its stockholders, provided that it distributes at least 90% of its REIT-taxable income and meets certain other requirements. Certain assets of the Company that produce non-qualifying income are owned by its taxable REIT subsidiaries, the income of which are subject to federal and state income taxes. The Company did not record a provision for income taxes related to the assets that are held in taxable REIT subsidiaries for the three months ended March 31, 2009 and 2008. The Company’s accounting policy with respect to interest and penalties related to tax uncertainties is to classify these amounts as provision for income taxes. The Company has not recognized any interest and penalties related to tax uncertainties for the three months ended March 31, 2009 and 2008.
          In July 2006, the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109” (“FIN 48”). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with FAS 109 “Accounting for Income Taxes.” This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition. This interpretation was effective January 1, 2007. The adoption of FIN 48 did not have a material impact on the Company’s financial results.
          Other Comprehensive Income / (Loss)
          SFAS No. 130 “Reporting Comprehensive Income,” divides comprehensive income into net income and other comprehensive income (loss), which includes unrealized gains and losses on available for sale securities. In addition, to the extent the Company’s derivative instruments qualify as hedges under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” net unrealized gains or losses are reported as a component of accumulated other comprehensive income/(loss), see “Derivatives and Hedging Activities” below. At March 31, 2009, accumulated other comprehensive loss was $89.2 million and consisted of $89.0 million of net unrealized losses on derivatives designated as cash flow hedges and $0.2 million in net unrealized losses related to available-for-sale securities. See Note 4 — “Available-For-Sale Securities” for further details. At December 31, 2008,
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
accumulated other comprehensive loss was $96.6 million and consisted of net unrealized losses on derivatives designated as cash flow hedges.
          Derivatives and Hedging Activities
          The Company accounts for derivative financial instruments in accordance with SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”), as amended by SFAS No. 138, “Accounting for Certain Derivative Instruments and Certain Hedging Activities” (“SFAS 138”). SFAS 133, as amended by SFAS 138, requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheets and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either accumulated other comprehensive loss in Arbor Realty Trust, Inc. Stockholders’ Equity until the hedged item is recognized in earnings or net income depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity. The Company relies on quotations from a third party to determine these fair values.
          As required by SFAS 133, the Company records all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether a company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain of its risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting under SFAS 133.
          SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of SFAS No. 133” (“SFAS 161”), amends and expands the disclosure requirements of SFAS 133 with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.
          In the normal course of business, the Company may use a variety of derivative financial instruments to manage, or hedge, interest rate risk. These derivative financial instruments must be effective in reducing its interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. Derivatives are used for hedging purposes rather than speculation. See Note 9 — “Derivative Financial Instruments” for further details.
          Variable Interest Entities
          FASB issued Interpretation No. 46R, “Consolidation of Variable Interest Entities” (“FIN 46”), which requires a variable interest entity (“VIE”) to be consolidated by its primary beneficiary (“PB”). The PB is the party that absorbs a majority of the VIE’s anticipated losses and/or a majority of the expected returns.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          The Company has evaluated its loans and investments and investments in equity affiliates to determine whether they are VIEs. This evaluation resulted in the Company determining that its bridge loans, junior participation loans, mezzanine loans, preferred equity investments and investments in equity affiliates were potential variable interests. For each of these investments, the Company has evaluated (1) the sufficiency of the fair value of the entities’ equity investments at risk to absorb losses, (2) that as a group the holders of the equity investments at risk have (a) the direct or indirect ability through voting rights to make decisions about the entities’ significant activities, (b) the obligation to absorb the expected losses of the entity and their obligations are not protected directly or indirectly, (c) the right to receive the expected residual return of the entity and their rights are not capped, (3) substantially all of the entities’ activities do not involve or are not conducted on behalf of an investor that has disproportionately fewer voting rights in terms of its obligation to absorb the expected losses or its right to receive expected residual returns of the entity, or both. In addition, the Company has evaluated its investments in collateralized debt obligation securities and has determined that the issuing entities are considered VIEs under the provisions of FIN 46, but has determined that the Company is not the primary beneficiary. As of March 31, 2009, the Company has identified 45 loans and investments which were made to entities determined to be VIEs with an aggregate carrying amount of $862.6 million. These VIE entities had exposure to real estate debt of approximately $3.5 billion at March 31, 2009.
          For the 45 VIEs identified, the Company has determined that it is not the primary beneficiary, and as such the VIEs should not be consolidated in the Company’s financial statements. The Company’s maximum exposure to loss would not exceed the carrying amount of such investments. For all other investments, the Company has determined they are not VIEs. As such, the Company has continued to account for these loans and investments as a loan or investment in equity affiliate, as appropriate.
          Entities that issue junior subordinated notes are considered VIEs. However, it is not appropriate to consolidate these entities under the provisions of FIN 46 as equity interests are variable interests only to the extent that the investment is considered to be at risk. Since the Company’s investments were funded by the entities that issued the junior subordinated notes, they are not considered to be at risk.
          Recently Issued Accounting Pronouncements
          FSP FAS 141(R)-1 — In April 2009, the FASB issued FASB Staff Position No. FAS 141(R)-1 (“FSP FAS 141(R)-1”), “Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies.” FSP FAS 141(R)-1 provides guidance on accounting for business combinations. It addresses issues raised by preparers, auditors, and members of the legal profession on initial recognition and measurement, subsequent measurement and accounting, and disclosure of assets and liabilities arising from contingencies in a business combination. FSP FAS 141(R)-1 applies to all assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Company does not currently expect the adoption of FSP FAS 141(R)-1 to have a material effect on the Company’s Consolidated Financial Statements.
          FSP FAS 157-4 — In April 2009, the FASB issued FASB Staff Position No. FSP 157-4 (“FSP FAS 157-4”), “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly.” FSP FAS 157-4 provides additional guidance on determining whether a market for a financial asset is not active and a transaction is not distressed for fair value measurement under SFAS 157, “Fair Value Measurement.” FSP FAS 157-4 applies to all fair value measurements prospectively and is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. The Company does not currently expect the adoption of FSP FAS 157-4 to have a material effect on the Company’s Consolidated Financial Statements.
          FSP FAS 115-2 and FAS 124-2 — In April 2009, the FASB issued FASB Staff Position No. FAS 115-2 and FAS 124-2 (“FSP FAS 115-2 and FAS 124-2”), “Recognition and Presentation of Other-Than-Temporary Impairments.” FSP FAS 115-2 and FAS 124-2 provides greater clarity about the credit and noncredit component of an other-than-temporary impairment event and more effectively communicates when it has occurred. FSP FAS 115-2 and FAS 124-2 applies only to debt securities and is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. When adopting FSP FAS 115-2 and
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
FAS 124-2, the Company will be required to record a cumulative-effect adjustment as of the beginning of the period of adoption to reclassify the noncredit component of a previously recognized other-than-temporary impairment from retained earnings to accumulated other comprehensive income. The Company does not currently expect the adoption of FSP FAS 115-2 and FAS 124-2 to have a material effect on the Company’s Consolidated Financial Statements.
          SAB 111 — In April 2009, the Securities and Exchange Commission’s (“SEC”) Office of the Chief Accountant and Division of Corporation Finance issued SEC Staff Accounting Bulletin 111 (“SAB 111”). SAB 111 amends and replaces SAB Topic 5M, “Miscellaneous Accounting—Other Than Temporary Impairment of Certain Investments in Equity Securities” to reflect FSP FAS 115-2 and FAS 124-2. The amended SAB Topic 5M maintains the prior staff views related to equity securities but has been amended to exclude debt securities from its scope. SAB 111 is effective upon the adoption of FSP FAS 115-2 and FAS 124-2. The Company does not currently expect the adoption of SAB 111 to have a material effect on the Company’s Consolidated Financial Statements.
          FSP FAS 107-1 and APB 28-1 — In April 2009, the FASB issued FASB Staff Position No. FAS 107-1 and APB 28-1 (“FSP FAS 107-1 and APB 28-1”), “Interim Disclosures about Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 requires the Company to disclose in the notes of its interim financial statements as well as its annual financial statements, the fair value of all financial instruments as required by SFAS 107, “Disclosures about Fair Value of Financial Instruments.” FSP FAS 107-1 and APB 28-1 applies to all financial instruments within the scope of SFAS 107 and is effective for interim and annual periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009. Because FSP FAS 107-1 and APB 28-1 impacts disclosure, the Company does not currently expect its adoption to have a material effect on the Company’s Consolidated Financial Statements.
Note 3 — Loans and Investments
          The following table sets forth the composition of the Company’s loan and investment portfolio at the dates indicated.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	At March 31, 2009	 	 	At December 31, 2008	 	
 	 	March 31,	 	 	Percent	 	 	December 31,	 	 	Percent	 	 	Loan	 	 	Wtd. Avg.	 	 	Loan	 	 	Wtd. Avg.	 	
 	 	2009	 	 	of Total	 	 	2008	 	 	of Total	 	 	Count	 	 	Pay Rate	 	 	Count	 	 	Pay Rate	 	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	
Bridge loans	 	$	1,425,525,613	 	 	 	63	%	 	$	1,441,846,251	 	 	 	62	%	 	 	57	 	 	 	6.02	%	 	 	58	 	 	 	6.22	%	
Mezzanine loans	 	 	352,214,096	 	 	 	15	%	 	 	364,937,818	 	 	 	16	%	 	 	38	 	 	 	6.53	%	 	 	42	 	 	 	7.03	%	
Junior participation loans	 	 	298,251,583	 	 	 	13	%	 	 	298,278,363	 	 	 	13	%	 	 	16	 	 	 	4.95	%	 	 	16	 	 	 	6.60	%	
Preferred equity Investments	 	 	194,578,304	 	 	 	9	%	 	 	205,247,126	 	 	 	9	%	 	 	18	 	 	 	4.27	%	 	 	18	 	 	 	4.05	%	
Other	 	 	4,136,481	 	 	nm	 	 	 	12,418,110	 	 	nm	 	 	 	1	 	 	 	—	 	 	 	2	 	 	 	8.73	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	2,274,706,077	 	 	 	100	%	 	 	2,322,727,668	 	 	 	100	%	 	 	130	 	 	 	5.80	%	 	 	136	 	 	 	6.22	%	

Unearned revenue	 	 	(9,936,750	)	 	 	 	 	 	 	(10,544,049	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Allowance for loan losses	 	 	(198,000,000	)	 	 	 	 	 	 	(130,500,000	)	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Loans and investments, net	 	$	2,066,769,327	 	 	 	 	 	 	$	2,181,683,619	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	

 	 	 	
nm — not meaningful	
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Concentration of Borrower Risk
          The Company is subject to concentration risk in that, as of March 31, 2009, the unpaid principal balance related to 30 loans with five unrelated borrowers represented approximately 27% of total assets. At December 31, 2008 the unpaid principal balance related to 34 loans with five unrelated borrowers represented approximately 28% of total assets. As of March 31, 2009 and December 31, 2008, the Company had 130 and 136 loans and investments, respectively. As of March 31, 2009, 40.2%, 12.4%, and 10.0% of the outstanding balance of the Company’s loans and investments portfolio had underlying properties in New York, California, and Florida, respectively. As of December 31, 2008, 39.8%, 12.1%, and 9.8% of the outstanding balance of the Company’s loans and investments portfolio had underlying properties in New York, California, and Florida, respectively.
Impaired Loans and Allowance for Loan Losses
          The Company considers a loan impaired when, based upon current information and events, it is probable that it will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. As a result of the Company’s normal quarterly loan review at March 31, 2009, it was determined that 18 loans with an aggregate carrying value, before reserves, of $588.8 million were impaired. At December 31, 2008, it was determined that ten loans with an aggregate carrying value, before reserves, of $443.2 million were impaired.
          The Company performed an evaluation of the loans and determined that the fair value of the underlying collateral securing the impaired loans was less than the net carrying value of the loans, resulting in the Company recording a $67.5 million provision for loan losses for the three months ended March 31, 2009. Of the $67.5 million of loan loss reserves recorded during the first quarter of 2009, $20.9 million was on loans that had reserves of $116.5 million at December 31, 2008 and $46.6 million of reserves related to other loans in the Company’s portfolio. The Company recorded a $3.0 million provision for loan losses for the three months ended March 31, 2008.
     A summary of the changes in the allowance for loan losses is as follows:
 	 	 	 	 	
 	 	For the Three	 	
 	 	Months Ended	 	
 	 	March 31, 2009	 	
Allowance at beginning of the period	 	$	130,500,000	 	
Provision for loan losses	 	 	67,500,000	 	
Charge-offs	 	 	—	 	
 	 	 	 	
Allowance at end of the period	 	$	198,000,000	 	
 	 	 	 	
          As of March 31, 2009, nine loans with a net carrying value of approximately $198.4 million, net of related loan loss reserves of $86.0 million, were classified as non-performing. Income is recognized on a cash basis only to the extent it is received. Full income recognition will resume when the loan becomes contractually current and performance has recommenced. As of December 31, 2008, four loans with a net carrying value of approximately $113.0 million, net of related loan loss reserves of $20.5 million, were classified as non-performing for which income recognition had been suspended.
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Note 4 — Available-For-Sale Securities
          The following is a summary of the Company’s available-for-sale securities at March 31, 2009.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Other-Than-	 	 	 	 	 	 	 	
 	 	Carrying	 	 	Temporary	 	 	Unrealized	 	 	Estimated	 	
 	 	Value	 	 	Impairment	 	 	Loss	 	 	Fair Value	 	
Common equity securities	 	$	529,104	 	 	$	—	 	 	$	(235,158	)	 	$	293,946	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total available-for-sale securities	 	$	529,104	 	 	$	—	 	 	$	(235,158	)	 	$	293,946	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
          The following is a summary of the Company’s available-for-sale securities at December 31, 2008.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	Other-Than-	 	 	 	 	 	 	 	
 	 	Carrying	 	 	Temporary	 	 	Unrealized	 	 	Estimated	 	
 	 	Value	 	 	Impairment	 	 	Loss	 	 	Fair Value	 	
Common equity securities	 	$	16,715,584	 	 	$	(16,186,480	)	 	$	—	 	 	$	529,104	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total available-for-sale securities	 	$	16,715,584	 	 	$	(16,186,480	)	 	$	—	 	 	$	529,104	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
          During 2007, the Company purchased 2,939,465 shares of common stock of CBRE Realty Finance, Inc., a commercial real estate specialty finance company, for $16.7 million which had a fair value of $0.3 million, at March 31, 2009 and a fair value of $0.5 million at December 31, 2008. As of March 31, 2009, these securities have been in an unrealized loss position for more than twelve months. GAAP requires that these securities are evaluated periodically to determine whether a decline in their value is other-than-temporary, though it is not intended to indicate a permanent decline in value. Management closely monitors market conditions on which it bases such decisions. At December 31, 2008, the Company believed that based on market events and the unfavorable prospects for near term recovery of value, that there was a lack of evidence to support the conclusion that the fair value decline was temporary. Therefore, at December 31, 2008, the Company concluded that these securities were other-than-temporarily impaired under GAAP and recorded a $16.2 million impairment charge to the Consolidated Statements of Operations. No such impairment charge was recorded during the quarter ended March 31, 2009.
          These securities are carried at their estimated fair value with unrealized gains and losses reported in accumulated other comprehensive loss. As of December 31, 2008, all losses in fair value to date were recorded as other-than-temporary impairments, and therefore have been recognized in earnings. The cumulative amount of other comprehensive loss related to unrealized losses on these securities as of March 31, 2009 was $0.2 million.
Note 5 — Securities Held-To-Maturity
          The following is a summary of the Company’s securities held-to-maturity at March 31, 2009.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Other-Than-	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Face	 	 	Amortized	 	 	Temporary	 	 	Carrying	 	 	Unrealized	 	 	Unrealized	 	 	Estimated	 	
 	 	Value	 	 	Cost	 	 	Impairment (1)	 	 	Value	 	 	Gain	 	 	Loss	 	 	Fair Value	 	
Collateralized debt obligation bonds	 	$	81,741,289	 	 	$	59,274,620	 	 	$	(1,387,500	)	 	$	57,887,120	 	 	$	175,000	 	 	$	(40,502,120	)	 	$	17,560,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total securities held-to-maturity	 	$	81,741,289	 	 	$	59,274,620	 	 	$	(1,387,500	)	 	$	57,887,120	 	 	$	175,000	 	 	$	(40,502,120	)	 	$	17,560,000	 	

 	 	 	
(1)	 	Cumulative total.	
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          The following is a summary of the Company’s securities held-to-maturity at December 31, 2008.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Other-Than-	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Face	 	 	Amortized	 	 	Temporary	 	 	Carrying	 	 	Unrealized	 	 	Unrealized	 	 	Estimated	 	
 	 	Value	 	 	Cost	 	 	Impairment	 	 	Value	 	 	Gain	 	 	Loss	 	 	Fair Value	 	
Collateralized debt obligation bonds	 	$	82,700,000	 	 	$	59,631,848	 	 	$	(1,387,500	)	 	$	58,244,348	 	 	$	175,000	 	 	$	(39,684,348	)	 	$	18,735,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total securities held-to-maturity	 	$	82,700,000	 	 	$	59,631,848	 	 	$	(1,387,500	)	 	$	58,244,348	 	 	$	175,000	 	 	$	(39,684,348	)	 	$	18,735,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
          The following is a summary of the underlying credit rating of the Company’s securities held-to-maturity at March 31, 2009 and December 31, 2008.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	At March 31, 2009	 	 	At December 31, 2008	 	
 	 	Amortized	 	 	Percent	 	 	Amortized	 	 	Percent	 	
Rating (2)	 	Cost	 	 	of Total	 	 	Cost	 	 	of Total	 	
AAA	 	$	40,508,578	 	 	 	68	%	 	$	41,097,282	 	 	 	69	%	
AA+	 	 	7,719,376	 	 	 	13	%	 	 	7,659,013	 	 	 	13	%	
AA-	 	 	9,659,166	 	 	 	16	%	 	 	9,488,053	 	 	 	16	%	
BB+	 	 	1,387,500	 	 	 	3	%	 	 	1,387,500	 	 	 	2	%	
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	$	59,274,620	 	 	 	100	%	 	$	59,631,848	 	 	 	100	%	

 	 	 	
(2)	 	Based on the rating published by Standard & Poor’s for each security.	
          During the second quarter of 2008, the Company purchased $82.7 million of investment grade commercial real estate (“CRE”) collateralized debt obligation bonds for $58.1 million, representing a $24.6 million discount to their face value. This discount is accreted into interest income on an effective yield adjusted for actual prepayment activity over the average life of the related security as a yield adjustment. For the three months ended March 31, 2009, the Company accreted approximately $0.6 million of this discount into interest income, representing accretion on approximately $21.0 million of the total discount. These securities bear interest at a weighted average spread of 40 basis points over LIBOR, have a weighted average stated maturity of 37.4 years but have an estimated average remaining life of 5.5 years due to the maturities of the underlying assets. For the three months ended March 31, 2009, the average yield on these securities based on their face values was 4.34%, including the accretion of discount.
          During the first quarter of 2009, the Company received a repayment of principal of $1.0 million on one of the Company’s securities held-to-maturity.
          Securities held to maturity are carried at cost, net of unamortized premiums and discounts, which are recognized in interest income using an effective yield or “interest” method. GAAP accounting standards require that held to maturity securities are evaluated periodically to determine whether a decline in their value is other-than-temporary, though it is not intended to indicate a permanent decline in value. The Company’s evaluation is based on its assessment of cash flows, which is supplemented by third-party research reports, internal review of the underlying assets securing the investments, the rating of the security, as well as the Company’s intent and ability to hold its CDO bond investments to maturity. As of March 31, 2009, the Company’s CDO bond investments were in an unrealized loss position, as the Company’s carrying value was in excess of their market value. However, these securities have been in an unrealized loss position for less than twelve months. Based on this analysis, the Company expects to fully recover the carrying value of these investments and has concluded that with exception of one $1.4 million bond, these investments are not other-than-temporarily impaired as of March 31, 2009. During the fourth quarter of 2008, the Company determined that one BB+ rated bond, with an amortized cost of approximately $1.4 million, was other-than-temporarily impaired, resulting in a $1.4 million impairment charge to the Company’s financial statements.
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          In 2008, the Company entered into a repurchase agreement with a financial institution for the purpose of financing a portion of the Company’s CDO bond securities. In the first quarter of 2009, the Company paid down approximately $1.3 million of this facility as a result of a decrease in values associated with a change in market interest rate spreads. At March 31, 2009 and December 31, 2008, current borrowings totaled approximately $1.9 million and $8.2 million, respectively.
Note 6 — Investment in Equity Affiliates

          The following is a summary of the Company’s investment in equity affiliates at March 31, 2009 and December 31, 2008:
 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Outstanding	 	
 	 	 	 	 	 	 	 	 	 	Loan Balance	 	
 	 	 	 	 	 	 	 	 	 	to Equity	 	
 	 	Investment in Equity Affiliates at	 	 	Affiliates at	 	
 	 	March 31,	 	 	December 31,	 	 	March 31,	 	
Equity Affiliates	 	2009	 	 	2008	 	 	2009	 	
930 Flushing & 80 Evergreen	 	$	491,975	 	 	$	491,975	 	 	$	24,582,599	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
450 West 33rd Street	 	 	1,136,960	 	 	 	1,136,960	 	 	 	50,000,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
1107 Broadway	 	 	5,720,000	 	 	 	5,720,000	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Alpine Meadows	 	 	12,664,152	 	 	 	10,157,018	 	 	 	30,500,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
St. John’s Development	 	 	2,813,828	 	 	 	3,500,000	 	 	 	25,000,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Lightstone Value Plus REIT L.P	 	 	55,988,411	 	 	 	—	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Issuers of Junior Subordinated Notes	 	 	8,305,000	 	 	 	8,305,000	 	 	 	—	 	

Total	 	$	87,120,326	 	 	$	29,310,953	 	 	$	130,082,599	 	
 	 	 	 	 	 	 	 	 	 	
     The Company accounts for the 450 West 33rd Street investment under the cost method of accounting and the remaining investments under the equity method in accordance with APB 18, “The Equity Method of Accounting for Investments in Common Stock.”
Alpine Meadows
     In July 2007, the Company invested $13.2 million in exchange for a 39% profits interest with an 18% preferred return in the Alpine Meadows ski resort, which consists of approximately 2,163 total acres in northwestern Lake Tahoe, California. The Company’s invested capital represents 65% of the total equity of the transaction and the Company will be allocated 65% of the losses. The Company also provided a $30.5 million first mortgage loan that matures in August 2009 and bears interest at pricing over one month LIBOR. The outstanding balance on this loan was $30.5 million at March 31, 2009. For the three months ended March 31, 2009, the Company recorded $2.5 million in income from this equity investment. This amount reflects Arbor’s portion of the joint venture’s income, net of depreciation expense, and was recorded in income from equity affiliates and as an increase to the Company’s investment in equity affiliates on the balance sheet. As a result, the Company has a $12.7 million investment as of March 31, 2009.
St. John’s Development
     In December 2006, the Company originated a $25.0 million bridge loan with a maturity date in September 2007 with two, three month extensions that bore interest at a fixed rate of 12%. The loan is secured by 20.5 acres of usable land and 2.3 acres of submerged land located on the banks of the St. John’s River in downtown Jacksonville,
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Florida and is currently zoned for the development of up to 60 dwellings per acre. In October 2007, the borrower sold the property to an investor group, in which the Company has a 50% non-controlling interest, for $25.0 million, and assumed the $25.0 million mortgage with a new maturity date of October 2009, and a change in the interest rate to LIBOR plus 6.48%. The Company also contributed $0.5 million to cover other operational costs of acquiring and maintaining the property.
     The managing member of the investor group is an experienced real estate developer who retains a 50% interest in the partnership and funded a $2.9 million interest reserve for the first year. The Company was required to contribute $2.9 million to fund the interest reserve for the second year and made an additional capital contribution of $0.1 million during 2008. Interest received on the $25.0 million loan will be recorded as a return of capital and reduction of the Company’s equity investment. For the three months ended March 31, 2009, the Company recorded $0.7 million of such interest, and as a result, has a $2.8 million investment as of March 31, 2009. The Company retains a non-controlling 50% equity interest in the property and accounts for this investment under the equity method. No income from the equity interest has been recognized for the three months ended March 31, 2009 and March 31, 2008.
Lightstone Value Plus REIT L.P. / Prime Outlets
     In December 2003, the Company invested approximately $2.1 million in exchange for a 50% non-controlling interest in Prime Outlets Member, LLC (“POM”), which owns 15% of a real estate holding company that owns and operates a portfolio of factory outlet shopping centers. The Company accounts for this investment under the equity method. Additionally, the Company owned a 16.67% carried profits interest through a consolidated entity which had a 25% interest in POM with a third party member owning the remaining 8.33%.
     In June 2008, the Company entered into an agreement (“the agreement”) to transfer its 16.67% interest in POM, at a value of approximately $37.2 million, in exchange for preferred and common operating partnership units of Lightstone Value Plus REIT L.P.
     In connection with the agreement, the Company borrowed from Lightstone Value Plus Real Estate Investment Trust, Inc. approximately $33 million, which was initially secured by its 16.67% interest in POM, has an eight year term, and bears interest at a fixed rate of 4% with payment of the interest deferred until the closing of the transaction. In addition, the Company paid an incentive management fee to its manager of approximately $7.3 million related to this transaction during the third quarter of 2008. As a result, during the second quarter of 2008, the Company recorded approximately $33.0 million of cash, $49.5 million of debt related to the proceeds received from the loan secured by the consolidated entity’s 25% interest in POM which was recorded in notes payable, a $16.5 million receivable from the third party member share of the consolidated entity’s 25% interest which was recorded in other assets and a deferred expense related to the incentive management fee of approximately $7.3 million.
     In the fourth quarter 2008, the Company received a $1.0 million distribution from POM related to its 24.17% equity and profits interest, the result of excess proceeds from the operations of the business. Of the distribution received by the Company, $1.0 million was recorded as interest income, representing the distribution received from the 25% profits interest, $0.3 million was recorded as net income attributable to noncontrolling interest relating to a third party member’s 8.33% noncontrolling interest share of the profits interest and $0.3 million was recorded as income netted in loss from equity affiliates, representing the portion received from the Company’s 7.5% equity interest. In accordance with the agreement, $0.7 million of the distribution relating to the 16.67% profits interest was used to pay down a portion of the $33 million debt and will reduce the value of the Company’s interest when exchanged for preferred and common operating partnership units at closing, thereby reducing the Company’s future gain.
     In March 2009, the Company exchanged its 16.67% interest in Prime Outlets for approximately $37.3 million of preferred and common operating partnership units in Lightstone Value Plus REIT L.P. and the $33.4 million loan is now secured by Arbor’s preferred and common operating partnership units. In June 2013, the preferred units may be redeemed by Lightstone Value Plus REIT L.P. for cash and the loan would become due upon
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
such redemption. The preferred operating partnership units yield 4.63% and the loan bears interest at a rate of 4%. The Company retained its 7.5% equity interest in POM.
          Through the consolidated entity that owned the 16.67%, the Company recorded in its first quarter 2009 financial statements an investment of approximately $56.0 million for the preferred and common operating partnership units, gain on exchange of profits interest of approximately $56.0 million, net income attributable to noncontrolling interest of approximately $18.7 million related to the third party members portion of income recorded, noncontrolling interest due to the third party member of approximately $2.1 million and a reduction of a $16.5 million receivable from the third party member which was previously recorded in other assets. In accordance with APB 29, “Accounting for Nonmonetary Transactions” as amended by FAS 153, “Exchanges of Nonmonetary Assets an Amendment of APB Option No. 29,” the gain of $56.0 million reflects the fair value of the investment in preferred and operating partnership units received in exchange for the 16.67% profits interest. The Company’s profits interest had no cost basis at the time of the exchange.
          In addition, the Company prepaid approximately $7.3 million in incentive management fees to its manager in 2008 related to this transaction. In accordance with the management agreement, installments of the annual incentive fee are subject to potential reconciliation at the end of the 2009 fiscal year.
Note 7 — Real Estate Owned, Net
          In 2008, the Company had a $5.0 million mezzanine loan secured by an office building located in Indianapolis, Indiana that was scheduled to mature in June 2012 and bore interest at a fixed rate of 10.72%. During the first quarter of 2008, the Company established a $1.5 million provision for loan loss related to this property reducing the carrying value to $3.5 million at March 31, 2008. In April 2008, the Company was the winning bidder at a UCC foreclosure sale of the entity which owns the equity interest in the property securing this loan and a $41.4 million first mortgage on the property. As a result, during the second quarter of 2008, the Company recorded this investment on its balance sheet as real estate owned, net at fair value which included the Company’s $3.5 million carrying value of the loan and $41.4 million first lien in mortgage notes payable. For the three months ended March 31, 2009, the Company recorded property operating income of $1.5 million, property operating expenses of $1.3 million and depreciation and amortization of $0.3 million to earnings. At March 31, 2009, this investment’s balance sheet was comprised of land of $6.2 million, building and leasehold improvements net of depreciation of $41.1 million, cash of $0.4 million, other assets of $0.9 million, mortgage note payable of $41.4 million, and other liabilities of $1.3 million.
Note 8 — Debt Obligations
          The Company utilizes repurchase agreements, term and revolving credit agreements, warehouse lines of credit, working capital lines, loan participations, collateralized debt obligations and junior subordinated notes to finance certain of its loans and investments. Borrowings underlying these arrangements are primarily secured by a significant amount of the Company’s loans and investments.
Repurchase Agreements
          The following table outlines borrowings under the Company’s repurchase agreements as of March 31, 2009 and December 31, 2008:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	March 31, 2009	 	 	December 31, 2008	 	
 	 	Debt	 	 	Collateral	 	 	Debt	 	 	Collateral	 	
 	 	Carrying	 	 	Carrying	 	 	Carrying	 	 	Carrying	 	
 	 	Value	 	 	Value	 	 	Value	 	 	Value	 	
Repurchase agreement, financial institution, $200 million committed line, expiration October 2009, interest is variable based on one-month LIBOR, the weighted average note rate was 1.57% and 1.50%, respectively	 	$	36,961,289	 	 	$	49,547,947	 	 	$	36,961,289	 	 	$	49,547,947	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repurchase agreement, financial institution, $100 million committed line, expiration June 2009, interest is variable based on one-month LIBOR; the weighted average note rate was 4.84% and 3.07%, respectively	 	 	7,310,000	 	 	 	9,123,938	 	 	 	15,554,000	 	 	 	19,240,188	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Repurchase agreement, financial institution, an uncommitted line, expiration May 2010, interest is variable based on one and three-month LIBOR; the weighted average note rate was 2.31% and 2.48%, respectively	 	 	1,877,007	 	 	 	12,280,668	 	 	 	8,212,500	 	 	 	12,089,904	 	

Total repurchase agreements	 	$	46,148,296	 	 	$	70,952,553	 	 	$	60,727,789	 	 	$	80,878,039	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          At March 31, 2009, the aggregate weighted average note rate for the Company’s repurchase agreements, including the cost of interest rate swaps on assets financed in these facilities, was 2.11%. Excluding the effect of swaps, the weighted average note rate at March 31, 2009 was 1.69%.
          The Company has a $200.0 million repurchase agreement with a financial institution which has a term expiring in October 2009 and bears interest at pricing over LIBOR, varying on the type of asset financed. At March 31, 2009, the aggregate outstanding balance in this facility was approximately $37.0 million.
          The Company has a $100.0 million repurchase agreement that bears interest at pricing over LIBOR and has a maturity date of June 2009. In January 2008, the Company was notified that no further advances could be taken under this facility. In December 2008, the Company amended this facility extending the maturity to June 2009. The amendment also includes an increase in interest rate pricing over LIBOR to 250 basis points, a paydown of $3.1 million by January 31, 2009 and full repayment of the facility by June 2009. During the three months ended March 31, 2009, the Company paid down approximately $8.2 million of this facility. At March 31, 2009, the aggregate outstanding balance under this facility was $7.3 million.
          In April 2008, the Company entered into an uncommitted master repurchase agreement with a financial institution for the purpose of financing its CRE CDO bond securities. The facility has a term expiring in May 2010 and bears interest at pricing over LIBOR, varying on the type if asset financed. During the first quarter of 2009, the Company paid down approximately $1.3 million of this debt, due to a decrease in values associated with a change in the market interest rate spreads. At March 31, 2009, the aggregate outstanding balance in this facility was approximately $1.9 million.
          In certain circumstances, the Company has financed the purchase of investments from a counterparty through a repurchase agreement with that same counterparty. The Company currently records these investments in the same manner as other investments financed with repurchase agreements, with the investment recorded as an asset and the related borrowing under the repurchase agreement as a liability on the Company’s consolidated balance sheet. Interest income earned on the investments and interest expense incurred on the repurchase obligations are reported separately on the consolidated statements of operations. These transactions may not qualify as a purchase by the Company under FSP FAS 140-3 which is effective for fiscal years beginning after November 15, 2008. The Company would be required to present the net investment on the balance sheet as a derivative with the corresponding change in fair value of the derivative being recorded in the statements of operations when certain criteria to treat these transactions not as part of the same arrangements (linked transactions) are not met. The value of the derivative would reflect not only changes in the value of the underlying investment, but also changes in the value of the underlying credit provided by the counterparty. However, FSP FAS 140-3 applies to prospective transactions occurring on or after the adoption date.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Junior Subordinated Notes
          The following table outlines borrowings under the Company’s junior subordinated notes as of March 31, 2009 and December 31, 2008:
 	 	 	 	 	 	 	 	 	
 	 	March 31, 2009	 	 	December 31, 2008	 	
 	 	Debt	 	 	Debt	 	
 	 	Carrying	 	 	Carrying	 	
 	 	Value	 	 	Value	 	
Junior subordinated notes, maturity March 2034, unsecured, face amount of $27.1 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 5.01% and 5.25%, respectively	 	$	27,070,000	 	 	$	27,070,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity March 2034, unsecured, face amount of $25.8 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 8.31% and 8.32%, respectively	 	 	25,780,000	 	 	 	25,780,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity April 2035, unsecured, face amount of $25.8 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 7.41% and 7.42%, respectively	 	 	25,774,000	 	 	 	25,774,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity July 2035, unsecured, face amount of $25.8 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 6.84% and 6.85%, respectively	 	 	25,774,000	 	 	 	25,774,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity January 2036, unsecured, face amount of $51.6 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 6.82% and 6.85%, respectively	 	 	51,550,000	 	 	 	51,550,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity July 2036, unsecured, face amount of $51.6 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 7.93%	 	 	51,550,000	 	 	 	51,550,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity June 2036, unsecured, face amount of $15.5 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 7.85% and 7.86%, respectively	 	 	15,464,000	 	 	 	15,464,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity April 2037, unsecured, face amount of $14.4 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 7.22%	 	 	14,433,000	 	 	 	14,433,000	 	
 	 	 	 	 	 	 	 	 	
Junior subordinated notes, maturity April 2037, unsecured, face amount of $29.3 million, interest rate variable based on three-month LIBOR, the weighted average note rate was 8.35% and 7.22%, respectively	 	 	29,285,000	 	 	 	38,660,000	 	

Total junior subordinated notes	 	$	266,680,000	 	 	$	276,055,000	 	
 	 	 	 	 	 	 	
          At March 31, 2009, the aggregate weighted average note rate for the Company’s junior subordinated notes, including the cost of interest rate swaps on assets financed in these facilities, was 7.30%. Excluding the effect of swaps, the weighted average note rate at March 31, 2009 was 4.15%.
          The junior subordinated notes are unsecured, have a maturity of 29 to 30 years, pay interest quarterly at a floating rate of interest based on three-month LIBOR and, absent the occurrence of special events, are not redeemable during the first five years. In connection with the issuance of these variable rate junior subordinated notes, the Company entered into various interest rate swap agreements. See Note 9 — “Derivative Financial Instruments” for further information relating to these derivatives.
          In March 2009, the Company purchased from its manager, ACM, approximately $9.4 million of junior subordinated notes originally issued by a wholly-owned subsidiary of the Company’s operating partnership for $1.3
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
million. In 2009, ACM purchased these notes from third party investors for $1.3 million. The Company recorded a net gain on extinguishment of debt of $8.1 million and a reduction of outstanding debt totaling $9.4 million from this transaction.
          The outstanding balance under these facilities was $266.7 million at March 31, 2009 and $276.1 million at December 31, 2008. The current weighted average note rate was 7.30% at March 31, 2009 and 7.21% at December 31, 2008. The impact of these entities in accordance with FIN 46R “Consolidation of Variable Interest Entities” is discussed in Note 2.
          In May 2009, the Company exchanged $247.1 million of its outstanding trust preferred securities, consisting of $239.7 million of junior subordinated notes issued to third party investors and $7.4 million of common equity issued to the Company in exchange for $268.4 million of newly issued unsecured junior subordinated notes, representing 112% of the original face amount. The new notes bear a fixed interest rate of 0.50% per annum for the period commencing February 1, 2009 and ending April 30, 2012 (the “Modification Period”), and then interest is to be paid at the rates set forth in the existing trust agreements until maturity, equal to three month LIBOR plus 2.90%. The Company paid a transaction fee of approximately $1.4 million to the issuers of the junior subordinated notes related to this restructuring. The Company is currently evaluating the effect of this transaction on its Consolidated Financial Statements.
          During the Modification Period, the Company will be permitted to make distributions of up to 100% of taxable income to common shareholders. The Company has agreed that such distributions will be paid in the form of the Company’s stock to the maximum extent permissible under the Internal Revenue Service rules and regulations in effect at the time of such distribution, with the balance payable in cash. This requirement regarding distributions in stock can be terminated by the Company at any time, provided that the Company pays the note holders the original rate of interest from the time of such termination.
Notes Payable
          The following table outlines borrowings under the Company’s notes payable as of March 31, 2009 and December 31, 2008:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	March 31, 2009	 	 	December 31, 2008	 	
 	 	Debt	 	 	Collateral	 	 	Debt	 	 	Collateral	 	
 	 	Carrying	 	 	Carrying	 	 	Carrying	 	 	Carrying	 	
 	 	Value	 	 	Value	 	 	Value	 	 	Value	 	
Term credit agreement, Wachovia Bank, National Association, $473 million committed line, expiration November 2009, interest is variable based on one-month LIBOR; the weighted average note rate was 3.00% and 3.34%, respectively	 	$	280,102,898	 	 	$	478,994,280	 	 	$	280,182,244	 	 	$	476,593,594	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Revolving credit agreement, Wachovia Bank, National Association, $100 million committed line, expiration November 2009, interest is variable based on one-month LIBOR; the weighted average note rate was 3.15% and 3.08%, respectively	 	 	64,834,510	 	 	 	101,260,891	 	 	 	64,834,510	 	 	 	101,260,891	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Term credit agreement, Wachovia Bank, National Association, $69 million committed line, expiration November 2009, interest is variable based on one-month LIBOR; the weighted average note rate was 3.04% and 2.98%, respectively	 	 	32,948,717	 	 	 	18,935,345	 	 	 	32,948,717	 	 	 	29,604,167	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Bridge loan warehouse, financial institution, $70 million committed line, expiration October 2009, interest rate variable based on Prime or LIBOR, the weighted average note rate was 8.09% and 5.15%, respectively	 	 	25,184,364	 	 	 	33,816,504	 	 	 	43,762,001	 	 	 	53,828,592	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	March 31, 2009	 	 	December 31, 2008	 	
 	 	Debt	 	 	Collateral	 	 	Debt	 	 	Collateral	 	
 	 	Carrying	 	 	Carrying	 	 	Carrying	 	 	Carrying	 	
 	 	Value	 	 	Value	 	 	Value	 	 	Value	 	
Working capital facility, Wachovia Bank, National Association; $45 million committed line, expiration June 2009, interest is variable based on one-month LIBOR, the weighted average note rate was 5.58% and 5.51%, respectively	 	 	41,907,965	 	 	 	—	 	 	 	41,907,965	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Note payable from investment in equity affiliates, $50.2 million, expiration July 2016, interest is fixed, the weighted average note rate was 4.06%, respectively	 	 	50,157,707	 	 	 	55,988,411	 	 	 	48,500,000	 	 	 	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Junior loan participations, maturity of July 2011, secured by the Company’s interest in first mortgage loans with principal balances totaling $5.0 million, participation interest based on a portion of the interest received from the loans which have fixed rates of 16.00%	 	 	5,000,000	 	 	 	5,000,000	 	 	 	5,000,000	 	 	 	5,000,000	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Junior loan participation, maturity May 2010, secured by the Company’s interest in a first mortgage loan with a principal balance of $1.3 million, participation interest was based on a portion of the interest received from the loan which has a fixed rate of 9.57%	 	 	1,300,000	 	 	 	1,300,000	 	 	 	1,300,000	 	 	 	1,300,000	 	

Total notes payable	 	$	501,436,161	 	 	$	695,295,431	 	 	$	518,435,437	 	 	$	667,587,244	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
          At March 31, 2009, the aggregate weighted average note rate for the Company’s notes payable, including the cost of interest rate swaps on assets financed in these facilities, was 3.72%. Excluding the effect of swaps, the weighted average note rate at March 31, 2009 was 3.23%.
          In November 2007, the Company entered in two credit agreements with Wachovia which replaced two of the Company’s existing repurchase agreements totaling $757.0 million with Wachovia and an affiliate of Wachovia.
          The first credit agreement consists of a $473.0 million term loan and a $100.0 million revolving commitment. The facility has a commitment period of two years with a one year auto extension feature, subject to certain criteria, to November 2010, bears interest at pricing over LIBOR, and has eliminated the mark to market risk as it relates to interest rate spreads that existed under the terms of the repurchase agreements. The advance rates for this term facility are similar to the advance rates that existed under the previous repurchase agreements. The $473.0 million term loan component has repayment provisions which include reducing the outstanding balance to $300.0 million by December 31, 2008. The outstanding balance under the term component of this facility was $280.1 million at March 31, 2009. The $100.0 million revolving commitment is used to finance new investments and can be increased with lender approval to $200.0 million when the term loan is paid down to $400.0 million. The term loan was paid down to $400.0 million on February 15, 2008. The outstanding balance under the revolving component of this facility was $64.8 million at March 31, 2009.
          The second credit agreement is a $69.0 million term loan which has a commitment period of two years with a one year extension option to November 2010 and bears interest at pricing over LIBOR. This agreement includes $10.0 million of annual repayment provisions in quarterly installments. The advance rate on this term facility is higher than the advance rate for the collateral that was in the repurchase agreement and the facility eliminates the mark to market risk as it relates to interest rate spreads that existed under the terms of the repurchase agreement. The Company has also pledged its 24.2% equity interest in POM as part of this agreement. In the second and third year of this term facility, the Company is required to paydown this facility by an additional amount equal to distributions in excess of $10.0 million per year received by the Company from its investment in POM, if any. In connection with the POM transaction in July 2008, the Company agreed to pay down approximately $11.6 million of this facility from proceeds received from this transaction. In addition, 16.7% of the Company’s 24.2% equity interest in POM was released as collateral in conjunction with this paydown. See Note 6 — “Investment in Equity Affiliates” for further details. The outstanding balance under the term component of this facility was $32.9 million at March 31, 2009.
          The Company has a $70 million bridge loan warehouse agreement which has a maturity of October 2009. This agreement bears a variable rate of interest, payable monthly, based on Prime plus 0% or pricing over 1, 2, 3 or
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
6-month LIBOR, at our option. At March 31, 2009, the aggregate outstanding balance under this facility was $25.2 million.
          The Company has a $45.0 million working capital facility with Wachovia Bank, National Association (“Wachovia”) with a maturity of June 2009. The facility requires quarterly paydowns of $3.0 million and interest rate pricing over LIBOR of 500 basis points. At March 31, 2009, the aggregate outstanding balance under this facility was $41.9 million.
          During the second quarter of 2008, the Company recorded a $49.5 million note payable related to the POM exchange of profits interest transaction. The note was initially secured by the Company’s interest in POM, matures in July 2016 and bore interest at a fixed rate of 4% with payment deferred until the closing of the transaction. Upon the closing of the POM transaction in March 2009, the note balance was increased to $50.2 million, bears interest at a fixed rate of 4% and is secured by the Company’s investment in common and preferred operating partnership units in Lightstone Value Plus REIT, L.P. See Note 6 — “Investment in Equity Affiliates” for further details. At March 31, 2009, the outstanding balance of this note was $50.2 million.
          The Company has three junior loan participations with a total outstanding balance at March 31, 2009 of $6.3 million. These participation borrowings have a maturity date equal to the corresponding mortgage loan and are secured by the participant’s interest in the mortgage loan. Interest expense is based on a portion of the interest received from the loans.
          Mortgage Note Payable
          During the second quarter of 2008, the Company recorded a $41.4 million first lien mortgage related to the foreclosure of an entity in which the Company had a $5.0 million mezzanine loan. The mortgage bears interest at a fixed rate, has a maturity date of June 2012 and was recorded in mortgage note payable. See Note 3 — “Loans and Investments” for further details. The outstanding balance of this mortgage was $41.4 million at March 31, 2009.
          Note Payable — Related Party
          During the fourth quarter of 2008, the Company borrowed $4.2 million from the Company’s manager, ACM. At December 31, 2008, the Company had outstanding borrowings due to ACM totaling $4.2 million, which was recorded in notes payable — related party. In January 2009, the loan was repaid in full.
          Collateralized Debt Obligations
          The following table outlines borrowings under the Company’s collateralized debt obligations as of March 31, 2009 and December 31, 2008:
 	 	 	 	 	 	 	 	 	
 	 	March 31, 2009	 	 	December 31, 2008	 	
 	 	Debt	 	 	Debt	 	
 	 	Carrying	 	 	Carrying	 	
 	 	Value	 	 	Value	 	
CDO I — Issued four investment grade tranches January 19, 2005. Reinvestment period through April 2009. Interest is variable based on three-month LIBOR; the weighted average note rate was 2.87% and 2.41%, respectively	 	$	261,807,979	 	 	$	275,319,000	 	
 	 	 	 	 	 	 	 	 	
CDO II — Issued nine investment grade tranches January 11, 2006. Reinvestment period through April 2011. Interest is variable based on three-month LIBOR; the weighted average note rate was 3.16% and 3.03%, respectively	 	 	336,962,504	 	 	 	343,270,000	 	
 	 	 	 	 	 	 	 	 	
CDO III — Issued 10 investment grade tranches December 14, 2006. Reinvestment period through January 2012. Interest is variable based on three-month LIBOR; the weighted average note rate was 1.77% and 1.65%, respectively	 	 	527,150,000	 	 	 	533,700,000	 	

Total CDOs	 	$	1,125,920,483	 	 	$	1,152,289,000	 	
 	 	 	 	 	 	 	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          At March 31, 2009, the aggregate weighted average note rate for the Company’s collateralized debt obligations, including the cost of interest rate swaps on assets financed in these facilities, was 2.44%. Excluding the effect of swaps, the weighted average note rate at March 31, 2009 was 1.77%.
          As of April 15, 2009, CDO I has reached the end of its replenishment date and will no longer make the $2.0 million amortization payments to investors. Investor capital will be repaid quarterly from proceeds received from loan repayments held as collateral in accordance with the terms of the CDO. Proceeds distributed will be recorded as a reduction of the CDO liability. Amortization proceeds from CDO II are distributed quarterly with approximately $1.2 million being paid to investors as a reduction of the CDO liability.
          CDO III has $100.0 million revolving note class that provides a revolving note facility. The outstanding note balance for CDO III was $527.2 million at March 31, 2009 which included $86.7 million outstanding under the revolving note facility. The outstanding note balance for CDO III was $533.7 million at December 31, 2008 which included $86.2 million outstanding under the revolving note facility.
          The Company intends to own these portfolios of real estate-related assets until their maturities and accounts for these transactions on its balance sheet as financing facilities. For accounting purposes, CDOs are consolidated in the Company’s financial statements. The investment grade tranches are treated as secured financings, and are non-recourse to the Company.
          During the three months ended March 31, 2009, the Company purchased, at a discount, approximately $11.5 million of investment grade rated notes originally issued by the Company’s CDO I issuing entity for a price of $2.1 million, $5.1 million of investment grade rated notes originally issued by the Company’s CDO II issuing entity for a price of $1.2 million and $7.1 million of investment grade rated notes originally issued by the Company’s CDO III issuing entity for a price of $2.3 million. Approximately $8.8 million of the investment grade rated CDO notes were purchased from the Company’s manager, ACM for a price of $3.2 million. In 2008, ACM purchased these notes from third party investors for $3.2 million. The Company recorded a net gain on extinguishment of debt of $18.2 million from this transaction in its Consolidated Statements of Operations.
Debt Covenants
          Each of the credit facilities contains various financial covenants and restrictions, including minimum net worth, minimum liquidity, debt-to-equity ratios and fixed and senior fixed charge coverage ratios. The Company was in compliance with all financial covenants and restrictions for the periods presented with the exception of a minimum liquidity requirement with one financial institution at March 31, 2009. The Company is required to have a minimum unrestricted cash and cash equivalents total balance of $15.0 million with this financial institution. The Company has obtained a waiver of this covenant for March 31, 2009 from this financial institution and expects to be in compliance with this covenant calculation or receive a waiver or amendment in future periods.
          The Company’s CDO bonds contain interest coverage and asset over collateralization covenants that must be met as of the waterfall distribution date in order for the Company to receive such payments. If the Company fails these covenants in any of its CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and the Company would not receive any residual payments until that CDO regained compliance with such tests. The Company was in compliance with all such covenants with the exception of the over collateralization test of CDO I as of March 31, 2009. In April 2009, this covenant was cured prior to the waterfall distribution date and, as a result, the Company is currently in compliance with all CDO covenants. In the event of a breach of the CDO covenants that could not be cured in the near-term, the Company
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
would be required to fund its non-CDO expenses, including management fees and employee costs, distributions required to maintain REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CDO not in breach of a CDO covenant test, (iii) income from real property and unencumbered loan assets, (iv) sale of assets, (v) or accessing the equity or debt capital markets, if available. The Company has the right to cure covenant breaches which would resume normal residual payments to the Company by purchasing non-performing loans out of the CDOs.
Note 9 — Derivative Financial Instruments
          The Company accounts for derivative financial instruments in accordance with SFAS No. 133 which requires an entity to recognize all derivatives as either assets or liabilities in the consolidated balance sheets and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either accumulated other comprehensive loss in Arbor Realty Trust, Inc. Stockholders’ Equity until the hedged item is recognized in net (loss) income attributable to Arbor Realty Trust, Inc., depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.
          In connection with the Company’s interest rate risk management, the Company periodically hedges a portion of its interest rate risk by entering into derivative financial instrument contracts. Specifically, the Company’s derivative financial instruments are used to manage differences in the amount, timing, and duration of its expected cash receipts and its expected cash payments principally related to its investments and borrowings. The Company’s objectives in using interest rate derivatives are to add stability to interest income and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company has entered into various interest rate swap agreements to hedge its exposure to interest rate risk on (i) variable rate borrowings as it relates to fixed rate loans; (ii) the difference between the CDO investor return being based on the three-month LIBOR index while the supporting assets of the CDO are based on the one-month LIBOR index; and (iii) the issuance of variable rate junior subordinated notes.
          Derivative financial instruments must be effective in reducing the Company’s interest rate risk exposure in order to qualify for hedge accounting. When the terms of an underlying transaction are modified, or when the underlying hedged item ceases to exist, all changes in the fair value of the instrument are marked-to-market with changes in value included in net income for each period until the derivative instrument matures or is settled. Any derivative instrument used for risk management that does not meet the hedging criteria is marked-to-market with the changes in value included in net income. The Company does not use derivatives for trading or speculative purposes.
          The following is a summary of the derivative financial instruments held by the Company as of March 31, 2009 and December 31, 2008: (Dollars in Thousands)
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	Notional Value	 	 	 	 	 	 	Balance	 	 	Fair Value	 	
Designation\	 	 	 	 	 	 	 	 	 	March 31,	 	 	December 31,	 	 	Expiration	 	 	Sheet	 	 	March 31,	 	 	December 31,	 	
Cash Flow	 	Derivative	 	 	Count	 	 	2009	 	 	2008	 	 	Date	 	 	Location	 	 	2009	 	 	2008	 	
Non-	 	Basis	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other	 	 	 	 	 	 	 	 	
Qualifying	 	Swaps	 	 	10	 	 	$	1,303,631	 	 	$	1,303,631	 	 	 	2009 – 2015	 	 	Assets	 	$	6,449	 	 	$	7,193	 	

 	 	Interest	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Rate	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Other	 	 	 	 	 	 	 	 	
Qualifying	 	Swaps	 	 	41	 	 	$	894,069	 	 	$	926,428	 	 	 	2010 – 2017	 	 	Liabilities	 	$	(85,542	)	 	$	(98,162	)	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
          The fair value of Non-Qualifying Hedges was $6.4 million and $7.2 million as of March 31, 2009 and December 31, 2008, respectively, and is recorded in other assets in the Consolidated Balance Sheet. These basis swaps are used to manage the Company’s exposure to interest rate movements and other identified risks but do not
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
meet the strict hedge accounting requirements of SFAS No. 133. The Company is exposed to changes in the fair value of certain of its fixed rate obligations due to changes in benchmark interest rates and uses interest rate swaps to manage its exposure to changes in fair value on these instruments attributable to changes in the benchmark interest rate. These interest rate swaps designated as fair value hedges involve the receipt of fixed-rate amounts from a counterparty in exchange for the Company making variable rate payments over the life of the agreements without the exchange of the underlying notional amount. For the three months ended March 31, 2009 and 2008, the change in fair value of the Non-Qualifying Swaps was $(0.7) million and $0.2 million, respectively and is recorded in interest expense on the Consolidated Statements of Operations.
          The fair value of Qualifying Cash Flow Hedges as of March 31, 2009 and December 31, 2008 was $(85.5) million and $(98.2) million, respectively, and was recorded in other liabilities and the change in accumulated other comprehensive loss in the Consolidated Balance Sheet. These interest rate swaps are used to hedge the variable cash flows associated with existing variable-rate debt, and amounts reported in accumulated other comprehensive loss related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. As of March 31, 2009, the Company expects to reclassify approximately $(32.2) million of other comprehensive loss from Qualifying Cash Flow Hedges to interest expense over the next twelve months assuming interest rates on that date are held constant.
          Gains and losses on terminated swaps are being accreted to income over the original life of the hedging instruments as the hedged item was designated as current and future outstanding LIBOR based debt, which has an indeterminate life, and the hedged transaction is still more likely than not to occur. The Company deferred through accumulated other comprehensive loss approximately $5.0 million of such loss on the termination of an interest rate swap agreement in the first quarter of 2009 and $1.5 million and $1.6 million of net gains as of March 31, 2009 and December 31, 2008, respectively. The Company recorded $0.1 million as additional interest expense related to the accretion of the loss for the three months ended March 31, 2009 and $0.1 million as a reduction to interest expense related to the accretion of the net gains for both the three months ended March 31, 2009 and 2008. The Company expects to accrete approximately $0.3 million of net deferred loss to interest expense over the next twelve months.
          The following is table below presents the effect of the Company’s derivative financial instruments on the Statements of Operations as of March 31, 2009 and December 31, 2008: (Dollars in Thousands)
 	   	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	Amount of Gain or (Loss)	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	Reclassified from	 	 	 	 	
 	 	 	 	Amount of Gain or (Loss)	 	 	Accumulated Other	 	 	Amount of Gain or (Loss)	 	
 	 	 	 	Recognized in	 	 	Comprehensive Loss into	 	 	Recognized	 	
 	 	 	 	Other Comprehensive Loss	 	 	Interest Expense	 	 	in Interest Expense	 	
 	 	 	 	(Effective Portion)	 	 	(Effective Portion)	 	 	(Ineffective Portion)	 	
 	 	 	 	For the Three Months Ended	 	 	For the Three Months Ended	 	 	For the Three Months Ended	 	
Designation\	 	 	 	March 31,	 	 	March 31,	 	 	March 31,	 	 	March 31,	 	 	March 31,	 	 	March 31,	 	
Cash Flow	 	Derivative	 	2009	 	 	2008	 	 	2009	 	 	2008	 	 	2009	 	 	2008	 	
Non-Qualifying	 	Basis Swaps	 	$	—	 	 	$	—	 	 	$	—	 	 	$	—	 	 	$	3,527	 	 	$	1,251	 	

Qualifying	 	Interest Rate Swaps	 	$	7,594	 	 	$	(30,753	)	 	$	(6,509	)	 	$	(1,921	)	 	$	—	 	 	$	—	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
          The cumulative amount of other comprehensive loss related to net unrealized losses on derivatives designated as Cash Flow Hedges as of March 31, 2009 and December 31, 2008 of $(89.0) million and $(96.6) million, respectively, is a combination of the fair value of qualifying cash flow hedges of $(85.5) million and $(98.2) million, respectively, a deferred loss on a terminated interest swap of $(5.0) million as of March 31, 2009, and deferred net gains on termination of interest swaps of $1.5 million and $1.6 million as of March 31, 2009 and December 31, 2008, respectively. The remaining portion included in other comprehensive loss as of March 31, 2009 is related to the Company’s available-for-sale securities as discussed in Note 4 “Available-For-Sale Securities” of these Consolidated Financial Statements.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          The Company has agreements with certain of its derivative counterparties that contain a provision where if the Company defaults on any of its indebtedness, including default where repayment of the indebtedness has not been accelerated by the lender, then the Company could also be declared in default on its derivative obligations. The Company also has an agreement with one of its derivative counterparties that contains a provision where if Arbor Realty Trust, Inc. stockholders’ equity declines by more than 50%, then the Company could be declared in default on its derivative obligation. As of March 31, 2009, the fair value of derivatives in a net liability position, which includes accrued interest but excludes any adjustment for nonperformance risk, related to these agreements was $(43.9) million. As of March 31, 2009, the Company has minimum collateral posting thresholds with certain of its derivative counterparties and has posted collateral of $43.7 million. If the Company had breached any of these provisions as of March 31, 2009, it could have been required to settle its obligations under the agreements at their termination value of $(43.9) million, which is an additional $(0.2) million in excess of the posted collateral.
Note 10 — Fair Value Measurements
          SFAS No. 157, “Fair Value Measurements” for financial assets and liabilities defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements.
          Fair value is defined as the price at which an asset could be exchanged in a current transaction between knowledgeable, willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, not the amount that would be paid to settle the liability with the creditor. Where available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation techniques involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity.
          Assets and liabilities disclosed at fair value are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, defined by SFAS 157 and directly related to the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities, are as follows:
 	•	 	Level 1 — Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date. The types of assets and liabilities carried at Level 1 fair value generally are government and agency securities, equities listed in active markets, investments in publicly traded mutual funds with quoted market prices and listed derivatives.	
 	 	 	 	
 	•	 	Level 2 — Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 2 inputs include quoted market prices in markets that are not active for an identical or similar asset or liability, and quoted market prices in active markets for a similar asset or liability. Fair valued assets and liabilities that are generally included in this category are non-government securities, municipal bonds, certain hybrid financial instruments, certain mortgage and asset backed securities including CDO bonds, certain corporate debt, certain commitments and guarantees, certain private equity investments and certain derivatives.	
 	 	 	 	
 	•	 	Level 3 — Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. These valuations are based on significant unobservable inputs that require a considerable amount of judgment and assumptions. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. Generally, assets and liabilities carried at fair value and included in this category are certain mortgage and asset-backed securities, certain corporate debt, certain private equity investments, certain municipal bonds, certain commitments and guarantees and certain derivatives.	
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          Determining which category as asset or liability falls within the hierarchy requires significant judgment and the Company evaluates its hierarchy disclosures each quarter.
          The Company measures certain financial assets and financial liabilities at fair value on a recurring basis, including available-for-sale securities and derivative financial instruments. The fair value of these financial assets and liabilities was determined using the following inputs as of March 31, 2009.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Fair Value Measurements	
 	 	 	 	 	 	Carrying	 	Fair	 	Using Fair Value Hierarchy	
 	 	 	 	 	 	Value	 	Value	 	Level 1	 	Level 2	 	Level 3	
Financial assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Available-for-sale securities (1)	 	 	 	 	 	$	293,946	 	 	$	293,946	 	 	$	293,946	 	 	$	—	 	 	$	—	 	
Derivative financial instruments	 	 	 	 	 	 	6,449,109	 	 	 	6,449,109	 	 	 	—	 	 	 	6,449,109	 	 	 	—	 	
Financial liabilities:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Derivative financial instruments	 	 	 	 	 	 	85,542,107	 	 	 	85,542,107	 	 	 	—	 	 	 	85,542,107	 	 	 	—	 	

(1)	 	During the year ended December 31, 2008, the Company’s available-for-sale securities were written to their fair value of $0.5 million, resulting in the recognition of a $16.2 million impairment that was considered other-than-temporary and included in operations for the period. For the three months ended March 31, 2009, changes in the fair market value of the Company’s available-for-sale securities were considered unrealized gains or losses and were recorded as a component of other comprehensive income or loss.	
          Available-for-sale securities: Fair values are approximated on current market quotes received from financial sources that trade such securities.
          Derivative financial instruments: Fair values are approximated on current market data received from financial sources that trade such instruments and are based on prevailing market data and derived from third party proprietary models based on well recognized financial principles and reasonable estimates about relevant future market conditions. These items are included in other assets and other liabilities on the consolidated balance sheet. In accordance with SFAS 157, the Company incorporates credit valuation adjustments in the fair values of its derivative financial instruments to reflect counterparty nonperformance risk.
          The Company measures certain financial assets and financial liabilities at fair value on a nonrecurring basis, such as loans and securities held-to-maturity. The fair value of these financial assets and liabilities was determined using the following inputs as of March 31, 2009.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	Fair Value Measurements	
 	 	 	 	 	 	Carrying	 	Fair	 	Using Fair Value Hierarchy	
 	 	 	 	 	 	Value	 	Value	 	Level 1	 	 	Level 2	 	 	Level 3	
Financial assets:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Impaired loans, net(1)	 	 	 	 	 	$	390,813,406	 	 	$	348,117,276	 	 	$	—	 	 	$	—	 	 	$	348,117,276	 	
Securities-held-to maturity (2)	 	 	 	 	 	 	—	 	 	 	175,000	 	 	 	—	 	 	 	—	 	 	 	175,000	 	

(1)	 	The Company had an allowance for loan losses of $198.0 million relating to 18 loans with an aggregate carrying value, before reserves, of approximately $588.8 million at March 31, 2009.	
 	 	 	
(2)	 	During the year ended December 31, 2008, one of the Company’s held-to-maturity securities was written down resulting in the recognition of a $1.4 million impairment that was considered other-than-temporary and included in earnings for the period.	
          Loan impairment assessments: Fair values of loans are estimated using discounted cash flow methodology, using discount rates, which, in the opinion of management, best reflect current market interest rates that would be offered for loans with similar characteristics and credit quality. Loans held for investment are intended to be held to maturity and, accordingly, are carried at cost, net of unamortized loan origination costs and fees, loan purchase discounts, and net of the allowance for loan losses when such loan or investment is deemed to be impaired. The Company considers a loan impaired when, based upon current information and events, it is probable
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
that it will be unable to collect all amounts due for both principal and interest according to the contractual terms of the loan agreement. The Company performs evaluations of its loans to determine if the value of the underlying collateral securing the impaired loan is less than the net carrying value of the loan, which may result in an allowance and corresponding charge to the provision for loan losses.
     Securities held-to-maturity: Fair values are approximated on current market quotes received from financial sources that trade such securities.
Note 11 — Commitments and Contingencies
Contractual Commitments
          As of March 31, 2009, the Company had the following material contractual obligations (payments in thousands):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contractual	 	Payments Due by Period (1)	 	
Obligations	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	Thereafter	 	 	Total	 	
Notes payable (2)	 	$	444,978	 	 	$	1,300	 	 	$	5,000	 	 	$	—	 	 	$	50,158	 	 	$	—	 	 	$	501,436	 	
Collateralized debt obligations (3)	 	 	152,604	 	 	 	41,766	 	 	 	198,199	 	 	 	733,351	 	 	 	—	 	 	 	—	 	 	 	1,125,920	 	
Repurchase agreements	 	 	44,271	 	 	 	1,877	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,148	 	
Trust preferred Securities (4)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	266,680	 	 	 	266,680	 	
Mortgage note payable	 	 	—	 	 	 	—	 	 	 	—	 	 	 	41,440	 	 	 	—	 	 	 	—	 	 	 	41,440	 	
Outstanding unfunded commitments (5)	 	 	32,181	 	 	 	27,914	 	 	 	11,319	 	 	 	1,137	 	 	 	393	 	 	 	695	 	 	 	73,639	 	

Totals	 	$	674,034	 	 	$	72,857	 	 	$	214,518	 	 	$	775,928	 	 	$	50,551	 	 	$	267,375	 	 	$	2,055,263	 	

 	 	 	
(1)	 	Represents amounts due based on contractual maturities.	
 	 	 	
(2)	 	The maturity date for the $473.0 million committed Wachovia term and $100.0 million committed revolving facilities do not include their one year auto extension features. The $69.0 million term loan does not include its one year extension option.	
 	 	 	
(3)	 	Comprised of $261.8 million of CDO I debt, $337.0 million of CDO II debt and $527.2 million of CDO III debt with a weighted average remaining maturity of 1.60, 2.86 and 3.29 years, respectively, as of March 31, 2009. In the first quarter of 2009, the Company repurchased, at a discount, approximately $23.7 million of investment grade notes originally issued by the Company’s CDO I, CDO II and CDO III issuers and recorded a reduction of the outstanding debt balance of $23.7 million.	
 	 	 	
(4)	 	In the first quarter of 2009, the Company repurchased, at a discount, approximately $9.4 million of investment grade rated junior subordinated notes originally issued by the Company’s issuing entity and recorded a reduction of the outstanding debt balance of $9.4 million.	
 	 	 	
(5)	 	In accordance with certain loans and investments, the Company has outstanding unfunded commitments of $73.6 million as of March 31, 2009, that the Company is obligated to fund as the borrowers meet certain requirements. Specific requirements include, but are not limited to, property renovations, building construction, and building conversions based on criteria met by the borrower in accordance with the loan agreements. In relation to the $73.6 million outstanding balance at March 31, 2009, the Company’s restricted cash balance contained approximately $21.6 million of cash held to fund the portion of the unfunded commitments for loans financed by the Company’s CDO vehicles.	
Litigation
          The Company currently is neither subject to any material litigation nor, to management’s knowledge, is any material litigation currently threatened against the company.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Note 12 — Equity
          Common Stock
          The Company’s charter provides for the issuance of up to 500 million shares of common stock, par value $0.01 per share, and 100 million shares of preferred stock, par value $0.01 per share. The Company was incorporated in June 2003 and was initially capitalized through the sale of 67 shares of common stock for $1,005.
          In 2007, the Company filed a shelf registration statement on Form S-3 with the SEC under the 1933 Act with respect to an aggregate of $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants that may be sold by the Company from time to time pursuant to Rule 415 of the 1933 Act. On April 19, 2007, the Commission declared this shelf registration statement effective. At March 31, 2009, the Company had $425.3 million available under this shelf registration.
          In June 2008, the Company issued 3,776,069 common shares upon the exchange of OP units by ACM on a one-for-one basis. As a result, the special voting preferred shares paired with each OP unit, pursuant to a pairing agreement, were simultaneously redeemed and cancelled by the Company. In connection with this transaction, the Company’s Board of Directors approved a resolution of the Company’s charter allowing ACM and Ivan Kaufman to own more than the 7% ownership limitation of the Company’s outstanding common stock.
          In August 2008, the Company entered into an equity placement program sales agreement with a securities agent whereby the Company may issue and sell up to 3 million shares of its common stock through the agent who agrees to use its commercially reasonable efforts to sell such shares during the term of the agreement and under the terms set forth therein. To date, the Company has not utilized this equity placement program.
          The Company had 25,142,410 shares of common stock outstanding at March 31, 2009 and December 31, 2008.
          Deferred Compensation
          On April 21, 2009, the Company issued an aggregate of 245,000 shares of restricted common stock under the 2003 Stock Incentive Plan, as amended in 2005 (the “Plan”), of which 155,000 shares were awarded to certain employees of the Company and ACM and 90,000 shares were issued to members of the board of directors. As a means of emphasizing retention at a critical time for the Company and due to their relatively low value, the 245,000 common shares underlying the restricted stock awards granted were fully vested as of the date of grant. In addition, on April 8, 2009, the Company accelerated the vesting of all unvested shares underlying restricted stock awards totaling 243,091 shares previously granted to certain employees of the Company and ACM and non-management members of the board.
          Noncontrolling Interest
          At December 31, 2007, noncontrolling interest in the Company’s operating partnership was $72.9 million reflecting ACM’s 15.5% limited partnership interest in ARLP, the Company’s operating partnership. In June 2008, ACM exercised its right to redeem its 3,776,069 operating partnership units (“OP units”) in the Company’s operating partnership for shares of the Company’s common stock on a one-for-one basis. As a result, ACM’s operating partnership ownership interest in the Company and the balance of noncontrolling interest in the operating partnership were reduced to zero as of June 30, 2008. In accordance with EITF 95-7, “Implementation Issues Related to the Treatment of Minority Interests in Certain Real Estate Investment Trusts,” the redemption of the noncontrolling interest in operating partnership in exchange for the Company’s common stock was recorded at book value and recorded directly to equity in additional paid-in capital. In addition, the special voting preferred shares paired with each OP unit, pursuant to a pairing agreement, were redeemed simultaneously and cancelled by the Company. In connection with this transaction, the Company’s Board of Directors approved a resolution of the Company’s charter allowing ACM and Ivan Kaufman to own more than the 7% ownership limitation, up to 21.9% of the Company’s outstanding common stock.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
          In December 2007, the FASB issued SFAS 160, effective for years beginning after December 15, 2008. SFAS 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between the Company and holders of such noncontrolling interests. Under SFAS 160, noncontrolling interests are considered equity and should be reported as an element of consolidated equity. Also under SFAS 160, net income encompasses the total income of all consolidated subsidiaries and requires separate disclosure on the face of the statements of operations of income attributable to the controlling and noncontrolling interests. When a subsidiary is deconsolidated, any retained, noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary must be measured at fair value. The presentation and disclosure requirements have been applied retrospectively for all periods presented.
          Noncontrolling interest in a consolidated entity on the Company’s consolidated balance sheet as of March 31, 2009 was $1.9 million, representing a third party’s interest in the equity of a consolidated subsidiary that owns an investment and carries a note payable related to the POM transaction discussed in Note 6 — “Investment in Equity Affiliates”. As a result of the POM transaction in March 2009, the Company recorded $18.5 million of net income attributable to the noncontrolling interest holder and a distribution to the noncontrolling interest of $16.6 million during the three months ended March 31, 2009. For the three months ended March 31, 2008, $2.3 million of net income attributable to the noncontrolling interest on the Company’s consolidated statements of operations represented income allocated to ACM’s noncontrolling interest in the operating partnership.
Note 13 — Earnings Per Share
          Earnings per share (“EPS”) is computed in accordance with SFAS No. 128, “Earnings Per Share.” Basic earnings per share is calculated by dividing net income attributable to Arbor Realty Trust, Inc. by the weighted average number of shares of common stock outstanding during each period inclusive of unvested restricted stock which participate fully in dividends. Diluted EPS is calculated by dividing income adjusted for noncontrolling interest in the operating partnership by the weighted average number of shares of common stock outstanding plus the additional dilutive effect of common stock equivalents during each period. The Company’s common stock equivalents are the potential settlement of incentive management fees in common stock and ARLP’s operating partnership units, prior to the redemption for common stock in June 2008.
          The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share computations for the three months ended March 31, 2009 and 2008.
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	For the Three Months Ended	 	 	For the Three Months Ended	 	
 	 	March 31, 2009	 	 	March 31, 2008	 	
 	 	Basic	 	 	Diluted	 	 	Basic	 	 	Diluted	 	
Net (loss) income attributable to Arbor Realty Trust, Inc.	 	$	(4,253,738	)	 	$	(4,253,738	)	 	$	12,704,792	 	 	$	12,704,792	 	
Add: net income attributable to noncontrolling interest in operating partnership	 	 	—	 	 	 	—	 	 	 	—	 	 	 	2,333,290	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
(Loss) earnings allocable to common stock	 	$	(4,253,738	)	 	$	(4,253,738	)	 	$	12,704,792	 	 	$	15,038,082	 	

Weighted average number of common shares outstanding	 	 	25,142,410	 	 	 	25,142,410	 	 	 	20,571,780	 	 	 	20,571,780	 	
Weighted average number of operating partnership units	 	 	—	 	 	 	—	 	 	 	—	 	 	 	3,776,069	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Dilutive effect of incentive management fee shares	 	 	—	 	 	 	—	 	 	 	—	 	 	 	55,532	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Total weighted average common shares outstanding	 	 	25,142,410	 	 	 	25,142,410	 	 	 	20,571,780	 	 	 	24,403,381	 	

(Loss) earnings per common share	 	$	(0.17	)	 	$	(0.17	)	 	$	0.62	 	 	$	0.62	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
Note 14 — Related Party Transactions
          At March 31, 2009, due to related party was $0.2 million and consisted of base management fees that were due to ACM which were remitted by the Company in May 2009. At December 31, 2008, due to related party was $1.0 million and consisted of $0.8 million of base management fees and $0.2 million of unearned fees due to ACM that were remitted by the Company in February 2009.
          At March 31, 2009, due from related party was $15.6 million and consisted of $9.7 million of loan repayment proceeds and $3.0 million of restructuring fee proceeds due from ACM. These payments were remitted to the Company in April 2009. The balance also included a $2.9 million overpayment of incentive management compensation from 2008. At December 31, 2008, due from related party was $2.9 million as a result of an overpayment of incentive management compensation based on the results of the twelve months ended December 31, 2008. See Note 16 — “Management Agreement” for further details.
          During the first quarter of 2009, the Company purchased from ACM, approximately $8.8 million of investment grade rated bonds originally issued by two of the Company’s three CDO issuing entities and approximately $9.4 million of junior subordinated notes originally issued by a wholly-owned subsidiary of the Company’s operating partnership for a net gain on early extinguishment of debt of $13.8 million. At March 31, 2009, ACM owned $11.3 million of CDO notes originally issued by the Company’s CDOs that were purchased for $5.0 million from third party investors in 2008.
     At December 31, 2008, the Company had outstanding borrowings from ACM totaling $4.2 million. In January 2009, the loan was repaid in full. See Note 8 — “Debt Obligations” for further details.
          The Company is dependent upon its manager (ACM), with whom it has a conflict of interest, to provide services to the Company that are vital to its operations. The Company’s chairman, chief executive officer and president, Mr. Ivan Kaufman, is also the chief executive officer and president of ACM, and, the Company’s chief financial officer, Mr. Paul Elenio, is the chief financial officer of ACM. In addition, Mr. Kaufman and the Kaufman entities together beneficially own approximately 92% of the outstanding membership interests of ACM and certain of the Company’s employees and directors, also hold an ownership interest in ACM. Furthermore, one of the Company’s directors also serves as the trustee of one of the Kaufman entities that holds a majority of the outstanding membership interests in ACM and co-trustee of another Kaufman entity that owns an equity interest in ACM. ACM currently holds approximately 5.4 million common shares, representing 21.4% of the voting power of the Company’s outstanding stock as of March 31, 2009.
Note 15 — Distributions
          The Board of Directors has announced that the Company has elected not to pay a common stock dividend for the quarter ended March 31, 2009. The Company decided, based on the continued difficult economic environment, to retain capital for working capital purposes.
          In January 2009, the Board of Directors elected not to pay a common stock distribution with respect to the quarter ended December 31, 2008. The Company believes the dividends paid in 2008 fully satisfy its 2008 REIT distribution requirements.
Note 16 — Management Agreement
          The Company, ARLP and Arbor Realty SR, Inc. have entered into a management agreement with ACM, which provides that for performing services under the management agreement, the Company will pay ACM an incentive compensation fee and base management fee. The incentive compensation fee is calculated as 25% of the amount by which ARLP’s funds from operations exceeds 9.5% return on invested funds or the Ten Year U.S. Treasury Rate plus 3.5%, whichever is greater, as described in the management agreement. This fee is subject to recalculation and reconciliation at fiscal year end in accordance with the management agreement. Any
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ARBOR REALTY TRUST, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
(Unaudited)
overpayments at fiscal year end shall be refunded to the Company in cash and the Company would record a negative incentive compensation expense in the quarter when such overpayment is determined.
          The following table sets forth the Company’s base and incentive compensation management fees for the periods indicated:
 	 	 	 	 	 	 	 	 	
 	 	For the Three Months Ended	 	
 	 	March 31,	 	
Management Fees:	 	2009	 	 	2008	 	
Base	 	$	722,377	 	 	$	899,004	 	
Incentive	 	 	—	 	 	 	1,680,429	 	
 	 	 	 	 	 	 	
Total expensed	 	$	722,377	 	 	$	2,579,433	 	
 	 	 	 	 	 	 	
     For the three months ended March 31, 2009 and 2008, the Company recorded $0.7 million and $0.9 million, respectively, of base management fees due to ACM of which $0.2 million and $0.3 million, respectively, were included in due to related party and paid subsequent to the respective periods.
     For the three months ended March 31, 2009, ACM did not earn an incentive compensation installment. For the three months ended March 31, 2008, ACM received an incentive compensation installment of $1.7 million which was paid in cash of $0.8 million and 55,532 shares of common stock.
     During the second quarter of 2008, the Company recorded a $7.3 million deferred management fee related to the incentive compensation fee recognized from the monetization of the POM transaction in June 2008, which was subsequently paid and reclassified to prepaid management fees. The $7.3 million incentive compensation fee was paid in 355,903 shares of common stock and $4.1 million paid in cash. In accordance with the management agreement, installments of the annual incentive compensation are subject to quarterly recalculation and potential reconciliation at the end of the 2009 fiscal year and any overpayments are required to be repaid in accordance with the management agreement.
     In addition, during the six months ended June 30, 2008, ACM received incentive compensation installments totaling $2.9 million, of which $1.4 million was paid in 116,680 shares of common stock and $1.5 million paid in cash. For the year ended December 31, 2008, ACM did not earn an incentive compensation fee and an overpayment of the incentive fee was recorded and included in due from related party in the amount of $2.9 million. The Company and ACM have agreed that ACM’s obligation to refund to the Company the $2.9 million will be deferred until a later date to be mutually agreed upon by the Company and ACM. In 2007, ACM received an incentive compensation installment totaling $19.0 million which was recorded as prepaid management fees related to the incentive compensation management fee on $77.1 million of deferred revenue recognized on the transfer of control of the 450 West 33 rd  Street property, of one of the Company’s equity affiliates.
Note 17 — Due to Borrowers
          Due to borrowers represents borrowers’ funds held by the Company to fund certain expenditures or to be released at the Company’s discretion upon the occurrence of certain pre-specified events, and to serve as additional collateral for borrowers’ loans. While retained, these balances earn interest in accordance with the specific loan terms they are associated with.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
          You should read the following discussion in conjunction with the unaudited consolidated interim financial statements, and related notes included herein.
Overview
          We are a Maryland corporation that was formed in June 2003 to invest in multi-family and commercial real estate-related bridge loans, junior participating interests in first mortgages, mezzanine loans, preferred and direct equity and, in limited cases, discounted mortgage notes and other real estate-related assets, which we refer to collectively as structured finance investments. We have also invested in mortgage-related securities. We conduct substantially all of our operations through our operating partnership and its wholly-owned subsidiaries.
          Our operating performance is primarily driven by the following factors:
 	•	 	Net interest income earned on our investments — Net interest income represents the amount by which the interest income earned on our assets exceeds the interest expense incurred on our borrowings. If the yield earned on our assets decreases or the cost of borrowings increases, this will have a negative impact on earnings. However, if the yield earned on our assets increases or the cost of borrowings decreases, this will have a positive impact on earnings. Net interest income is also directly impacted by the size of our asset portfolio.	
 	 	 	 	
 	•	 	Credit quality of our assets — Effective asset and portfolio management is essential to maximizing the performance and value of a real estate/mortgage investment. Maintaining the credit quality of our loans and investments is of critical importance. Loans that do not perform in accordance with their terms may have a negative impact on earnings and liquidity.	
 	 	 	 	
 	•	 	Cost control — We seek to minimize our operating costs, which consist primarily of employee compensation and related costs, management fees and other general and administrative expenses. If there are increases in foreclosures and non-performing loans and investments, certain of these expenses, particularly employee compensation expenses and asset management related expenses, may increase.	
          We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. A REIT is generally not subject to federal income tax on its REIT-taxable income that it distributes to its stockholders, provided that it distributes at least 90% of its REIT-taxable income and meets certain other requirements. Certain of our assets that produce non-qualifying income are owned by our taxable REIT subsidiaries, the income of which are subject to federal and state income taxes. We did not record a provision for income taxes related to the assets that are held in taxable REIT subsidiaries during the three months ended March 31, 2009 and 2008.
Sources of Operating Revenues
          We derive our operating revenues primarily through interest received from making real estate-related bridge, mezzanine and junior participation loans and preferred equity investments. For the three months ended March 31, 2009 and 2008, interest income earned on these loans and investments represented approximately 93% and 99% of our total revenues, respectively.
          Interest income may also be derived from profits of equity participation interests. No such interest income had been recognized for the three months ended March 31, 2009. For the three months ended March 31, 2008, interest earned on these equity participation interests represented approximately 1% of our total revenues.
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          We derived interest income from our investments in CRE collateralized debt obligation bond securities. For the three months ended March 31, 2009, interest on these investments represented approximately 3% of our total revenues. No such income was recognized for the three months ended March 31, 2008.
          Property operating income is derived from our real estate owned. For the three months ended March 31, 2009, property operating income represented approximately 4% of our total revenues. No such income was recognized for the three months ended March 31, 2008.
          Additionally, we derive operating revenues from other income that represents loan structuring and miscellaneous asset management fees associated with our loans and investments portfolio. For the three months ended March 31, 2009 and 2008, revenue from other income represented less than 1% of our total revenues.
Income or Loss from Equity Affiliates and Gain on Sale of Loans and Real Estate
          We derive income or losses from equity affiliates relating to joint ventures that were formed with equity partners to acquire, develop and/or sell real estate assets. These joint ventures are not majority owned or controlled by us, and are not consolidated in our financial statements. These investments are recorded under either the equity or cost method of accounting as appropriate. We record our share of net income and losses from the underlying properties on a single line item in the consolidated statements of operations as income from equity affiliates. For the three ended March 31, 2009, income from equity affiliates totaled approximately $2.5 million. No such income was recognized for the three months ended March 31, 2008.
          We also may derive income from the gain on sale of loans and real estate. We may acquire (1) real estate for our own investment and, upon stabilization, disposition at an anticipated return and (2) real estate notes generally at a discount from lenders in situations where the borrower wishes to restructure and reposition its short term debt and the lender wishes to divest certain assets from its portfolio. No such income has been recorded to date.
Critical Accounting Policies
          Please refer to the section of our Annual Report on Form 10-K for the year ended December 31, 2008 entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Significant Accounting Estimates and Critical Accounting Policies” for a discussion of our critical accounting policies. During the three months ended March 31, 2009, there were no material changes to these policies, except for the updates described below.
Revenue Recognition
          Interest Income. Interest income is recognized on the accrual basis as it is earned from loans, investments and securities. In many instances, the borrower pays an additional amount of interest at the time the loan is closed, an origination fee, and deferred interest upon maturity. In some cases, interest income may also include the amortization or accretion of premiums and discounts arising from the purchase or origination of the loan or security. This additional income, net of any direct loan origination costs incurred, is deferred and accreted into interest income on an effective yield or “interest” method adjusted for actual prepayment activity over the life of the related loan or security as a yield adjustment. Income recognition is suspended for loans when, in the opinion of management, a full recovery of income and principal becomes doubtful. Income recognition is resumed when the loan becomes contractually current and performance is demonstrated to be resumed. Several of the loans provide for accrual of interest at specified rates, which differ from current payment terms. Interest is recognized on such loans at the accrual rate subject to management’s determination that accrued interest and outstanding principal are ultimately collectible, based on the underlying collateral and operations of the borrower. If management cannot make this determination regarding collectibility, interest income above the current pay rate is recognized only upon actual receipt. Additionally, interest income is recorded when earned from equity participation interests, referred to as equity kickers. These equity kickers have the potential to generate additional revenues to us as a result of excess cash flows being distributed and/or as appreciated properties are sold or refinanced. We did not record interest income on such investments for the three months ended March 31, 2009 as compared to $0.3 million for the three months ended March 31, 2008.
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          Property operating income. Property operating income represents operating income associated with the operations of an office building recorded as real estate owned, net. For the three months ended March 31, 2009, we recorded approximately $1.5 million of property operating income relating to real estate owned. There was no property operating income for the three months ended March 31, 2008.
Derivatives and Hedging Activities
          In accordance with SFAS No. 133, the carrying values of interest rate swaps and the underlying hedged liabilities are reflected at their fair value. As of December 31, 2007 we retained the services of Chatham Financial Corporation, a Statement on Auditing Standards No. 70 (“SAS 70”), “Service Organizations” compliant, third party financial services company to determine these fair values. Changes in the fair value of these derivatives are either offset against the change in the fair value of the hedged liability through earnings or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings. The ineffective portion of a derivative’s change in fair value is immediately recognized in earnings. Derivatives that do not qualify for cash flow hedge accounting treatment are adjusted to fair value through earnings.
          SFAS 161, “Disclosures about Derivative Instruments and Hedging Activities”, an amendment of FASB Statement No. 133, amends and expands the disclosure requirements of SFAS 133 with the intent to provide users of financial statements with an enhanced understanding of: (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about the fair value of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative instruments.
          As required by SFAS 133, we record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether a company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risk, even though hedge accounting does not apply or we elect not to apply hedge accounting under SFAS 133.
          During the three months ended March 31, 2009 we did not enter into new swaps. During the three months ended March 31, 2008, we entered into six additional interest rate swaps, that qualify as cash flow hedges, having a total combined notional value of approximately $121.6 million. During the three months ended March 31, 2009, we terminated a $33.5 million portion of an interest rate swap with a total notional value of approximately $67.0 million. The loss on termination will be amortized to expense over the original life of the hedging instrument. The fair value of our qualifying hedge portfolio has increased by approximately $12.6 million from December 31, 2008 as a result of the terminated swap, combined with a change in the projected LIBOR rates and credit spreads of both parties.
          Because the valuations of our hedging activities are based on estimates, the fair value may change if our estimates are inaccurate. For the effect of hypothetical changes in market interest rates on our interest rate swaps, see “Interest Rate Risk” in “Quantitative and Qualitative Disclosures About Market Risk”, set forth in Item 3 hereof.
Recently Issued Accounting Pronouncements
          For a discussion of the impact of new accounting pronouncements on our financial condition or results of operations, see Note 2 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof.
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Changes in Financial Condition
          Our loan and investment portfolio balance, including our held-to-maturity securities, at March 31, 2009 was $2.1 billion, with a weighted average current interest pay rate of 5.74% as compared to $2.2 billion, with a weighted average current interest pay rate of 6.13% at December 31, 2008. At March 31, 2009, advances on financing facilities totaled $1.9 billion, with a weighted average funding cost of 3.65% as compared to $2.0 billion, with a weighted average funding cost of 3.51% at December 31, 2008.
          During the quarter, five loans paid off on properties that were either sold or refinanced by a third party with an outstanding balance of $19.0 million, five loans partially repaid totaling $31.3 million and eight loans were refinanced during the quarter totaling $161.3 million. These totals included a $9.0 million loss on the restructuring of two loans during the first quarter of 2009. In addition, one loan of approximately $2.7 million was extended during the quarter in accordance with the extension options of the corresponding loan agreements.
          In March 2009, we exchanged our 16.67% interest in Prime Outlets Member, LLC (“POM”) for preferred and common operating partnership units of Lightstone Value Plus REIT L.P. at a value of approximately $37.0 million. As a result, during the first quarter of 2009, we recorded a gain on exchange of profits interest of approximately $56.0 million and income attributable to noncontrolling interest of approximately $18.7 million related to the third party member’s portion of income recorded. See Note 6 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof for further details.
          Cash and cash equivalents increased $13.4 million, to $14.2 million at March 31, 2009 compared to $0.8 million at December 31, 2008. All highly liquid investments with original maturities of three months or less are considered to be cash equivalents. The increase was primarily due to payoffs and paydowns of our loan investments.
          Restricted cash decreased $10.2 million, or 11% to $83.0 million at March 31, 2009 compared to $93.2 million at December 31, 2008. Restricted cash is kept on deposit with the trustees for our collateralized debt obligations (“CDOs”), and primarily represents proceeds from loan repayments which will be used to purchase replacement loans as collateral for the CDOs. The decrease was primarily due to the redeployment of funds during the first quarter of 2009 from proceeds received from the full satisfaction of loans held in the CDO and the transfer of loans from other financing facilities to the CDOs.
          Investment in equity affiliates increased $57.8 million to $87.1 million at March 31, 2009. In June 2008, we entered into an agreement to transfer our 16.67% interest in POM, in exchange for preferred and common operating partnership units of Lightstone Value Plus REIT L.P. Upon closing this transaction on March 30, 2009, we recorded an investment of approximately $56.0 million for the preferred and common operating partnership units. See Note 6 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof for further details.
          Due from related party increased $12.7 million to $15.6 million at March 31, 2009 compared to $2.9 million at December 31, 2008 primarily as a result of $9.7 million of loan repayment proceeds and $3.0 million of restructuring fee proceeds due from ACM. These payments were remitted to us in April 2009.
          Other assets decreased $40.9 million, or 29%, to $98.8 million at March 31, 2009 compared to $139.7 million at December 31, 2008. The decrease was primarily due to a reduction of a $16.5 million third party member receivable in March 2009 in connection with the closing of the POM transaction as well as a $9.1 million decrease in interest receivable in the first quarter of 2009 from a portion of our interest rate swaps as a result of a decrease in LIBOR rates from the fourth quarter of 2008. This decrease was also due to a $2.8 million decrease in collateral posted for a portion of our interest rate swaps whose value had previously declined as a result of reductions in the projected LIBOR rates, a $5.1 million decrease in funded cash collateral from the termination of a $33.5 million swap and a $4.2 million decrease in interest income accrued as a result of non-performing loans and lower LIBOR rates. See Item 3 “Quantitative and Qualitative Disclosures About Market Risk” for further information relating to our derivatives.
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          In March 2009, we purchased from our manager, ACM, approximately $9.4 million of junior subordinated notes originally issued by a wholly-owned subsidiary of our operating partnership for $1.3 million. In 2009, ACM purchased these notes from third party investors for $1.3 million. We recorded a net gain on extinguishment of debt of $8.1 million and a reduction of outstanding debt totaling $9.4 million from this transaction. In addition, during the three months ended March 31, 2009, we purchased, approximately $23.7 million of investment grade rated notes originally issued by our CDO issuing entities for a price of $5.6 million. Of the $23.7 million purchased, $8.8 million of the CDO notes were purchased from ACM for a price of $3.2 million. In 2008, ACM purchased these notes from third party investors for $3.2 million. We recorded a net gain on extinguishment of debt of $18.2 million and a reduction of outstanding debt totaling $23.7 million from these transactions in our first quarter 2009 financial statements.
          Other liabilities decreased $14.0 million, or 10.4%, to $120.7 million at March 31, 2009 compared to $134.6 million at December 31, 2008. The decrease was primarily due to a $12.6 million decrease in accrued interest payable primarily due to a reduction in LIBOR rates, the timing of reset dates and a decline in the outstanding balance of our financing facilities.
          On April 21, 2009, we issued an aggregate of 245,000 shares of restricted common stock under the 2003 Stock Incentive Plan, as amended in 2005 (the “Plan”), of which 155,000 shares were awarded to certain of our and ACM employees and 90,000 shares were issued to members of the board of directors. As a means of emphasizing retention at a critical time for Arbor and due to their relatively low value, the 245,000 common shares underlying the restricted stock awards granted were fully vested as of the date of grant. In addition, on April 8, 2009, we accelerated the vesting of all unvested shares underlying restricted stock awards totaling 243,091 shares previously granted to certain of our and ACM employees and non-management members of the board.
Comparison of Results of Operations for the Three Months Ended March 31, 2009 and 2008
          The following table sets forth our results of operations for the three months ended March 31, 2009 and 2008:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended	 	 	 	 	
 	 	March 31,	 	 	Increase/(Decrease)	 	
 	 	2009	 	 	2008	 	 	Amount	 	 	Percent	 	
 	 	(Unaudited)	 	 	 	 	 	 	 	 	 	
Revenue:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest income	 	 	$30,500,023	 	 	$	55,416,330	 	 	$	(24,916,307	)	 	 	(45	)%	
Property operating income	 	 	1,470,796	 	 	 	—	 	 	 	1,470,796	 	 	nm	 	
Other income	 	 	16,250	 	 	 	20,693	 	 	 	(4,443	)	 	 	(21	)%	

Total revenue	 	 	31,987,069	 	 	 	55,437,023	 	 	 	(23,449,954	)	 	 	(42	)%	

Expenses:	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Interest expense	 	 	19,150,816	 	 	 	31,304,099	 	 	 	(12,153,283	)	 	 	(39	)%	
Employee compensation and benefits	 	 	2,391,984	 	 	 	1,977,343	 	 	 	414,641	 	 	 	21	%	
Selling and administrative	 	 	2,082,342	 	 	 	1,538,066	 	 	 	544,276	 	 	 	35	%	
Property operating expenses	 	 	1,331,145	 	 	 	—	 	 	 	1,331,145	 	 	nm	 	
Depreciation and amortization	 	 	283,022	 	 	 	—	 	 	 	283,022	 	 	nm	 	
Provision for loan losses	 	 	67,500,000	 	 	 	3,000,000	 	 	 	64,500,000	 	 	nm	 	
Loss on restructured loans	 	 	9,036,914	 	 	 	—	 	 	 	9,036,914	 	 	nm	 	
Management fee — related party	 	 	722,377	 	 	 	2,579,433	 	 	 	(1,857,056	)	 	 	(72	)%	

Total expenses	 	 	102,498,600	 	 	 	40,398,941	 	 	 	62,099,659	 	 	 	154	%	

(Loss) income before gain on exchange of profits interest, gain on extinguishment of debt and income from equity affiliates	 	 	(70,511,531	)	 	 	15,038,082	 	 	 	(85,549,613	)	 	nm	 	
Gain on exchange of profits interest	 	 	55,988,411	 	 	 	—	 	 	 	55,988,411	 	 	nm	 	
Gain on extinguishment of debt	 	 	26,267,033	 	 	 	—	 	 	 	26,267,033	 	 	nm	 	
Income from equity affiliates	 	 	2,507,134	 	 	 	—	 	 	 	2,507,134	 	 	nm	 	

Net income	 	 	14,251,047	 	 	 	15,038,082	 	 	 	(787,035	)	 	 	(5	)%	
Net income attributable to noncontrolling interest	 	 	18,504,785	 	 	 	2,333,290	 	 	 	16,171,495	 	 	nm	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	
Net (loss) income attributable to Abor Realty Trust, Inc	 	 	$(4,253,738	)	 	$	12,704,792	 	 	$	(16,958,530	)	 	 	(133	)%	

 	 	 	
nm — not meaningful	
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Revenue
          Interest income decreased $24.9 million, or 45%, to $30.5 million for the three months ended March 31, 2009 from $55.4 million for the three months ended March 31, 2008. This decrease was primarily due to a 39% decrease in the average yield on assets from 8.35% for the three months ended March 31, 2008 to 5.12% for the three months ended March 31, 2009. This decrease in yield was the result of a decrease in average LIBOR over the same period, along with the suspension of interest on our non-performing loans and a decrease in loans and investments due to payoffs and paydowns. In addition, interest income from cash equivalents decreased $1.6 million to $0.2 million for the three months ended March 31, 2009 compared to $1.8 million for the three months ended March 31, 2008 as a result of decreased average cash balances, as well as decreases in interest rates from 2008 to 2009. Interest income for the three months ended March 31, 2008 also included the recognition of $0.3 million from a 25.0% carried profits interest in a $0.3 million preferred equity investment.
          Property operating income of $1.5 million for the three months ended March 31, 2009 represents operating income associated with the operations of an office building recorded as real estate owned net. There was no property operating income for the three months ended March 31, 2008.
          Other income decreased $4,443 to $16,250 for the three months ended March 31, 2009 from $20,693 for the three months ended March 31, 2008. This is primarily due to decreased miscellaneous asset management fees on our loan and investment portfolio.
Expenses
          Interest expense decreased $12.2 million, or 39%, to $19.2 million for the three months ended March 31, 2009 from $31.3 million for the three months ended March 31, 2008. This decrease was primarily due to a 30% decrease in the average cost of these borrowings from 5.64% for the three months ended March 31, 2008 to 3.94% for the three months ended March 31, 2009 due to a reduction in average LIBOR on the portion of our debt that was floating over the same period. In addition, there was an 11% decrease in the average balance of our debt facilities from $2.2 billion for the three months ended March 31, 2008 to $2.0 billion for the three months ended March 31, 2009 as a result of decreased leverage on our portfolio due to the paying down of certain outstanding indebtedness by repayment of loans, the transfer of assets to our CDO vehicles which carry a lower cost of funds and from available capital.
          Employee compensation and benefits expense increased $0.4 million, or 21%, to $2.4 million for the three months ended March 31, 2009 from $2.0 million for the three months ended March 31, 2008. This increase was primarily due to an increase in employee salaries and benefits related to asset management and the restructuring of our loans. These expenses represent salaries, benefits, stock-based compensation related to employees, and incentive compensation for those employed by us during these periods.
          Selling and administrative expense increased $0.6 million, or 35%, to $2.1 million for the three months ended March 31, 2009 from $1.5 million for the three months ended March 31, 2008. These costs include, but are not limited to, professional and consulting fees, marketing costs, insurance expense, director’s fees, licensing fees,
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travel and placement fees, and stock-based compensation relating to the cost of restricted stock granted to our directors and certain employees of our manager. This increase was primarily due to increased general corporate legal expenses and professional fees associated with certain transactions, partially offset by decreased costs related to restricted stock awards granted to directors and certain employees of our manager, ACM due to a lower stock price.
          Property operating expenses of $1.3 million for the three months ended March 31, 2009 represents all expenses related to the operations of an office building recorded as real estate owned, net. There were no property operating expenses for the three months ended March 31, 2008.
          Depreciation and amortization expense of $0.3 million for the three months ended March 31, 2009 represents depreciation on property, leasehold improvements, and equipment associated with the consolidation of an office building as real estate owned, net. There were no depreciation and amortization expenses for the three months ended March 31, 2008.
          Provision for loan losses totaled $67.5 million for the three months ended March 31, 2009, and 3.0 million for the three months ended March 31, 2008. The provision recorded for the three months ended March 31, 2009 was based on our normal quarterly loan review at March 31, 2009, where it was determined that 18 loans with a aggregate carrying value of $588.8 million, before reserves, were impaired. We performed an evaluation of the loans and determined that the fair value of the underlying collateral securing the impaired loans was less than the net carrying value of the loans, resulting in us recording an additional $67.5 million provision for loan losses. The provision recorded for the three months ended March 31, 2008 was based on our normal quarterly loan review at March 31, 2008, where it was determined that three loans with a aggregate carrying value of $70.2 million, before reserves, became impaired during the quarter.
          Loss on restructured loans of $9.0 million for the three months ended March 31, 2009 represents losses incurred as a result of restructuring certain of our loans primarily due to the unfavorable changes in market conditions. There were no losses on restructured loans for the three months ended March 31, 2008.
          Management fees decreased $1.9 million to $0.7 million for the three months ended March 31, 2009 from $2.6 million for the three months ended March 31, 2008. These amounts represent compensation in the form of base management fees and estimated incentive management fees as provided for in the management agreement with our manager. The incentive management fee expense for the three months ended March 31, 2008 was $1.7 million. No incentive management fee was earned for the three months ended March 31, 2009 as a result of a cumulative loss for the trailing 12-month period. The base management fee expense was $0.7 million for the three months ended March 31, 2009 as compared to $0.9 million for the three months ended March 31, 2008.
          Gain on exchange of profits interest of $56.0 million was due to the recognition of income attributable to the POM exchange of profits interest transaction recognized in the three months ended March 31, 2009. See Note 6 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof for further details on the POM transaction recorded in the three months ended March 31, 2009.
          Gain on extinguishment of debt totaled $26.3 million for the three months ended March 31, 2009. During the first quarter of 2009, we purchased, at a discount, approximately $23.7 million of investment grade rated bonds originally issued by our three CDO issuing entities. In addition, we purchased, at a discount, approximately $9.4 million of junior subordinated notes originally issued by a wholly-owned subsidiary of our operating partnership. We recorded a net gain on early extinguishment of debt of $26.3 million related to these transactions.
Income From Equity Affiliates
          Income from equity affiliates totaled $2.5 million for the three months ended March 31, 2009. We did not recognize income from equity affiliates for the three months ended March 31, 2008. The $2.5 million of income recorded during the three months ended March 31, 2009, reflects a portion of the joint venture’s profits from a $12.7 million equity investment.
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Net Income Attributable to Noncontrolling Interest
          Net income attributable to noncontrolling interest totaled $18.5 million for the three months ended March 31, 2009 representing the portion of income allocated to the third party’s interest in a consolidated subsidiary, primarily the result of the $56.0 million gain recorded from the exchange of our profits interest in POM during the first quarter of 2009. This is related to the POM transaction discussed in Note 6 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof.
          Net income attributable to noncontrolling interest in our operating partnership totaled $2.3 million for the three months ended March 31, 2008 representing the portion of our income allocated to our manager. There was no net income attributable to noncontrolling interest in our operating partnership for the three months ended March 31, 2009. Our manager had a weighted average limited partnership interest of 15.5% for the three months ended March 31, 2008. In June 2008, our manager, exercised its right to redeem its 3,776,069 operating partnership units in our operating partnership for shares of our common stock on a one-for-one basis. As a result, our manager’s operating partnership ownership interest percentage was reduced to zero.
          In December 2007, the FASB issued SFAS No. 160 “Noncontrolling Interests in Consolidated Financial Statements — an amendment of Accounting Research Bulletin No. 51” (“SFAS 160”), effective for years beginning after December 15, 2008. SFAS 160 clarifies the classification of noncontrolling interests in consolidated statements of financial position and the accounting for and reporting of transactions between us and holders of such noncontrolling interests. Under SFAS 160, noncontrolling interests are considered equity and should be reported as an element of consolidated equity. Also under SFAS 160, net income encompasses the total income of all consolidated subsidiaries and requires separate disclosure on the face of the statements of operations of income attributable to the controlling and noncontrolling interests. When a subsidiary is deconsolidated, any retained, noncontrolling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary must be measured at fair value. The presentation and disclosure requirements have been applied retrospectively for all periods presented.
Provision for Income Taxes
          We are organized and conduct our operations to qualify as a REIT for federal income tax purposes. As a REIT, we are generally not subject to federal income tax on our REIT-taxable income that we distribute to our stockholders, provided that we distribute at least 90% of our REIT-taxable income and meet certain other requirements. As of March 31, 2009 and 2008, we were in compliance with all REIT requirements and, therefore, have not provided for income tax expense on our REIT- taxable income for the three months ended March 31, 2009 and 2008.
          Certain of our assets that produce non-qualifying income are owned by our taxable REIT subsidiaries, the income of which is subject to federal and state income taxes. During the three months ended March 31, 2009 and 2008, we did not record any provision on income from these taxable REIT subsidiaries.
Liquidity and Capital Resources
Sources of Liquidity
          Liquidity is a measurement of the ability to meet potential cash requirements. Our short-term and long-term liquidity needs include ongoing commitments to repay borrowings, fund future loans and investments, fund additional cash collateral from potential declines in the value of a portion of our interest rate swaps, fund operating costs and distributions to our stockholders as well as other general business needs. Our primary sources of funds for liquidity consist of proceeds from equity offerings, debt facilities and cash flows from operations. Our equity sources consist of funds raised from our private equity offering in July 2003, net proceeds from our initial public offering of our common stock in April 2004, net proceeds from our public offering of our common stock in June 2007 and depending on market conditions, proceeds from capital market transactions including the future issuance of common, convertible and/or preferred equity securities. Our debt facilities include the issuance of floating rate notes resulting from our CDOs, the issuance of junior subordinated notes to subsidiary trusts issuing preferred securities and borrowings under credit agreements. Net cash provided by operating activities include interest
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income from our loan and investment portfolio reduced by interest expense on our debt facilities, cash from equity participation interests, repayments of outstanding loans and investments and funds from junior loan participation arrangements.
          We believe our existing sources of funds will be adequate for purposes of meeting our short-term and long-term liquidity needs. Our loans and investments are financed under existing credit facilities and their credit status is continuously monitored; therefore, these loans and investments are expected to generate a generally stable return. Our ability to meet our long-term liquidity and capital resource requirements is subject to obtaining additional debt and equity financing. If we are unable to renew our sources of financing on substantially similar terms or at all, it would have an adverse effect on our business and results of operations. Any decision by our lenders and investors to enter into such transactions with us will depend upon a number of factors, such as our financial performance, compliance with the terms of our existing credit arrangements, industry or market trends, the general availability of and rates applicable to financing transactions, such lenders’ and investors’ resources and policies concerning the terms under which they make such capital commitments and the relative attractiveness of alternative investment or lending opportunities.
          Current conditions in capital and credit markets have made certain forms of financing less attractive, and in certain cases less available, therefore we will continue to rely on cash flows provided by operating and investing activities for working capital.
          To maintain our status as a REIT under the Internal Revenue Code, we must distribute annually at least 90% of our REIT-taxable income. These distribution requirements limit our ability to retain earnings and thereby replenish or increase capital for operations. However, we believe that our capital resources and access to financing will provide us with financial flexibility and market responsiveness at levels sufficient to meet current and anticipated capital requirements. In December 2008, the IRS issued “Revenue Procedure 2008-68” that allows listed REITs to offer shareholders elective stock dividends, which are paid in a combination of cash and common stock with at least 10% of the total distribution paid in cash, to satisfy the dividend requirement through 2009.
Equity Offerings
          Our authorized capital provides for the issuance of up to 500 million shares of common stock, par value $0.01 per share, and 100 million shares of preferred stock, par value $0.01 per share.
          In March 2007, we filed a shelf registration statement on Form S-3 with the SEC under the 1933 Act with respect to an aggregate of $500.0 million of debt securities, common stock, preferred stock, depositary shares and warrants, that may be sold by us from time to time pursuant to Rule 415 of the 1933 Act. On April 19, 2007, the Commission declared this shelf registration statement effective.
          In June 2007, we sold 2,700,000 shares of our common stock registered on the shelf registration statement in a public offering at a price of $27.65 per share, for net proceeds of approximately $73.6 million after deducting the underwriting discount and the other estimated offering expenses. We used the proceeds to pay down debt and finance our loan and investment portfolio. The underwriters did not exercise their over allotment option for additional shares.
          In August 2008, we entered into an equity placement program sales agreement with a securities agent whereby we may issue and sell up to three million shares of our common stock through the agent who agrees to use its commercially reasonable efforts to sell such shares during the term of the agreement and under the terms set forth therein. To date, we have not utilized this equity placement program.
          At March 31, 2009, we had $425.3 million available under the shelf registration described above and 25,142,410 shares outstanding.
Debt Facilities
          We also maintain liquidity through two term credit agreements, one of which has a revolving credit component, three master repurchase agreements, one working capital facility, one note payable, three junior loan
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participations and one bridge loan warehousing credit agreement with seven different financial institutions or companies. In addition, we have issued three collateralized debt obligations or CDOs and nine separate junior subordinated notes. London inter-bank offered rate, or LIBOR, refers to one-month LIBOR unless specifically stated. As of March 31, 2009, these facilities had an aggregate capacity of $2.2 billion and borrowings were approximately $1.9 billion.
          The following is a summary of our debt facilities as of March 31, 2009:
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
 	 	At March 31, 2009	 	
 	 	 	 	 	 	Debt Carrying	 	 	 	 	 	 	Maturity	 	
Debt Facilities	 	Commitment	 	 	Value	 	 	Available (1)	 	 	Dates	 	
Repurchase agreements. Interest is variable based on pricing over LIBOR	 	$	209,187,007	 	 	$	46,148,296	 	 	$	163,038,711	 	 	 	2009 – 2010	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Collateralized debt obligations. Interest is variable based on pricing over three-month LIBOR	 	 	1,139,220,483	 	 	 	1,125,920,483	 	 	 	13,300,000	 	 	 	2011 – 2013	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Junior subordinated notes. Interest is variable based on pricing over three-month LIBOR	 	 	266,680,000	 	 	 	266,680,000	 	 	 	—	 	 	 	2034 – 2037	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Notes payable. Interest is variable based on pricing over Prime or LIBOR	 	 	581,417,284	 	 	 	501,436,161	 	 	 	79,981,123	 	 	 	2009 – 2013	 	

 	 	$	2,196,504,774	 	 	$	1,940,184,940	 	 	$	256,319,834	 	 	 	 	 	

 	 	 	
(1)	 	subject to certain conditions and bank approval.	
          These debt facilities are described in further detail in Note 8 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof.
     Repurchase Agreements
          Repurchase obligation financings provide us with a revolving component to our debt structure. Repurchase agreements provide stand alone financing for certain assets and interim, or warehouse financing, for assets that we plan to contribute to our CDOs. At March 31, 2009, the aggregate outstanding balance under these facilities was $46.1 million.
          We have a $200.0 million repurchase agreement with a financial institution which has a term expiring in October 2009 and bears interest at pricing over LIBOR, varying on the type of asset financed. At March 31, 2009, the outstanding balance under this facility was $37.0 million with a current weighted average note rate of 1.57%.
          We have a $100.0 million repurchase agreement with a second financial institution that bears interest at pricing over LIBOR and has a term expiring in June 2009. In January 2008, we were notified that no further advances could be taken under this facility. In December 2008, we amended this facility extending the maturity to June 2009. The amendment also includes an increase in interest rate pricing over LIBOR to 250 basis points, a paydown of $3.1 million by January 31, 2009 and full repayment of the facility by June 2009. During the three months ended March 31, 2009, we paid down approximately $8.2 million of this facility. At March 31, 2009, the outstanding balance under this facility was $7.3 million with a current weighted average note rate of 4.84%.
          We have an uncommitted master repurchase agreement with a third financial institution, effective April 2008, entered into for the purpose of financing a portion of our CRE CDO bond securities. The agreement has a term expiring in May 2010 and bears interest at pricing over LIBOR, varying on the type of asset financed. During the first quarter of 2009, we paid down approximately $1.3 million of this facility,
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due to a decrease in values associated with a change in market interest rate spreads. At March 31, 2009, the outstanding balance under this facility was $1.9 million with a current weighted average note rate of 2.31%.
     CDOs
          We completed three separate CDOs since 2005 by issuing to third party investors, tranches of investment grade collateralized debt obligations through newly-formed wholly-owned subsidiaries (the “Issuers”). The Issuers hold assets, consisting primarily of real-estate related assets and cash which serve as collateral for the CDOs. The assets pledged as collateral for the CDOs were contributed from our existing portfolio of assets. By contributing these real estate assets to the various CDOs, these transactions resulted in a decreased cost of funds relating to the corresponding CDO assets and created capacity in our existing credit facilities.
          The Issuers issued tranches of investment grade floating-rate notes of approximately $305.0 million, $356.0 million and $447.5 million for CDO I, CDO II and CDO III, respectively. CDO III also has a $100.0 million revolving note which was not drawn upon at the time of issuance. The revolving note facility has a commitment fee of 0.22% per annum on the undrawn portion of the facility. The tranches were issued with floating rate coupons based on three-month LIBOR plus pricing of 0.44% — 0.77%. Proceeds from the sale of the investment grade tranches issued in CDO I, CDO II and CDO III of $267.0 million, $301.0 million and $317.1 million, respectively, were used to repay higher costing outstanding debt under our repurchase agreements and notes payable. The CDOs may be replenished with substitute collateral for loans that are repaid during the first four years for CDO I and the first five years for CDO II and CDO III, subject to certain customary provisions. Thereafter, the outstanding debt balance will be reduced as loans are repaid. Proceeds from the repayment of assets which serve as collateral for the CDOs must be retained in its structure as restricted cash until such collateral can be replaced and therefore not available to fund current cash needs. If such cash is not used to replenish collateral, it could have a negative impact on our anticipated returns. Proceeds from CDO II are distributed quarterly with approximately $1.2 million being paid to investors as a reduction of the CDO liability. As of April 15, 2009, CDO I reached the end of its replenishment date and will no longer make quarterly amortization payments to investors. Investor capital will be repaid quarterly from proceeds received from loan repayments held as collateral in accordance with the terms of the CDO. Proceeds distributed will be recorded as a reduction of the CDO liability. For accounting purposes, CDOs are consolidated in our financial statements.
          During the three months ended March 31, 2009, we purchased, at a discount, approximately $23.7 million of investment grade rated notes originally issued by our CDO issuing entities for a price of $5.6 million. We recorded a net gain on extinguishment of debt of $18.2 million and a reduction of outstanding debt totaling $23.7 million from these transactions in our first quarter 2009 financial statements.
          At March 31, 2009, the outstanding note balance under CDO I, CDO II and CDO III was $261.8 million, $337.0 million and $527.2 million, respectively.
          The continued turmoil in the structured finance markets, in particular the sub-prime residential loan market, has negatively impacted the credit markets generally, and, as a result, investor demand for commercial real estate collateralized debt obligations has been substantially curtailed. In recent years, we have relied to a substantial extent on CDO financings to obtain match funded financing for our investments. Until the market for commercial real estate CDOs recovers, we may be unable to utilize CDOs to finance our investments and we may need to utilize less favorable sources of financing to finance our investments on a long-term basis. There can be no assurance as to when demand for commercial real estate CDOs will return or the terms of such securities investors will demand or whether we will be able to issue CDOs to finance our investments on terms beneficial to us.
          Our CDO bonds contain interest coverage and asset over collateralization covenants that must be met as of the waterfall distribution date in order for us to receive such payments. If we fail these covenants in any of our CDOs, all cash flows from the applicable CDO would be diverted to repay principal and interest on the outstanding CDO bonds and we would not receive any residual payments until that CDO regained compliance with such tests. We were in compliance with all such covenants with the exception of the over collateralization test of CDO I as of March 31, 2009. In April 2009, this covenant was cured prior to the waterfall distribution date and, as a result, we are currently in compliance with all CDO covenants. In the event of a breach of the CDO covenants that could not be cured in the near-term, we would be required to fund our non-CDO expenses, including management fees and
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employee costs, distributions required to maintain REIT status, debt costs, and other expenses with (i) cash on hand, (ii) income from any CDO not in breach of a covenant test, (iii) income from real property and unencumbered loan assets, (iv) sale of assets, (v) or accessing the equity or debt capital markets, if available. We have the right to cure covenant breaches which would resume normal residual payments to us by purchasing non-performing loans out of the CDOs. However, we may not have sufficient liquidity available to do so at such time.
     Junior Subordinated Notes
          The junior subordinated notes are unsecured, have a maturity of 29 to 30 years, pay interest quarterly at a floating rate of interest based on three-month LIBOR and, absent the occurrence of special events, are not redeemable during the first five years. In connection with the issuance of these variable rate junior subordinated notes, we entered into various interest rate swap agreements. See Item 7A “Quantitative and Qualitative Disclosures About Market Risk” for further information relating to these derivatives.
          In March 2009, we purchased, at a discount, approximately $9.4 million of investment grade rated junior subordinated notes originally issued by a wholly-owned subsidiary of our operating partnership for $1.3 million. We recorded a net gain on extinguishment of debt of $8.1 million and a reduction of outstanding debt totaling $9.4 million from this transaction in our first quarter 2009 financial statements.
          At March 31, 2009, the aggregate outstanding balance under these facilities was $266.7 million with a current weighted average note rate of 7.30%.
          In May 2009, we exchanged $247.1 million of our outstanding trust preferred securities, consisting of $239.7 million of junior subordinated notes issued to third party investors and $7.4 million of common equity issued to us in exchange for $268.4 million of newly issued unsecured junior subordinated notes, representing 112% of the original face amount. The new notes bear a fixed interest rate of 0.50% per annum for the period commencing February 1, 2009 and ending April 30, 2012 (the “Modification Period”), and then interest is to be paid at the rates set forth in the existing trust agreements until maturity, equal to three month LIBOR plus 2.90%. We paid a transaction fee of approximately $1.4 million to the issuers of the junior subordinated notes related to this restructuring. We are currently evaluating the effect of this transaction on our Consolidated Financial Statements.
          During the Modification Period, we will be permitted to make distributions of up to 100% of taxable income to common shareholders. We have agreed that such distributions will be paid in the form of our stock to the maximum extent permissible under the Internal Revenue Service rules and regulations in effect at the time of such distribution, with the balance payable in cash. This requirement regarding distributions in stock can be terminated by us at any time, provided that we pay the note holders the original rate of interest from the time of such termination.
     Notes Payable
          Notes payable consists of two term credit agreements, a revolving credit line, a working capital facility, a bridge loan warehousing credit agreement, a note payable and a junior loan participation. At March 31, 2009, the aggregate outstanding balance under these facilities was $501.4 million.
          In November 2007, we entered into two credit agreements with Wachovia which replaced two previously existing repurchase agreements with Wachovia and an affiliate of Wachovia. The first credit agreement consists of a $473.0 million term loan and a $100.0 million revolving commitment which has a commitment period of two years with a one year auto extension feature, subject to certain criteria, to November 2010. The second credit agreement is a $69.0 million term loan which has a commitment period of two years with a one year extension period to November 2010. These two credit agreements each bear interest at pricing over LIBOR, and have eliminated the mark to market risk as it relates to interest rate spreads that existed under the terms of the repurchase agreements.
          The $473.0 million term loan has repayment provisions which required a reduction of the outstanding balance to $300.0 million by December 31, 2008. At December 31, 2008, the outstanding balance under this facility was $280.2 million. At March 31, 2009, the outstanding balance under this facility was $280.1 million with a current weighted average note rate of 3.00%. The $100.0 million revolving commitment is used to finance new
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investments and can be increased with lender approval to $200.0 million when the term loan was paid down to $400.0 million in February 2008. At March 31, 2009, the outstanding balance under this revolving facility was $64.8 million with a current weighted average note rate of 3.15%.
          The $69.0 million term loan includes $10.0 million of annual repayment provisions in quarterly installments. We have also pledged our 24% equity interest in POM as part of the agreement. In the second and third year of this term facility, we are required to paydown this facility by an additional amount equal to distributions in excess of $10.0 million per year received by us from our investment in POM, if any. In connection with the POM transaction in July 2008, we agreed to pay down approximately $11.6 million of this facility from proceeds received from this transaction. In addition, 16.7% of our 24.2% equity interest in POM was released as collateral in conjunction with this paydown. At March 31, 2009, the outstanding balance under this facility was $32.9 million with a current weighted average note rate of 3.04%.
          We have a $70.0 million bridge loan warehousing credit agreement with a fifth financial institution, with a maturity date of October 2009, to provide financing for bridge loans. This agreement bears a variable rate of interest, payable monthly, based on Prime plus 0% or pricing over 1, 2, 3 or 6-month LIBOR, at our option. At March 31, 2009, the outstanding balance under this facility was $25.2 million with a current weighted average note rate of 8.09%.
          We have a $45.0 million working capital facility with Wachovia that has a term expiring in June 2009. The facility requires quarterly paydowns of $3.0 million and an interest rate of 500 bps over LIBOR. At March 31, 2009, the aggregate outstanding balance under this facility was $41.9 million with a current weighted average note rate of 5.58%.
          We have a $50.2 million note payable related to the POM transaction. During the second quarter of 2008, we recorded a $49.5 million note payable related to the POM exchange of profits interest transaction. The note was initially secured by our interest in POM, matures in July 2016 and bore interest at a fixed rate of 4% with payment deferred until the closing of the transaction. Upon the closing of the POM transaction in March 2009, the note balance was increased to $50.2 million, bears interest at a fixed rate of 4% and is secured by our investment in common and preferred operating partnership units in Lightstone Value Plus REIT, L.P.
          We have three junior loan participations with a total outstanding balance at March 31, 2009 of $6.3 million. These participation borrowings have a maturity date equal to the corresponding mortgage loan and are secured by the participant’s interest in the mortgage loans. Interest expense is based on a portion of the interest received from the loans.
     Mortgage Note Payable
          During the second quarter of 2008, we recorded a $41.4 million first lien mortgage related to the foreclosure of an entity in which we had a $5.0 million mezzanine loan. The mortgage bears interest at a fixed rate, has a maturity date of June 2012 and the outstanding balance of this mortgage was $41.4 million at March 31, 2009.
     Note Payable — Related Party
          During the fourth quarter of 2008, we borrowed $4.2 million from our manager, ACM. At December 31, 2008, we had outstanding borrowings due to ACM totaling $4.2 million, which was recorded in notes payable — related party. In January 2009, the loan was repaid in full.
          The working capital facility, bridge loan warehousing credit agreement, term and revolving credit agreements, and the master repurchase agreements require that we pay interest monthly, based on pricing over LIBOR. The amount of our pricing over these rates varies depending upon the structure of the loan or investment financed pursuant to the specific agreement.
          The working capital facility, term and revolving credit agreements, bridge loan warehousing credit agreement, and the master repurchase agreements require that we pay down borrowings under these facilities pro-rata as principal payments on our loans and investments are received. In addition, if upon maturity of a loan or
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investment we decide to grant the borrower an extension option, the financial institutions have the option to extend the borrowings or request payment in full on the outstanding borrowings of the loan or investment extended. The financial institutions also have the right to request immediate payment of any outstanding borrowings on any loan or investment that is at least 60 days delinquent.
Cash Flow From Operations
          We continually monitor our cash position to determine the best use of funds to both maximize our return on funds and maintain an appropriate level of liquidity. Historically, in order to maximize the return on our funds, cash generated from operations has generally been used to temporarily pay down borrowings under credit facilities whose primary purpose is to fund our new loans and investments. Consequently, when making distributions in the past, we have borrowed the required funds by drawing on credit capacity available under our credit facilities. However, given current market conditions, we may have to maintain adequate liquidity from operations to make any future distributions.
Restrictive Covenants
          Each of the credit facilities contains various financial covenants and restrictions, including minimum net worth and debt-to-equity ratios. In addition to the financial terms and capacities described above, our credit facilities generally contain covenants that prohibit us from effecting a change in control, disposing of or encumbering assets being financed and restrict us from making any material amendment to our underwriting guidelines without approval of the lender. If we violate these covenants in any of our credit facilities, we could be required to pledge more collateral, or repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. If we are unable to retire our borrowings in such a situation, (i) we may need to prematurely sell the assets securing such debt, (ii) the lenders could accelerate the debt and foreclose on the assets that are pledged as collateral to such lenders, (iii) such lenders could force us into bankruptcy, (iv) such lenders could force us to take other actions to protect the value of their collateral and (v) our other debt financings could become immediately due and payable. Any such event would have a material adverse effect on our liquidity, the value of our common stock, our ability to make distributions to our stockholders and our ability to continue as a going concern. Violations of these covenants may also result in our being unable to borrow unused amounts under our credit facilities, even if repayment of some or all borrowings is not required. Additionally, to the extent that we were to realize additional losses relating to our loans and investments, it would put additional pressure on our ability to continue to meet these covenants.
          We were in compliance with all financial covenants and restrictions for the periods presented with the exception of a minimum liquidity requirement with one financial institution at March 31, 2009. We are required to have a minimum unrestricted cash and cash equivalents total balance of $15.0 million, with this financial institution. We have obtained a waiver of this covenant for March 31, 2009 from this financial institution and expect to be in compliance with this covenant calculation or receive a waiver or amendment in future periods.
Contractual Commitments
          As of March 31, 2009, we had the following material contractual obligations (payments in thousands):
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Contractual	 	Payments Due by Period (1)	 	
Obligations	 	2009	 	 	2010	 	 	2011	 	 	2012	 	 	2013	 	 	Thereafter	 	 	Total	 	
Notes payable (2)	 	$	444,978	 	 	$	1,300	 	 	$	5,000	 	 	$	—	 	 	$	50,158	 	 	$	—	 	 	$	501,436	 	
Collateralized debt obligations (3)	 	 	152,604	 	 	 	41,766	 	 	 	198,199	 	 	 	733,351	 	 	 	—	 	 	 	—	 	 	 	1,125,920	 	
Repurchase agreements	 	 	44,271	 	 	 	1,877	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	46,148	 	
Trust preferred Securities (4)	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	—	 	 	 	266,680	 	 	 	266,680	 	
Mortgage note payable	 	 	—	 	 	 	—	 	 	 	—	 	 	 	41,440	 	 	 	—	 	 	 	—	 	 	 	41,440	 	
Outstanding unfunded commitments (5)	 	 	32,181	 	 	 	27,914	 	 	 	11,319	 	 	 	1,137	 	 	 	393	 	 	 	695	 	 	 	73,639	 	

Totals	 	$	674,034	 	 	$	72,857	 	 	$	214,518	 	 	$	775,928	 	 	$	50,551	 	 	$	267,375	 	 	$	2,055,263	 	
 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
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(1)	 	Represents amounts due based on contractual maturities.	
 	 	 	
(2)	 	The maturity date for the $473.0 million committed Wachovia term and $100.0 million committed revolving facilities do not include their one year auto extension features. The $69.0 million term loan does not include its one year extension option.	
 	 	 	
(3)	 	Comprised of $261.8 million of CDO I debt, $337.0 million of CDO II debt and $527.2 million of CDO III debt with a weighted average remaining maturity of 1.60, 2.86 and 3.29 years, respectively, as of March 31, 2009. In the first quarter of 2009, we repurchased, at a discount, approximately $23.7 million of investment grade notes originally issued by our CDO I, CDO II and CDO III issuers and recorded a reduction of the outstanding debt balance of $23.7 million.	
 	 	 	
(4)	 	In the first quarter of 2009, we repurchased, at a discount, approximately $9.4 million of investment grade rated junior subordinated notes originally issued by our issuing entity and recorded a reduction of the outstanding debt balance of $9.4 million.	
 	 	 	
(5)	 	In accordance with certain loans and investments, we have outstanding unfunded commitments of $73.6 million as of March 31, 2009, that we are obligated to fund as the borrowers meet certain requirements. Specific requirements include, but are not limited to, property renovations, building construction, and building conversions based on criteria met by the borrower in accordance with the loan agreements. In relation to the $73.6 million outstanding balance at March 31, 2009, our restricted cash balance contained approximately $21.6 million of cash held to fund the portion of the unfunded commitments for loans financed by our CDO vehicles.	
Management Agreement
          Base Management Fees. In exchange for the services that ACM provides us pursuant to the management agreement, we pay our manager a monthly base management fee in an amount equal to:
 	(1)	 	0.75% per annum of the first $400 million of our operating partnership’s equity (equal to the month-end value computed in accordance with GAAP of total partners’ equity in our operating partnership, plus or minus any unrealized gains, losses or other items that do not affect realized net income),	
 	 	 	 	
 	(2)	 	0.625% per annum of our operating partnership’s equity between $400 million and $800 million, and	
 	 	 	 	
 	(3)	 	0.50% per annum of our operating partnership’s equity in excess of $800 million.	
          The base management fee is not calculated based on the manager’s performance or the types of assets it selects for investment on our behalf, but it is affected by the performance of these assets because it is based on the value of our operating partnership’s equity. We incurred $0.7 million and $0.9 million of base management fees for services rendered in the three months ended March 31, 2009 and 2008, respectively.
          Incentive Compensation. Pursuant to the management agreement, our manager is also entitled to receive incentive compensation in an amount equal to:
 	(1)	 	25% of the amount by which:	

 	(a)	 	our operating partnership’s funds from operations per operating partnership unit, adjusted for certain gains and losses, exceeds	
 	 	 	 	
 	(b)	 	the product of (x) the greater of 9.5% per annum or the Ten Year U.S. Treasury Rate plus 3.5%, and (y) the weighted average of (i) $15.00, (ii) the offering price per share of our common stock (including any shares of common stock issued upon exercise of warrants or options) in any subsequent offerings (adjusted for any prior capital dividends or distributions), and (iii) the issue price per operating partnership unit for subsequent contributions to our operating partnership, multiplied by	

 	(2)	 	the weighted average of our operating partnership’s outstanding operating partnership units.	
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          For the three months ended March 31, 2009, ACM did not earn an incentive compensation installment. For the three months ended March 31, 2008, ACM received an incentive compensation installment of $1.7 million which was paid in cash of $0.8 million and 55,532 shares of common stock.
     During the second quarter of 2008, we recorded a $7.3 million deferred management fee related to the incentive compensation fee recognized from the monetization of our profits interest in POM in June 2008, which was subsequently paid and reclassified to prepaid management fees. The $7.3 million incentive compensation fee was paid in 355,903 shares of common stock and $4.1 million paid in cash. In accordance with the management agreement, installments of the annual incentive compensation are subject to quarterly recalculation and potential reconciliation at the end of the 2009 fiscal year and any overpayments are required to be repaid in accordance with the management agreement. See Note 6 of the “Notes to the Consolidated Financial Statements” set forth in Item 1 hereof for further details.
          In addition, during the six months ended June 30, 2008, ACM received incentive compensation installments totaling $2.9 million, of which $1.4 million was paid in 116,680 shares of common stock and $1.5 million paid in cash. For the year ended December 31, 2008, ACM did not earn an incentive compensation fee and an overpayment of the incentive fee was recorded and included in due from related party in the amount of $2.9 million. We and ACM have agreed that ACM’s obligation to refund to us the $2.9 million will be deferred until a later date to be mutually agreed upon by us and ACM. In 2007, ACM received an incentive compensation installment totaling $19.0 million which was recorded as prepaid management fees related to the incentive compensation management fee on $77.1 million of deferred revenue recognized on the transfer of control of the 450 West 33 rd  Street property of one of our equity affiliates.
          We pay the annual incentive compensation in four installments, each within 60 days of the end of each fiscal quarter. The calculation of each installment is based on results for the 12 months ending on the last day of the fiscal quarter for which the installment is payable. These installments of the annual incentive compensation are subject to recalculation and potential reconciliation at the end of such fiscal year, and any overpayments are required to be repaid in accordance with the management agreement. Subject to the ownership limitations in our charter, at least 25% of this incentive compensation is payable to our manager in shares of our common stock having a value equal to the average closing price per share for the last 20 days of the fiscal quarter for which the incentive compensation is being paid.
          The incentive compensation is accrued as it is earned. In accordance with Issue 4(b) of EITF 96-18, “Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Services,” the expense incurred for incentive compensation paid in common stock is determined using the valuation method described above and the quoted market price of our common stock on the last day of each quarter. At December 31 of each year, we remeasure the incentive compensation paid to our manager in the form of common stock in accordance with Issue 4(a) of EITF 96-18 which discusses how to measure at the measurement date when certain terms are not known prior to the measurement date. Accordingly, the expense recorded for such common stock is adjusted to reflect the fair value of the common stock on the measurement date when the final calculation of the annual incentive compensation is determined. In the event that the annual incentive compensation calculated as of the measurement date is less than the four quarterly installments of the annual incentive compensation paid in advance, our manager will refund the amount of such overpayment in cash and we would record a negative incentive compensation expense in the quarter when such overpayment is determined.
          Origination Fees. Our manager is entitled to 100% of the origination fees paid by borrowers under each of our bridge loan and mezzanine loans that do not exceed 1% of the loan’s principal amount. We retain 100% of the origination fee that exceeds 1% of the loan’s principal amount.
          Term and Termination. The management agreement has an initial term of two years and is renewable automatically for an additional one year period every year thereafter, unless terminated with six months’ prior written notice. If we terminate or elect not to renew the management agreement in order to manage our portfolio internally, we are required to pay a termination fee equal to the base management fee and incentive compensation for the 12-month period preceding the termination. If, without cause, we terminate or elect not to renew the management agreement for any other reason, including a change of control of us, we are required to pay a
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termination fee equal to two times the base management fee and incentive compensation paid for the 12-month period preceding the termination.
Related Party Transactions
          Due to related party was $0.2 million at March 31, 2009 and consisted of base management fees that were due to ACM which were remitted by us in May 2009. At December 31, 2008, due to related party was $1.0 million and consisted of $0.8 million of base management fees and $0.2 million of unearned fees due to ACM that were remitted by us in February 2009.
          At March 31, 2009, due from related party was $15.6 million and consisted of $9.7 million of loan repayment proceeds and $3.0 million of restructuring fee proceeds due from ACM. These payments were remitted to us in April 2009. The balance also included a $2.9 million overpayment of incentive management compensation from 2008. At December 31, 2008, due from related party was $2.9 million as a result of an overpayment of incentive management compensation based on the results of the twelve months ended December 31, 2008. Refer to the section “Management Agreement” above for further details.
          During the first quarter of 2009, we purchased from ACM, approximately $8.8 million of investment grade rated bonds originally issued by two of our three CDO issuing entities and approximately $9.4 million of junior subordinated notes originally issued by a wholly-owned subsidiary of our operating partnership for a net gain on early extinguishment of debt of $13.8 million. At March 31, 2009, ACM owned $11.3 million of CDO notes originally issued by our CDOs that were purchased for $5.0 million from third party investors in 2008.
          During the fourth quarter of 2008, we borrowed $4.2 million from our manager, ACM. At December 31, 2008, we had outstanding borrowings due to ACM totaling $4.2 million, which was recorded in notes payable — related party. In January 2009, the loan was repaid in full.
          We are dependent upon our manager (ACM), with whom we have a conflict of interest, to provide services to us that are vital to our operations. Our chairman, chief executive officer and president, Mr. Ivan Kaufman, is also the chief executive officer and president of our manager, and, our chief financial officer, Mr. Paul Elenio, is the chief financial officer of our manager. In addition, Mr. Kaufman and the Kaufman entities together beneficially own approximately 92% of the outstanding membership interests of ACM, and certain of our employees and directors also hold an ownership interest in ACM. Furthermore, one of our directors also serves as the trustee of one of the Kaufman entities that holds a majority of the outstanding membership interests in ACM and co-trustee of another Kaufman entity that owns an equity interest in our manager. ACM currently holds approximately 5.4 million common shares, representing 21.4% of the voting power of its outstanding stock as of March 31, 2009.
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Funds from Operations
          We are presenting funds from operations (FFO) because we believe it to be an important supplemental measure of our operating performance in that it is frequently used by analysts, investors and other parties in the evaluation of real estate investment trusts (REITs). We also use FFO for the calculation of the incentive management fee for our management company (ACM). The revised White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts, or NAREIT, in April 2002 defines FFO as net income (loss) attributable to Arbor Realty Trust, Inc. (computed in accordance with generally accepted accounting principles in the United States (GAAP)), excluding gains (losses) from sales of depreciated real properties, plus real estate related depreciation and amortization and after adjustments for unconsolidated partnerships and joint ventures. We consider gains and losses on the sales of real estate investments to be a normal part of our recurring operating activities in accordance with GAAP and should not be excluded when calculating FFO.
          FFO is not intended to be an indication of our cash flow from operating activities (determined in accordance with GAAP) or a measure of our liquidity, nor is it entirely indicative of funding our cash needs, including our ability to make cash distributions. Our calculation of FFO may be different from the calculation used by other companies and, therefore, comparability may be limited.
          FFO for the three months ended March 31, 2009 and 2008 are as follows:
 	 	 	 	 	 	 	 	 	
 	 	Three Months Ended March 31,	 	
(Unaudited)	 	2009	 	 	2008	 	
Net (loss) income attributable to Arbor Realty Trust, Inc., GAAP basis	 	$	(4,253,738	)	 	$	12,704,792	 	
Add:	 	 	 	 	 	 	 	 	
Noncontrolling interest in operating partnership	 	 	—	 	 	 	2,333,290	 	
Depreciation — real estate owned	 	 	283,022	 	 	 	—	 	
Depreciation — investment in equity affiliates	 	 	205,324	 	 	 	—	 	
 	 	 	 	 	 	 	
Funds from operations (“FFO”)	 	$	(3,765,392	)	 	$	15,038,082	 	

Diluted FFO per common share	 	$	(0.15	)	 	$	0.62	 	
 	 	 	 	 	 	 	
Diluted weighted average shares outstanding	 	 	25,142,410	 	 	 	24,403,381	 	
 	 	 	 	 	 	 	
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Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and real estate values. The primary market risks that we are exposed to are real estate risk and interest rate risk.
Market Conditions
          We are subject to market changes in the debt and secondary mortgage markets. These markets are currently experiencing disruptions, which could have a short-term adverse impact on our earnings and financial condition.
          Current conditions in the debt markets include reduced liquidity and increased risk adjusted premiums. These conditions may increase the cost and reduce the availability of debt. We attempt to mitigate the impact of debt market disruptions by obtaining adequate debt facilities from a variety of financing sources. There can be no assurance, however, that we will be successful in these efforts, that such debt facilities will be adequate or that the cost of such debt facilities will be at similar terms.
          The secondary mortgage markets are also currently experiencing disruptions resulting from reduced investor demand for collateralized debt obligations and increased investor yield requirements for these obligations. In light of these conditions, we currently expect to finance our loan and investment portfolio with our current capital and debt facilities.
Real Estate Risk
          Commercial mortgage assets may be viewed as exposing an investor to greater risk of loss than residential mortgage assets since such assets are typically secured by larger loans to fewer obligors than residential mortgage assets. Multi-family and commercial property values and net operating income derived from such properties are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, events such as natural disasters including hurricanes and earthquakes, acts of war and/or terrorism (such as the events of September 11, 2001) and others that may cause unanticipated and uninsured performance declines and/or losses to us or the owners and operators of the real estate securing our investment; national, regional and local economic conditions (which may be adversely affected by industry slowdowns and other factors); local real estate conditions (such as an oversupply of housing, retail, industrial, office or other commercial space); changes or continued weakness in specific industry segments; construction quality, construction delays, construction cost, age and design; demographic factors; retroactive changes to building or similar codes; and increases in operating expenses (such as energy costs). In the event net operating income decreases, a borrower may have difficulty repaying our loans, which could result in losses to us. In addition, decreases in property values reducing the value of collateral, and a lack of liquidity in the market, could reduce the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses. Even when the net operating income is sufficient to cover the related property’s debt service, there can be no assurance that this will continue to be the case in the future.
Interest Rate Risk
          Interest rate risk is highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political considerations and other factors beyond our control.
          Our operating results will depend in large part on differences between the income from our loans and our borrowing costs. Most of our loans and borrowings are variable-rate instruments, based on LIBOR. The objective of this strategy is to minimize the impact of interest rate changes on our net interest income. In addition, we have various fixed rate loans in our portfolio, which are financed with variable rate LIBOR borrowings. We have entered into various interest swaps (as discussed below) to hedge our exposure to interest rate risk on our variable rate LIBOR borrowings as it relates to our fixed rate loans. Many of our loans and borrowings are subject to various interest rate floors. As a result, the impact of a change in interest rates may be different on our interest income than it is on our interest expense.
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          Based on our loans, securities held-to-maturity and liabilities as of March 31, 2009, and assuming the balances of these loans, securities and liabilities remain unchanged for the subsequent twelve months, a 0.5% increase in LIBOR would decrease our annual net income and cash flows by approximately $2.3 million. This is primarily due to various interest rate floors that are in effect at a rate that is above a 0.5% increase in LIBOR which would limit the effect of a 0.5% increase, and increased expense on variable rate debt, partially offset by our interest rate swaps that effectively convert a portion of the variable rate LIBOR based debt, as it relates to certain fixed rate assets, to a fixed basis that is not subject to a 0.5% increase. Based on the loans, securities held-to-maturity and liabilities as of March 31, 2009, and assuming the balances of these loans, securities and liabilities remain unchanged for the subsequent twelve months, a 0.5% decrease in LIBOR would increase our annual net income and cash flows by approximately $2.3 million. This is primarily due to various interest rate floors which limit the effect of a decrease on interest income and decreased expense on variable rate debt, partially offset by our interest rate swaps that effectively converted a portion of the variable rate LIBOR based debt, as it relates to certain fixed rate assets, to a fixed basis that is not subject to a decrease.
          Based on the loans, securities held-to-maturity and liabilities as of December 31, 2008, and assuming the balances of these loans, securities and liabilities remain unchanged for the subsequent twelve months, a 0.5% increase in LIBOR would decrease our annual net income and cash flows by approximately $2.6 million. This is primarily due to various interest rate floors that are in effect at a rate that is above a 0.5% increase in LIBOR which would limit the effect of a 0.5% increase, and increased expense on variable rate debt, partially offset by our interest rate swaps that effectively convert a portion of the variable rate LIBOR based debt, as it relates to certain fixed rate assets, to a fixed basis that is not subject to a 0.5% increase. Based on the loans, securities held-to-maturity and liabilities as of December 31, 2008, and assuming the balances of these loans, securities and liabilities remain unchanged for the subsequent twelve months, a 0.5% decrease in LIBOR would increase our annual net income and cash flows by approximately $1.8 million. This is primarily due to various interest rate floors which limit the effect of a decrease on interest income and decreased expense on variable rate debt, partially offset by our interest rate swaps that effectively converted a portion of the variable rate LIBOR based debt, as it relates to certain fixed rate assets, to a fixed basis that is not subject to a decrease.
          In the event of a significant rising interest rate environment and/or economic downturn, defaults could increase and result in credit losses to us, which could adversely affect our liquidity and operating results. Further, such delinquencies or defaults could have an adverse effect on the spreads between interest-earning assets and interest-bearing liabilities.
          In connection with our CDOs described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” we entered into interest rate swap agreements to hedge the exposure to the risk of changes in the difference between three-month LIBOR and one-month LIBOR interest rates. These interest rate swaps became necessary due to the investor’s return being paid based on a three-month LIBOR index while the assets contributed to the CDOs are yielding interest based on a one-month LIBOR index.
          We had ten of these interest rate swap agreements outstanding that have combined notional values of $1.3 billion at both March 31, 2009 and December 31, 2008. The market value of these interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. If there were a 50 basis point increase in forward interest rates as of March 31, 2009 and December 31, 2008, the value of these interest rate swaps would have decreased by approximately $0.1 million for both periods. If there were a 50 basis point decrease in forward interest rates as of March 31, 2009 and December 31, 2008 the value of these interest rate swaps would have increased by approximately $0.1 million for both periods.
          We have also entered into various interest rate swap agreements in connection with the issuance of variable rate junior subordinate notes. These swaps have total notional values of $236.5 million as of March 31, 2009 and December 31, 2008. The market value of these interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. If there had been a 50 basis point increase in forward interest rates as of March 31, 2009 and December 31, 2008, the fair market value of these interest rate swaps would have increased by approximately $3.0 million and $3.3 million, respectively. If there were a 50 basis point decrease in forward interest rates as of March 31, 2009 and December 31, 2008, the fair market value of these interest rate swaps would have decreased by approximately $3.1 million and $3.4 million, respectively.
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          We also have interest rate swap agreements outstanding to hedge current and outstanding LIBOR based debt relating to certain fixed rate loans within our portfolio. We had 33 of these interest rate swap agreements outstanding that have a combined notional value of $657.6 million as of March 31, 2009 compared to 33 interest rate swap agreements outstanding with combined notional values of $689.9 million as of December 31, 2008. The fair market value of these interest rate swaps is dependent upon existing market interest rates and swap spreads, which change over time. If there had been a 50 basis point increase in forward interest rates as of March 31, 2009 and December 31, 2008, the fair market value of these interest rate swaps would have increased by approximately $13.5 million and $15.7 million, respectively. If there were a 50 basis point decrease in forward interest rates as of March 31, 2009 and December 31, 2008, the fair market value of these interest rate swaps would have decreased by approximately $13.9 million and $16.2 million, respectively.
          Certain of our interest rate swaps, which are designed to hedge interest rate risk associated with a portion of our loans and investments, could require the funding of additional cash collateral for changes in the market value of these swaps. Due to the prolonged volatility in the financial markets that began in 2007, the value of these interest rate swaps have declined substantially. As a result, at March 31, 2009 and December 31, 2008, we funded approximately $43.7 million and $46.5 million, respectively, in cash related to these swaps. If we continue to experience significant changes in the outlook of interest rates, these contracts could continue to decline in value, which would require additional cash to be funded. However, at maturity the value of these contracts return to par and all cash will be recovered. If we do not have available cash to meet these requirements, this could result in the early termination of these interest rate swaps, leaving us exposed to interest rate risk associated with these loans and investments, which could adversely impact our financial condition.
          Our hedging transactions using derivative instruments also involve certain additional risks such as counterparty credit risk, the enforceability of hedging contracts and the risk that unanticipated and significant changes in interest rates will cause a significant loss of basis in the contract. The counterparties to our derivative arrangements are major financial institutions with high credit ratings with which we and our affiliates may also have other financial relationships. As a result, we do not anticipate that any of these counterparties will fail to meet their obligations. There can be no assurance that we will be able to adequately protect against the foregoing risks and will ultimately realize an economic benefit that exceeds the related amounts incurred in connection with engaging in such hedging strategies.
          We utilize interest rate swaps to limit interest rate risk. Derivatives are used for hedging purposes rather than speculation. We do not enter into financial instruments for trading purposes.
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Table of Contents
Item 4. CONTROLS AND PROCEDURES
          Our management, with the participation of our chief executive officer and chief financial officer, has evaluated the effectiveness of our “disclosure controls and procedures” (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon such evaluation, our chief executive officer and chief financial officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports we file or submit under the Exchange Act and are effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act of 1934 is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure.
          There have not been any changes in our internal controls over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
          None.
Item 1A. RISK FACTORS
          There have been no material changes to the risk factors set forth in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2008.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
          None.
Item 3. DEFAULTS UPON SENIOR SECURITIES
          None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
          None.
Item 5. OTHER INFORMATION
           In May 2009, the Company exchanged $247.1 million of its outstanding trust preferred securities, consisting of $239.7 million of junior subordinated notes issued to third party investors and $7.4 million of common equity issued to the Company in exchange for $268.4 million of newly issued unsecured junior subordinated notes, representing 112% of the original face amount. The new notes bear a fixed interest rate of 0.50% per annum for the period commencing February 1, 2009 and ending April 30, 2012 (the “Modification Period”), and then interest is to be paid at the rates set forth in the existing trust agreements until maturity, equal to three month LIBOR plus 2.90%. The Company paid a transaction fee of approximately $1.4 million to the issuers of the junior subordinated notes related to this restructuring. The Company is currently evaluating the effect of this transaction on its Consolidated Financial Statements.
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Item 6. EXHIBITS
     In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Arbor or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
     Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Arbor may be found elsewhere in this report and Arbor’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
 	 	 	 	 	
Exhibit	 	 	
Number	 	Description	
 	3.1	 	 	Articles of Incorporation of Arbor Realty Trust, Inc. *	
 	 	 	 	 	
 	3.2	 	 	Articles of Amendment to Articles of Incorporation of Arbor Realty Trust, Inc.▲	
 	 	 	 	 	
 	3.3	 	 	Articles Supplementary of Arbor Realty Trust, Inc. *	
 	 	 	 	 	
 	3.4	 	 	Amended and Restated Bylaws of Arbor Realty Trust, Inc. ▲▲	
 	 	 	 	 	
 	4.1	 	 	Form of Certificate for Common Stock. *	
 	 	 	 	 	
 	10.1	 	 	Amended and Restated Management Agreement, dated January 18, 2005, by and among Arbor Realty Trust, Inc., Arbor Commercial Mortgage, LLC, Arbor Realty Limited Partnership and Arbor Realty SR, Inc. †	
 	 	 	 	 	
 	10.2	 	 	Services Agreement, dated July 1, 2003, by and among Arbor Realty Trust, Inc., Arbor Commercial Mortgage, LLC and Arbor Realty Limited Partnership. *	
 	 	 	 	 	
 	10.3	 	 	Non-Competition Agreement, dated July 1, 2003, by and among Arbor Realty Trust, Inc., Arbor Realty Limited Partnership and Ivan Kaufman. *	
 	 	 	 	 	
 	10.4	 	 	Second Amended and Restated Agreement of Limited Partnership of Arbor Realty Limited Partnership, dated January 18, 2005, by and among Arbor Commercial Mortgage, LLC, Arbor Realty Limited Partnership, Arbor Realty LPOP, Inc. and Arbor Realty GPOP, Inc. †	
 	 	 	 	 	
 	10.5	 	 	Registration Rights Agreement, dated July 1, 2003, between Arbor Realty Trust, Inc. and Arbor Commercial Mortgage, LLC. *	
 	 	 	 	 	
 	10.6	 	 	Pairing Agreement, dated July 1, 2003, by and among Arbor Realty Trust, Inc., Arbor Commercial Mortgage, LLC, Arbor Realty Limited Partnership, Arbor Realty LPOP, Inc. and Arbor Realty GPOP, Inc. *	
 	 	 	 	 	
 	10.7	 	 	2003 Omnibus Stock Incentive Plan, (as amended and restated on July 29, 2004). **	
 	 	 	 	 	
 	10.8	 	 	Amendment No. 1 to the 2003 Omnibus Stock Incentive Plan. ‡‡	
 	 	 	 	 	
 	10.9	 	 	Form of Restricted Stock Agreement. *	
 	 	 	 	 	
 	10.10	 	 	Benefits Participation Agreement, dated July 1, 2003, between Arbor Realty Trust, Inc. and Arbor Management, LLC. *	
 	 	 	 	 	
 	10.11	 	 	Form of Indemnification Agreement. *	
 	 	 	 	 	
 	10.12	 	 	Structured Facility Warehousing Credit and Security Agreement, dated July 1, 2003, between Arbor Realty Limited Partnership and Residential Funding Corporation. *	
 	 	 	 	 	
 	10.13	 	 	Amended and Restated Loan Purchase and Repurchase Agreement, dated July 12, 2004, by and among	
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Exhibit	 	 	
Number	 	Description	
 	 	 	 	Arbor Realty Funding LLC, as seller, Wachovia Bank, National Association, as purchaser, and Arbor Realty Trust, Inc., as guarantor. ***	
 	 	 	 	 	
 	10.14	 	 	Master Repurchase Agreement, dated as of November 18, 2002, by and between Nomura Credit and Capital, Inc. and Arbor Commercial Mortgage, LLC. *	
 	 	 	 	 	
 	10.15	 	 	Revolving Credit Facility Agreement, dated as of December 7, 2004, by and between Arbor Realty Trust, Inc., Arbor Realty Limited Partnership and Watershed Administrative LLC and the lenders named therein. †	
 	 	 	 	 	
 	10.16	 	 	Indenture, dated January 19, 2005, by and between Arbor Realty Mortgage Securities Series 2004-1, Ltd., Arbor Realty Mortgage Securities Series 2004-1 LLC, Arbor Realty SR, Inc. and LaSalle Bank National Association. †	
 	 	 	 	 	
 	10.17	 	 	Indenture, dated January 11, 2006, by and between Arbor Realty Mortgage Securities Series 2005-1, Ltd., Arbor Realty Mortgage Securities Series 2005-1 LLC, Arbor Realty SR, Inc. and LaSalle Bank National Association. ‡	
 	 	 	 	 	
 	10.18	 	 	Master Repurchase Agreement, dated as of October 26, 2006, by and between Column Financial, Inc. and Arbor Realty SR, Inc. and Arbor TRS Holding Company Inc., as sellers, Arbor Realty Trust, Inc., Arbor Realty Limited Partnership, as guarantors, and Arbor Realty Mezzanine LLC. ‡‡‡	
 	 	 	 	 	
 	10.19	 	 	Note Purchase Agreement, dated January 19, 2005, by and between Arbor Realty Mortgage Securities Series 2004-1, Ltd., Arbor Realty Mortgage Securities Series 2004-1 LLC and Wachovia Capital Markets, LLC. †	
 	 	 	 	 	
 	10.20	 	 	Note Purchase Agreement, dated January 11, 2006, by and between Arbor Realty Mortgage Securities Series 2005-1, Ltd., Arbor Realty Mortgage Securities Series 2005-1 LLC and Wachovia Capital Markets, LLC. ‡	
 	 	 	 	 	
 	10.21	 	 	Indenture, dated December 14, 2006, by and between Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty Mortgage Securities Series 2006-1 LLC, Arbor Realty SR, Inc. and Wells Fargo Bank, National Association.  w	
 	 	 	 	 	
 	10.22	 	 	Note Purchase and Placement Agreement, dated December 14, 2006, by and between Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty Mortgage Securities Series 2006-1 LLC and Wachovia Capital Markets, LLC and Credit Suisse Securities (USA) LLC.  w	
 	 	 	 	 	
 	10.23	 	 	Note Purchase Agreement, dated December 14, 2006, by and between Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty Mortgage Securities Series 2006-1 LLC and Wells Fargo Bank, National Association.  w	
 	 	 	 	 	
 	10.24	 	 	Master Repurchase Agreement, dated as of March 30, 2007, by and between Variable Funding Capital Company LLC, as purchaser, Wachovia Bank, National Association, as swingline purchaser, Wachovia Capital Markets, LLC, as deal agent, Arbor Realty Funding LLC, Arbor Realty Limited Partnership and ARSR Tahoe, LLC, as sellers, Arbor Realty Trust, Inc., Arbor Realty Limited Partnership and Arbor Realty SR, Inc., as guarantors.  ww	
 	 	 	 	 	
 	10.25	 	 	Credit Agreement, dated November 6, 2007, by and between Arbor Realty Funding, LLC, ARSR Tahoe, LLC, Arbor Realty Limited Partnership, and ART 450 LLC, as Borrowers, Arbor Realty Trust, Inc., Arbor Realty Limited Partnership, and Arbor Realty SR, Inc., as Guarantors, and Wachovia Bank, National Association, as Administrative Agent.  www	
 	 	 	 	 	
 	10.26	 	 	Second Amendment, dated June 18, 2008, to the Amended and Restated Management Agreement by and among Arbor Realty Trust, Inc., Arbor Commercial Mortgage, LLC, Arbor Realty Limited Partnership and Arbor Realty SR, Inc.  v	
 	 	 	 	 	
 	10.27	 	 	Amendment No. 2, dated March 20, 2008, to the Arbor Realty Trust, Inc. 2003 Omnibus Stock Incentive Plan.  v	
 	 	 	 	 	
 	10.28	 	 	Amendment No. 3, dated May 21, 2008, to the Arbor Realty Trust, Inc. 2003 Omnibus Stock Incentive Plan. v	
 	 	 	 	 	
 	10.29	 	 	Equity Placement Program Sales Agreement, dated August 15, 2008, between Arbor Realty Trust, Inc. and JMP Securities LLC.  vv	
 	 	 	 	 	
 	10.30	 	 	Junior Subordinated Indenture, dated May 6, 2009, between Arbor Realty SR, Inc. and The Bank of New York Mellon Trust Company, National Association, as Trustee relating to $29,400,000 aggregate principal amount of Junior Subordinated Notes due 2034.	
 	 	 	 	 	
 	10.31	 	 	Junior Subordinated Indenture, dated May 6, 2009, between Arbor Realty SR, Inc. and The Bank of New York Mellon Trust Company, National Association, as Trustee relating to $168,000,000 aggregate principal amount of Junior Subordinated Notes due 2034.	
 	 	 	 	 	
 	10.32	 	 	Junior Subordinated Indenture, dated May 6, 2009, among Arbor Realty SR, Inc. Arbor Realty Trust, Inc., as Guarantor, and Wilmington Trust Company, as Trustee, relating to $21,224,000 aggregate principal amount of Junior Subordinated Notes due 2035.	
 	 	 	 	 	
 	10.33	 	 	Junior Subordinated Indenture, dated May 6, 2009, among Arbor Realty SR, Inc. Arbor Realty Trust, Inc., as Guarantor, and Wilmington Trust Company, as Trustee, relating to $2,632,000 aggregate principal amount of Junior Subordinated Notes due 2036.	
 	 	 	 	 	
 	10.34	 	 	Junior Subordinated Indenture, dated May 6, 2009, among Arbor Realty SR, Inc. Arbor Realty Trust, Inc., as Guarantor, and Wilmington Trust Company, as Trustee, relating to $47,180,000 aggregate principal amount of Junior Subordinated Notes due 2037.	
 	 	 	 	 	
 	10.35	 	 	Exchange Agreement, dated May 6, 2009, among Arbor Realty Trust, Inc., Arbor Realty SR, Inc., Kodiak CDO II, Ltd., Attentus CDO I, Ltd. and Attentus CDO III, Ltd.	
 	 	 	 	 	
 	10.36	 	 	Exchange Agreement, dated May 6, 2009, among Arbor Realty SR, Inc., Arbor Realty Trust, Inc., Taberna Preferred Funding I, Ltd., Taberna Preferred Funding II, Ltd., Taberna Preferred Funding III, Ltd., Taberna Preferred Funding IV, Ltd., Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VII, Ltd. and Taberna Preferred Funding VIII, Ltd.	
 	 	 	 	 	
 	31.1	 	 	Certification of Chief Executive Officer pursuant to Exchange Act Rule 13a-14.	
 	 	 	 	 	
 	31.2	 	 	Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14.	
 	 	 	 	 	
 	32.1	 	 	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
 	 	 	 	 	
 	32.2	 	 	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.	
59

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     Exhibit Index

▲	 	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2007.	
 	 	 	
▲▲	 	Incorporated by reference to Exhibit 99.2 of the Registrant’s Current Report on Form 8-K (No. 001-32136) which was filed with the Securities and Exchange Commission on December 11, 2007.	
 	 	 	
*	 	Incorporated by reference to the Registrant’s Registration Statement on Form S-11 (Registration No. 333-110472), as amended. Such registration statement was originally filed with the Securities and Exchange Commission on November 13, 2003.	
 	 	 	
**	 	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004.	
 	 	 	
***	 	Incorporated by reference to the Registrant’s Quarterly Report of Form 10-Q for the quarter ended September 30, 2004.	
 	 	 	
†	 	Incorporated by reference to the Registrant’s Annual Report of Form 10-K for the year ended December 31, 2004.	
 	 	 	
‡	 	Incorporated by reference to the Registrant’s Annual Report of Form 10-K for the year ended December 31, 2005.	
 	 	 	
‡‡	 	Incorporated by reference to the Registrant’s Quarterly Report of Form 10-Q for the quarter ended June 30, 2005.	
 	 	 	
‡‡‡	 	Incorporated by reference to the Registrant’s Quarterly Report of Form 10-Q for the quarter ended September 30, 2006.	
 	 	 	
w	 	Incorporated by reference to the Registrant’s Annual Report of Form 10-K for the year ended December 31, 2006.	
 	 	 	
ww	 	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2007.	
 	 	 	
www	 	Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.	
 	 	 	
v	 	Incorporated by reference to the Registrant’s Quarterly Report of Form 10-Q for the quarter ended June 30, 2008.	
 	 	 	
vv	 	Incorporated by reference to Exhibit 1.1 of the Registrant’s Current Report on Form 8-K (No. 001-32136) which was filed with the Securities and Exchange Commission on August 15, 2008.	
     In reviewing the agreements included as exhibits to this Quarterly Report on Form 10-Q, please remember they are included to provide you with information regarding their terms and are not intended to provide any other factual or disclosure information about Arbor or the other parties to the agreements. The agreements contain representations and warranties by each of the parties to the applicable agreement. These representations and warranties have been made solely for the benefit of the other parties to the applicable agreement and:
• should not in all instances be treated as categorical statements of fact, but rather as a way of allocating the risk to one of the parties if those statements prove to be inaccurate;
• have been qualified by disclosures that were made to the other party in connection with the negotiation of the applicable agreement, which disclosures are not necessarily reflected in the agreement;
• may apply standards of materiality in a way that is different from what may be viewed as material to you or other investors; and
• were made only as of the date of the applicable agreement or such other date or dates as may be specified in the agreement and are subject to more recent developments.
Accordingly, these representations and warranties may not describe the actual state of affairs as of the date they were made or at any other time. Additional information about Arbor may be found elsewhere in this report and Arbor’s other public filings, which are available without charge through the SEC’s website at http://www.sec.gov.
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SIGNATURES
     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized:
 	 	 	 	 	 	 	
 	 	ARBOR REALTY TRUST, INC.	
 	 	(Registrant)	
 	 	 	 	 	 	 	
 	 	By:	 	/s/ Ivan Kaufman	 	 	
 	 	 	 	 	 	 	
 	 	Name: Ivan Kaufman	
 	 	Title: Chief Executive Officer	
 	 	 	 	 	 	 	
 	 	By:	 	/s/ Paul Elenio	 	 	
 	 	 	 	 	 	 	
 	 	Name: Paul Elenio	
 	 	Title: Chief Financial Officer	
Date: May 11, 2009
61

Exhibit 10.30
EXECUTION VERSION
JUNIOR SUBORDINATED INDENTURE
between
ARBOR REALTY SR, INC.
AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL
ASSOCIATION,
as trustee
 
Dated as of May 6, 2009
 
Indenture I

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

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

 
 	 	 	 	 	
 	 	Page	 	
SECTION 10.4 Calculation Agent	 	 	54	 	
SECTION 10.5 Additional Indebtedness	 	 	55	 	
SECTION 10.6 Additional Covenants	 	 	55	 	
SECTION 10.7 Waiver of Covenants	 	 	57	 	
SECTION 10.8 Treatment of Securities	 	 	57	 	
SECTION 10.9 Inspection Rights	 	 	57	 	
 	 	 	 	 	
ARTICLE XI Redemption of Securities	 	 	57	 	
SECTION 11.1 Optional Redemption	 	 	57	 	
SECTION 11.2 Special Event Redemption	 	 	58	 	
SECTION 11.3 Election to Redeem; Notice to Trustee	 	 	58	 	
SECTION 11.4 Selection of Securities to be Redeemed	 	 	58	 	
SECTION 11.5 Notice of Redemption	 	 	59	 	
SECTION 11.6 Deposit of Redemption Price	 	 	59	 	
SECTION 11.7 Payment of Securities Called for Redemption	 	 	60	 	
 	 	 	 	 	
ARTICLE XII Subordination of Securities	 	 	60	 	
SECTION 12.1 Securities Subordinate to Senior Debt	 	 	60	 	
SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	60	 	
SECTION 12.3 Payment Permitted If No Default	 	 	62	 	
SECTION 12.4 Subrogation to Rights of Holders of Senior Debt	 	 	62	 	
SECTION 12.5 Provisions Solely to Define Relative Rights	 	 	63	 	
SECTION 12.6 Trustee to Effectuate Subordination	 	 	63	 	
SECTION 12.7 No Waiver of Subordination Provisions	 	 	63	 	
SECTION 12.8 Notice to Trustee	 	 	63	 	
SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	64	 	
SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt	 	 	64	 	
SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights	 	 	64	 	
SECTION 12.12 Article Applicable to Paying Agents	 	 	65	 	
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SCHEDULES
Schedule A  –  Determination of LIBOR
Exhibit A  –  Form of Officer’s Financial Certificate
Exhibit B — Form of Officers’ Certificate Under Section 10.3
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     This Junior Subordinated Indenture (the “Indenture”), dated as of May 6, 2009, between ARBOR REALTY SR, INC.,  a Maryland corporation (the  “Company” ), and  THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association, as Trustee (in such capacity, the “Trustee” ).
Recitals of the Company
     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the  “Securities” ) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
     NOW, THEREFORE, this Indenture Witnesseth:
     For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions of General Application
     SECTION 1.1 Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I;
     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
     (f) a reference to the singular includes the plural and vice versa; and
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     (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.
     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
     “Affiliate” means in relation to any Person, any other Person (a) that is directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such first Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total voting power of the first Person or of rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or more of whose Equity Interests or total voting power is directly or indirectly beneficially owned by the first Person or such first Person has rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of such Person, or (d) any officer or director of such Person.
     “Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
     “Attentus Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) in original principal amount of Junior Subordinated Notes due 2035.
     “Attentus Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Two Million Six Hundred Thirty Two Thousand Dollars ($2,632,000) in original principal amount of Junior Subordinated Notes due 2036.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
     “Board of Directors” means the board of directors of the Company or any duly authorized committee of that board.
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     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
     “Control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis Street, 16 th  Floor, Houston, Texas 77019 Attn: Global Corporate Trust. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone no.:(713) 483-6029.
     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of
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another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
     “Defaulted Interest” has the meaning specified in Section 3.1.
     “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
     “Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by and among the Company and the parties named therein, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.
     “GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
     “Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or
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instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Security is registered in the Securities Register.
     “Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Payment Date” means June 30, September 30, December 30 and March 30 of each year during the term of this Indenture.
     “Interest Period” means the period commencing on, and including, an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date; provided, however, that the initial Interest Period shall commence on May 6, 2009.
     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
     “Kodiak” has the meaning specified in Section 5.16.
     “Kodiak/Attentus Indenture III” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) in original principal amount of Junior Subordinated Notes due 2037.
     “LIBOR” has the meaning specified in Schedule A.
     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
     “Maturity,” means when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
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     “Modification Period” means the period commencing as of May 6, 2009 and continuing through, but excluding, the Modification Period Termination Date.
     “Modification Period Termination Date” means the earliest of (a) March 30, 2012, (b) the first Interest Payment Date occurring after the Company has elected to terminate the Modification Period in accordance with the terms of Section 3.1(g), (c) the effective date set forth in  Section 10.5 , if applicable, and (d) the effective date set forth in  Section 10.6 , if applicable.
     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.
     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.
     “Operative Documents” means the Indenture, the Securities and the Parent Guarantee, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Security.
     “Original Kodiak Indentures” has the meaning specified in Section 5.16.
     “Other Taxes” has the meaning set forth in Section 3.11(c).
     “Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
     (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
     (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities
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are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company, if any, or any other obligor upon the Securities, if any, or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.
     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
     “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or any government or agency or political subdivision thereof, or any other entity of whatever nature.
     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
     “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under  Section 3.6  in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
     “Reference Banks” has the meaning specified in Schedule A.
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     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.
     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.
     “Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5 .
     “Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.
     “Special Event” means the occurrence of a Tax Event.
     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
     “Special Redemption Price” has the meaning set forth in Section 11.2.
     “Stated Maturity” means March 30, 2034.
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     “Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent 50% of the ownership interests having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.
     “Taberna Capital Management, LLC” means Taberna Capital Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “Taberna Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which Company issued One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of Junior Subordinated Notes.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.
     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
     SECTION 1.2 Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that
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in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.
     (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to  Section 10.3 ) shall include:
     (i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
     SECTION 1.3 Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force
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and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
     SECTION 1.4 Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this  Section 1.4 .
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Securities shall be proved by the Securities Register.
     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled
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to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in  Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in  Section 5.2 , (iii) any request to institute proceedings referred to in  Section 5.7(b ) or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in  Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 th ) day after the applicable record date.
     SECTION 1.5 Notices, Etc. to Trustee and Company.
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     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
     (i) The Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or
     (ii) The Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention:  John Natalone, or at any other address previously furnished in writing to the Trustee by the Company.
     (b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.
     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.
     SECTION 1.6 Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, (if any) and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given
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pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     SECTION 1.7 Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
     SECTION 1.8 Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under  Article VIII  and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
     SECTION 1.9 Separability Clause.
     If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
     SECTION 1.10 Benefits of Indenture.
     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.
     SECTION 1.11 Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     SECTION 1.12 Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY
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BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
     SECTION 1.13 Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
     SECTION 1.14 Shareholder Communications Act
     (a) With respect to securities under and as defined in the Shareholders Communications Act of 1985 (the “SCA”) issued in the United States, the SCA requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (i) the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA) with respect to the securities. Under the SCA, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’ request. The SCA defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee. Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”
     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.
     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a Holder, Trustee shall release the name, address and securities position to the Company, if the Company requests such information pursuant to the SCA for the specific purpose of direct communications between the Company and such Holder. With respect to securities issued
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outside of the United States, if applicable, information shall be released to issuers only if required by law or regulation of the particular country in which the securities are located.
ARTICLE II
Security Forms
     SECTION 2.1 Form of Security.
     Any Security issued hereunder shall be in substantially the following form:
Arbor Realty SR, Inc.
Junior Subordinated Note due 2034

No.                                        	 	$[                    ]	
Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,”  which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to                       , the principal sum of [                                          ] ($[                      ]) or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture, on March 30, 2034. The Company further promises to pay interest on said principal sum from May 6, 2009, or from the most recent date on and to which interest has been paid or duly provided for, quarterly in arrears on June 30, September 30, December 30 and March 30, of each year, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 3.75% per annum until the principal hereof is paid or duly provided for or made available for payment;  provided, further , that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 3.75% per annum (in each case, to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
     Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable for any Interest Period shall be computed on the basis of a 360-
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day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), between the Company and The Bank of New York Mellon Trust Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any
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successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after March 30, 2010 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of  Article XI  of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
     The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
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     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
     This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6 day of May, 2009.
 	 	 	 	 	
 	ARBOR REALTY SR, INC.
 	 	
 	By:  	 	 	
 	Name:  	 	 	
 	Title:  	 	 	
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     SECTION 2.2 Restricted Legend.
     (a) Any Security issued hereunder shall bear a legend in substantially the following form:
“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT” ), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT
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(A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( “ERISA” ), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE  “CODE” ) (EACH A “PLAN” ), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE. ”
     (b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as
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may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.
     SECTION 2.3 Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the following form:
     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.
     Dated:                                         
 	 	 	 	 	
 	THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION , not in its individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	 	Authorized signatory 	 	

     SECTION 2.4 Temporary Securities.
     (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
     (b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
     SECTION 2.5 Definitive Securities.
     The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination
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of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
ARTICLE III
The Securities
     SECTION 3.1 Payment of Principal and Interest.
     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during the Modification Period and thereafter at a variable rate of LIBOR plus 3.75% per annum until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus 3.75% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made legally available for payment.
     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
     (c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a  “Special Record Date” ), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons
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entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
     (d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.
     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in  Article II  hereof
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shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. The Company shall promptly notify the Trustee of any such modifications, which notice shall identify with particularity the necessary changes to the form of security set forth in Article II. The Company agrees to cooperate with all reasonable requests of the Trustee and the Holders in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to the Securities.
     (g) The Company may, at its option from time to time, upon not less than thirty (30) days prior written notice to the Trustee (with a copy to Chuck Logan at The Bank of New York Mellon Global Trust, N.A., 525 William Penn Boulevard, 8 th  Floor, Pittsburg, Pennsylvania 15259, Facsimile: (412) 236-1141) and the Holders, elect to terminate the Modification Period.
     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
     SECTION 3.2 Denominations.
     The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
     SECTION 3.3 Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Twenty Nine Million Four Hundred Thousand Dollars ($29,400,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that:  (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be
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registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.
     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
     (c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in  Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
     (d) Each Security shall be dated the date of its authentication.
     SECTION 3.4 Global Securities.
     (a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the
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Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial interests as Holders.
     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this  Article III  or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
     (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
     (e) Reserved.
     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
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     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
     (h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
     SECTION 3.5 Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the  “Securities Registrar” ), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of  Article VI  shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
     (c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written
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instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g):  (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to  Article XI  and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
     (h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.
     SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
     (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the
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Company shall execute and upon its receipt of a Company Order written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
     SECTION 3.7 Persons Deemed Owners.
     The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
     SECTION 3.8 Cancellation.
     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this  Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
     SECTION 3.9 Reserved.
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     SECTION 3.10 Reserved.
     SECTION 3.11 Agreed Tax Treatment.
          (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless otherwise required by law, to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
          (b) Intentionally Omitted.
          (c) The Company shall pay to the relevant taxing authority in accordance with applicable law, and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Securities or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Indenture or the Securities (hereinafter referred to as “ Other Taxes ”).
          (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any jurisdiction on amounts payable under this  Section 3.11 , imposed on or paid by any such Holder and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date any such Holder makes written demand therefor.
          (e) Intentionally Omitted.
     SECTION 3.12 CUSIP Numbers.
     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE IV
Satisfaction and Discharge
     SECTION 4.1 Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this  Section 4.1 ) and the Trustee, on demand of and at
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the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
     (a) either
     (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
     (ii) all such Securities not theretofore delivered to the Trustee for cancellation
     (A) have become due and payable, or
     (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or
     (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under  Section 6.11  and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this  Section 4.1 , the obligations of the Trustee under  Section 4.2  and Section 10.2(e)  shall survive.
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     SECTION 4.2 Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with  Section 3.1 , either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this  Section 4.2  shall not be subject to the claims of holders of Senior Debt under  Article XII .
ARTICLE V
Remedies
     SECTION 5.1 Events of Default.
     “Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days;
     (b) default in the payment of the principal of or any premium on any Security at its Maturity;
     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any covenant or warranty of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;
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     (e) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action;
     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;
     (g) default in the performance or breach of any covenant or warranty of the Company set forth in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten (10) days;
     (h) any Event of Default under any of the Taberna Indenture II or the Attentus Indenture I, Attentus Indenture II; or Kodiak/Attentus Indenture III;
     (i) Intentionally Omitted.
     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement that has a material adverse effect on the Company’s ability to make payments on the Securities or the Guarantor’s ability to make any Parent Guarantee Payments (as defined in the Parent Guarantee Agreement), or that has a material adverse effect on the value of the Securities, and the continuance of any such default or breach for a period of thirty (30) days after either (i) the Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time period, or (ii) after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
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     (b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this  Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:
     (i) the Company has paid or deposited with the Trustee a sum sufficient to pay:
     (A) all overdue installments of interest on all Securities,
     (B) any accrued Additional Interest on all Securities,
     (C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and
     (ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in  Section 5.13 ;
     No such rescission shall affect any subsequent default or impair any right consequent thereon.
     SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
     (a) The Company covenants that if:
     (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days, or
     (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
     the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under  Section 6.6 .
     (b) If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for
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the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.
     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
     SECTION 5.4 Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 .
     SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.
     All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to  Article XII  and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
     SECTION 5.6 Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
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     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;
     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;
     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
     FOURTH: The balance, if any, to the Person or Persons entitled thereto.
     SECTION 5.7 Limitation on Suits.
     Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
     it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
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     SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
     SECTION 5.9 Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.
     SECTION 5.10 Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
     SECTION 5.11 Delay or Omission Not Waiver.
     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this  Article V  or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.
     SECTION 5.12 Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with this Indenture,
     (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
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     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
     SECTION 5.13 Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
     (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
     (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.
     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
     SECTION 5.14 Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this  Section 5.14  shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
     SECTION 5.15 Waiver of Usury, Stay or Extension Laws.
     The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of,
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any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
     SECTION 5.16 OriginalKodiak Indentures Events of Default.
     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company shall not be deemed to be in default as a result of any payment default under that certain (a) Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b) hereof, together with any operative documents executed in connection therewith, collectively, the “ Original Kodiak Indentures ”); provided, however, that at such time as such Kodiak Indentures are terminated or all of the original preferred securities issued thereunder are exchanged by the holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or other securities, this  Section 5.16  shall be void and of no further force and effect.
ARTICLE VI
The Trustee
     SECTION 6.1 Corporate Trustee Required.
     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this  Section 6.1 , the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this  Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this  Article VI .
     SECTION 6.2 Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities;
     (iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law; and
     (iv) the Trustee shall not be liable for the failure to take any action with respect to any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h) unless and
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until there has been given to the Trustee and the Company by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 6.3 Notice of Defaults.
     Within thirty (30) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities. For the purpose of this  Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
     SECTION 6.4 Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the
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advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the
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absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;
     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the Trustee pursuant to this  Article VI  shall also be afforded such Paying Agent, Authenticating Agent, Securities Registrar and/or Calculation Agent.
     SECTION 6.5 May Hold Securities.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
     SECTION 6.6 Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities
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on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
     SECTION 6.7 Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under  Section 6.8 .
     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and the Company.
     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
     SECTION 6.8 Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring
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Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this  Article VI .
     SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this  Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9  to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
     SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.
     The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
     SECTION 6.11 Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to  Section 3.6 , and Securities so authenticated shall be entitled to the benefits
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of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this  Section 6.11  the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this  Section 6.11 .
     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this  Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this  Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
     (d) The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this  Section 6.11  in such amounts as the Company and the Authenticating Agent shall agree from time to time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned Indenture.
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Dated:	 	THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as Trustee	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	 	 	Authenticating Agent	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	 	 	Authorized Signatory	 	 	
ARTICLE VII
Holder’s Lists and Reports by Company
     SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
     (b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,
     in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
     SECTION 7.2 Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in  Section 7.1  and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in  Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of
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them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
     SECTION 7.3 Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with  Section 7.3(b)  hereof.
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii)  Taberna Capital Management, LLC, 450 Park Avenue, New York, New York  10022, Attn:  Raphael Licht or such other address as designated by Taberna Capital Management, LLC and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Taberna Capital Management, LLC.), a duly completed and executed certificate substantially and substantively in the form attached hereto as  Exhibit A , including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
     (c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “Commission” ) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval ( “EDGAR” ) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this  Section 7.3(c)  shall be solely for purposes of compliance with this  Section 7.3(c)  and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
     SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.
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     The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
     (a) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
     (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this  Article VIII  and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this  Section 8.1 .
     SECTION 8.2 Successor Company Substituted.
     (a) Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with  Section 8.1  and the execution and delivery to the Trustee of the supplemental indenture described in  Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.
     (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the
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Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX
Supplemental Indentures
     SECTION 9.1 Supplemental Indentures without Consent of Holders.
     Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
     (a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or
     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (c) to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders.
     SECTION 9.2 Supplemental Indentures with Consent of Holders.
     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
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     (i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.
     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
     SECTION 9.3 Execution of Supplemental Indentures.
     In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.
     SECTION 9.4 Effect of Supplemental Indentures.
     Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
     SECTION 9.5 Reference in Securities to Supplemental Indentures.
     Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form
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approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE X
Covenants
     SECTION 10.1 Payment of Principal, Premium, if any, and Interest.
     The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
     SECTION 10.2 Money for Security Payments to be Held in Trust.
     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
     (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of
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applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
     SECTION 10.3 Statement as to Compliance.
     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate (substantially in the form attached hereto as  Exhibit B ) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
     SECTION 10.4 Calculation Agent.
     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of  Schedule A  (the “Calculation Agent” ). The Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities at any time. If the Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in  Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each
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LIBOR Determination Date that either:  (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
     SECTION 10.5 Additional Indebtedness.
     (a) The Company shall be permitted to incur additional Debt (including convertible debt); provided, that, during the Modification Period any such additional Debt shall not be used, in whole or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of such election to the Holders within ten (10) days after such election and shall be deemed to have elected to terminate the Modification Period effective as of the first Interest Payment Date occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the Company inadvertently violates the terms hereof, then if the Company has not cured such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities within seven (7) days after such breach or violation, the Company shall be deemed to have elected to terminate the Modification Period effective nine (9) months after the incurrence of such Debt and such election shall not be deemed to constitute an Event of Default. The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to common or preferred stock or other Equity Interests.
     SECTION 10.6 Additional Covenants.
     (a) The Company covenants and agrees with each Holder of Securities that (i) during the Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank  pari passu  in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into while the Modification Period is not in effect prior to an Event of
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Default, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock upon substantially the same terms, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks  pari passu  with or junior to such stock), (F) with respect to the Taberna Indenture II, the Attentus Indenture I, the Attentus Indenture II, the Kodiak/Attentus Indenture III and the Original Kodiak Indentures or (G) any other dividends or distributions necessary in order for the Company to maintain its REIT status, provided that (x) such dividend or distributions shall be declared and paid in stock in an amount up to the maximum extent permitted by the Code or rules and regulations promulgated thereunder, with the balance payable in cash, and (y) the Company shall be permitted to increase its distributions from the minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one hundred percent (100%) of its taxable income and, with respect to this subsection (G), any violation of this subsection (G) shall not be an Event of Default unless the Company fails to cure to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities any such violation within seven (7) days after discovery thereof.
     (b) Intentionally omitted.
     (c) Notwithstanding the provisions of Section 10(a) the Company shall be permitted during the Modification Period to issue common or preferred shares of the Company’s stock (each, a “ New Stock Class ”) and to declare dividends upon such New Stock Class, provided that (i) such dividends are permitted to be declared without declaring or paying dividends upon or otherwise making payments upon any other Equity Interests (except to comply with the REIT status maintenance requirements described in  Section 10(a) ); (ii) the holders of such New Stock Class shall not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and (iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of the Company, then the Company may elect, and shall be deemed to have elected to, terminate the Modification Period effective nine (9) months after such repurchase or redemption. If the Company has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders and shall cure such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of which shall be deemed an election to terminate the Modification Period effective nine (9) months after such repurchase or redemption and such election shall not be deemed to constitute an Event of Default. So long as no Event of Default has occurred and is continuing, from and after the Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue common or preferred shares of the Company’s stock, declare or pay any dividends or distributions on, or redeem, purchase or
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otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests.
     SECTION 10.7 Waiver of Covenants.
     The Company may omit in any particular instance to comply with any covenant or condition contained in Sections 10.5 and 10.6  if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
     SECTION 10.8 Treatment of Securities.
     The Company will treat the Securities as indebtedness of the Company, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.
     SECTION 10.9 Inspection Rights.
     During the Modification Period, upon written notice from the Holders of a majority in aggregate principal amount of the Outstanding Securities at least five (5) Business Days in advance, the Company and Guarantor shall permit representatives appointed by the Holders the Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the books and records of account of the Company and Guarantor and its subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by such management representatives of the Company and its subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, either in person at the Company’s offices or telephonically, all at such reasonable times and intervals during normal business hours as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing the inspections provided for herein shall be limited to once per calendar quarter. Except to the extent (i) required by law, (ii) required by any court order, or any directive of a Governmental Authority, or (iii) that any such information is available or accessible in the public domain, the Holders shall maintain all information disclosed and/or copied in the course of any such inspection confidential in all respects, except that it may share such information with the Trustee, any collateral manager for the Holders, any other Holder and any of their respective counsel provided that such Person agrees to maintain the confidentially of such information.
ARTICLE XI
Redemption of Securities
     SECTION 11.1 Optional Redemption.
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     The Company may, at its option, on any Interest Payment Date, on or after March 30, 2010, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Optional Redemption Price” ).
     SECTION 11.2 Special Event Redemption.
     Prior to March 30, 2010, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Special Redemption Price” ).
     SECTION 11.3 Election to Redeem; Notice to Trustee.
     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by  Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
     SECTION 11.4 Selection of Securities to be Redeemed.
     (a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
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     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     SECTION 11.5 Notice of Redemption.
     (a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Trustee).
     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
     (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.
     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
     SECTION 11.6 Deposit of Redemption Price.
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     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
     SECTION 11.7 Payment of Securities Called for Redemption.
     (a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
     (c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
ARTICLE XII
Subordination of Securities
     SECTION 12.1 Securities Subordinate to Senior Debt.
     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this  Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
     SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or
60

 
indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a  “Proceeding” ), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior
61

 
Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in aggregate principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
     SECTION 12.3 Payment Permitted If No Default.
     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of  Section 12.2  or of any Proceeding referred to in  Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with  Section 12.8 ) that such payment would have been prohibited by the provisions of this  Article XII , except as provided in  Section 12.8 .
     SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this  Article XII  (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this  Article XII  to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
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     SECTION 12.5 Provisions Solely to Define Relative Rights.
     The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this  Article XII  or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this  Article XII  of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 12.6 Trustee to Effectuate Subordination.
     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this  Article XII  and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
     SECTION 12.7 No Waiver of Subordination Provisions.
     No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     SECTION 12.8 Notice to Trustee.
     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this  Article XII  or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this  Section 12.8  at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full
63

 
power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this  Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this  Article XII .
     SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.
     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this  Article XII  or otherwise.
     SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this  Article XII , and no implied covenant or obligations with respect to the holders of such Senior
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Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to  Section 6.6.
     SECTION 12.12 Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this  Article XII  shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this  Article XII  in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.
* * * *
     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
* * * *
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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
 	 	 	 	 	
 	Arbor Realty SR, Inc.
 	 	
 	By:  	 /s/ Guy R. Milone, Jr.	 	
 	 	Name:  	Guy R. Milone, Jr.	 	
 	 	Title:  	Vice President	 	
 	
 	The Bank of New York Mellon Trust Company,
National Association, as Trustee
 	 	
 	By:  	/s/ Bill Marshall	 	
 	 	Name:  	 Bill Marshall	 	
 	 	Title:  	 Vice President	 	

 
EXHIBIT A
DETERMINATION OF LIBOR
     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market;  provided  that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
     (3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
EXH. A-1

 
EXHIBIT B
FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3
     Pursuant to Section 10.3 of the Indenture, dated as of May 6, 2009 (as amended or supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the “Company”) and The Bank of New York Mellon Trust Company, National Association, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the [fiscal/calendar]  year ending on                       , 20___  [, except as follows: specify each such default and the nature and status thereof ].
     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of                     , 20___.
                                                                                  
Name:
Title:  [Must be the Chairman of the Board, a
Vice Chairman of the Board, the Chief
Executive Officer, the President or a Vice
president of Arbor Realty SR, Inc.]
                                                                                   
Name:
Title:  [Must be the Chief Financial Officer,
the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of Arbor
Realty SR, Inc.]
EXH. B-1

 
Schedule A
Form of Officer’s Financial Certificate
     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), among Arbor Realty SR, Inc. (the “Company” ) and The Bank of New York Mellon Trust Company, National Assocation, as trustee, that, as of [date], [20___]:
     [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Guarantor and its consolidated subsidiaries for the three years ending [date], 20___.]
     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Guarantor and its consolidated subsidiaries for the fiscal quarter ending [date], 20___.]
     The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ( “GAAP” ), the financial position of the Guarantor and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
     There has been no monetary default with respect to any indebtedness owed by the Guarantor and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below:].
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this ___ day of ___, 200[___].

 	By:  	 	 	
 	Name:  	 	 	
 	 	Arbor Realty SR, Inc.
333 Earle Ovington Blvd., Suite 900
Uniondale, NY 11553
(516) 832-7408 	 	
 	
SCH. A-1

Exhibit 10.31
EXECUTION VERSION
JUNIOR SUBORDINATED INDENTURE
between
ARBOR REALTY SR, INC.
AND
THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION,
as trustee
 
Dated as of May 6, 2009
 
Indenture II

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

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

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

 
-iv-
SCHEDULES
Schedule A — Determination of LIBOR
Exhibit A — Form of Officer’s Financial Certificate
Exhibit B — Form of Officers’ Certificate Under Section 10.3

 
     This Junior Subordinated Indenture (the “Indenture”), dated as of May 6, 2009, between ARBOR REALTY SR, INC.,  a Maryland corporation (the  “Company” ), and  THE BANK OF NEW YORK MELLON TRUST COMPANY, NATIONAL ASSOCIATION , a national banking association, as Trustee (in such capacity, the “Trustee” ).
Recitals of the Company
     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the  “Securities” ) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done.
     NOW, THEREFORE, this Indenture Witnesseth:
     For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I
Definitions and Other Provisions of General Application
     SECTION 1.1 Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I;
     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
     (f) a reference to the singular includes the plural and vice versa; and
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     (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.
     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
     “Affiliate” means in relation to any Person, any other Person (a) that is directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such first Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total voting power of the first Person or of rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or more of whose Equity Interests or total voting power is directly or indirectly beneficially owned by the first Person or such first Person has rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of such Person, or (d) any officer or director of such Person.
     “Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
     “Attentus Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) in original principal amount of Junior Subordinated Notes due 2035.
     “Attentus Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Two Million Six Hundred Thirty Two Thousand Dollars ($2,632,000) in original principal amount of Junior Subordinated Notes due 2036.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
     “Board of Directors” means the board of directors of the Company or any duly authorized committee of that board.
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     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
     “Control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at 601 Travis Street, 16 th  Floor, Houston, Texas 77019 Attn: Global Corporate Trust. Initially, all notices and correspondence shall be addressed to Mudassir Mohamed, telephone no.:(713) 483-6029.
     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of
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another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
     “Defaulted Interest” has the meaning specified in Section 3.1.
     “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
     “Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by and among the Company and the parties named therein, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.
     “GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
     “Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or
4

 
instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Security is registered in the Securities Register.
     “Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Payment Date” means July 30, October 30, January 30 and April 30 of each year during the term of this Indenture.
     “Interest Period” means the period commencing on, and including, an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date; provided, however, that the initial Interest Period shall commence on May 6, 2009.
     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
     “Kodiak” has the meaning specified in Section 5.16.
     “Kodiak/Attentus Indenture III” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) in original principal amount of Junior Subordinated Notes due 2037.
     “LIBOR” has the meaning specified in Schedule A.
     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
     “Maturity,” means when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
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     “Modification Period” means the period commencing as of May 6, 2009 and continuing through, but excluding, the Modification Period Termination Date.
     “Modification Period Termination Date” means the earliest of (a) April 30, 2012, (b) the first Interest Payment Date occurring after the Company has elected to terminate the Modification Period in accordance with the terms of Section 3.1(g), (c) the effective date set forth in  Section 10.5 , if applicable, and (d) the effective date set forth in  Section 10.6 , if applicable.
     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.
     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company and delivered to the Trustee.
     “Operative Documents” means the Indenture, the Securities and the Parent Guarantee, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company or any Affiliate of the Company.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Security.
     “Original Kodiak Indentures” has the meaning specified in Section 5.16.
     “Other Taxes” has the meaning set forth in Section 3.11(c).
     “Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
     (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
     (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities
6

 
are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company, if any, or any other obligor upon the Securities, if any, or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor.
     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
     “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or any government or agency or political subdivision thereof, or any other entity of whatever nature.
     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
     “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under  Section 3.6  in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
     “Reference Banks” has the meaning specified in Schedule A.
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     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, the officer in the Worldwide Securities Services department of the Trustee having direct responsibility for the administration of this Indenture.
     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.
     “Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5 .
     “Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company that is a financing vehicle of the Company (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.
     “Special Event” means the occurrence of a Tax Event.
     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
     “Special Redemption Price” has the meaning set forth in Section 11.2.
     “Stated Maturity” means March 30, 2034.
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     “Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent 50% of the ownership interests having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.
     “Taberna Capital Management, LLC” means Taberna Capital Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “Taberna Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which the Company issued Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of Junior Subordinated Notes.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.
     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
     SECTION 1.2 Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company to the Trustee to take any action under any provision of this Indenture, the Company shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that
9

 
in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.
     (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to  Section 10.3 ) shall include:
     (i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
     SECTION 1.3 Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company stating that the information with respect to such factual matters is in the possession of the Company, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force
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and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
     SECTION 1.4 Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company, if made in the manner provided in this  Section 1.4 .
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Securities shall be proved by the Securities Register.
     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company in reliance thereon, whether or not notation of such action is made upon such Security.
     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled
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to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in  Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in  Section 5.2 , (iii) any request to institute proceedings referred to in  Section 5.7(b ) or (iv) any direction referred to in  Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in  Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 th ) day after the applicable record date.
     SECTION 1.5 Notices, Etc. to Trustee and Company.
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     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
     (i) The Trustee by any Holder or the Company shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or
     (ii) The Company by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention: John Natalone, or at any other address previously furnished in writing to the Trustee by the Company.
     (b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.
     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.
     SECTION 1.6 Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, (if any) and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given
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pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     SECTION 1.7 Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
     SECTION 1.8 Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under  Article VIII  and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
     SECTION 1.9 Separability Clause.
     If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
     SECTION 1.10 Benefits of Indenture.
     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.
     SECTION 1.11 Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the Company and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     SECTION 1.12 Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY
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BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
     SECTION 1.13 Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
     SECTION 1.14 Shareholder Communications Act
     (a) With respect to securities under and as defined in the Shareholders Communications Act of 1985 (the “SCA”) issued in the United States, the SCA requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (i) the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA) with respect to the securities. Under the SCA, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’ request. The SCA defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee. Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”
     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.
     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a Holder, Trustee shall release the name, address and securities position to the Company, if the Company requests such information pursuant to the SCA for the specific purpose of direct communications between the Company and such Holder. With respect to securities issued
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outside of the United States, if applicable, information shall be released to issuers only if required by law or regulation of the particular country in which the securities are located.
ARTICLE II
Security Forms
     SECTION 2.1 Form of Security.
     Any Security issued hereunder shall be in substantially the following form:
Arbor Realty SR, Inc.
Junior Subordinated Note due 2034
 	 	 	
No.                                        	 	$[                    ]	
Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,”  which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to ___, the principal sum of [___] ($[___]) or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture, on March 30, 2034. The Company further promises to pay interest on said principal sum from May 6, 2009, or from the most recent date on and to which interest has been paid or duly provided for, quarterly in arrears on July 30, October 30, January 30 and April 30, of each year, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.87% per annum until the principal hereof is paid or duly provided for or made available for payment;  provided, further , that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.87% per annum (in each case, to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
     Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable for any Interest Period shall be computed on the basis of a 360-
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day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), between the Company and The Bank of New York Mellon Trust Company, National Association, as Trustee (in such capacity, the “Trustee,” which term includes any
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successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after July 30, 2011 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of  Article XI  of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
     The Indenture permits, with certain exceptions as therein provided, the Company and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
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     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     The Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
     This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6th day of May, 2009.
 	 	 	 	 	 	 	
 	 	ARBOR REALTY SR, INC.	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Title:	 	 	 	 	
 	 	 	 	 	 	 	
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     SECTION 2.2  Restricted Legend.
     (a) Any Security issued hereunder shall bear a legend in substantially the following form:
“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT” ), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT
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(A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( “ERISA” ), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE  “CODE” ) (EACH A “PLAN” ), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE. ”
     (b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as
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may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.
     SECTION 2.3 Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the following form:
     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.
     Dated:                                        
 	 	 	 	 	
 	THE BANK OF NEW YORK MELLON TRUST
COMPANY , National Association, not in its
individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	 	Authorized signatory 	 	

     SECTION 2.4 Temporary Securities.
     (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
     (b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
     SECTION 2.5 Definitive Securities.
     The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination
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of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
ARTICLE III
The Securities
     SECTION 3.1 Payment of Principal and Interest.
     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during the Modification Period and thereafter at a variable rate of LIBOR plus 2.87% per annum until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus 2.87% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made legally available for payment.
     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
     (c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a  “Special Record Date” ), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons
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entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
     (d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.
     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in  Article II  hereof
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shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. The Company shall promptly notify the Trustee of any such modifications, which notice shall identify with particularity the necessary changes to the form of security set forth in Article II. The Company agrees to cooperate with all reasonable requests of the Trustee and the Holders in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to the Securities.
     (g) The Company may, at its option from time to time, upon not less than thirty (30) days prior written notice to the Trustee (with a copy to Chuck Logan at The Bank of New York Mellon Global Trust, N.A., 525 William Penn Boulevard, 8 th  Floor, Pittsburg, Pennsylvania 15259, Facsimile: (412) 236-1141) and the Holders, elect to terminate the Modification Period.
     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
     SECTION 3.2 Denominations.
     The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
     SECTION 3.3 Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of One Hundred Sixty-Eight Million Dollars ($168,000,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be
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registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.
     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
     (c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in  Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
     (d) Each Security shall be dated the date of its authentication.
     SECTION 3.4 Global Securities.
     (a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the
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Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial interests as Holders.
     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this  Article III  or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
     (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
     (e) Reserved.
     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
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     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
     (h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Trustee nor any agent of the Company or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
     SECTION 3.5 Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the  “Securities Registrar" ), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of  Article VI  shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
     (c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written
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instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to  Article XI  and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
     (h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.
     SECTION 3.6 Mutilated, Destroyed, Lost and Stolen Securities.
     (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the
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Company shall execute and upon its receipt of a Company Order written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
     SECTION 3.7 Persons Deemed Owners.
     The Company, the Trustee and any agent of the Company or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Trustee nor any agent of the Company or the Trustee shall be affected by notice to the contrary.
     SECTION 3.8 Cancellation.
     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this  Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
     SECTION 3.9 Reserved.
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     SECTION 3.10 Reserved.

     SECTION 3.11  Agreed Tax Treatment.
          (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless otherwise required by law, to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
          (b) Intentionally Omitted.
          (c) The Company shall pay to the relevant taxing authority in accordance with applicable law, and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Securities or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Indenture or the Securities (hereinafter referred to as “ Other Taxes ”).
          (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any jurisdiction on amounts payable under this  Section 3.11 , imposed on or paid by any such Holder and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date any such Holder makes written demand therefor.
          (e) Intentionally Omitted.
     SECTION 3.12 CUSIP Numbers.
     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
ARTICLE IV
Satisfaction and Discharge
     SECTION 4.1 Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this  Section 4.1 ) and the Trustee, on demand of and at
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the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
     (a) either
     (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
     (ii) all such Securities not theretofore delivered to the Trustee for cancellation
     (A) have become due and payable, or
     (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or
     (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under  Section 6.11  and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this  Section 4.1 , the obligations of the Trustee under  Section 4.2  and Section 10.2(e)  shall survive.
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     SECTION 4.2 Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with  Section 3.1 , either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this  Section 4.2  shall not be subject to the claims of holders of Senior Debt under  Article XII .
ARTICLE V
Remedies
     SECTION 5.1 Events of Default.
     “Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days;
     (b) default in the payment of the principal of or any premium on any Security at its Maturity;
     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any covenant or warranty of the Company in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;
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     (e) the institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property, or the making by it of an assignment for the benefit of creditors, or the admission by it in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company in furtherance of any such action;
     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;
     (g) default in the performance or breach of any covenant or warranty of the Company set forth in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten (10) days;
     (h) any Event of Default under any of the Taberna Indenture I or the Attentus Indenture I, Attentus Indenture II; or Kodiak/Attentus Indenture III;
     (i) Intentionally Omitted.
     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement that has a material adverse effect on the Company’s ability to make payments on the Securities or the Guarantor’s ability to make any Parent Guarantee Payments (as defined in the Parent Guarantee Agreement), or that has a material adverse effect on the value of the Securities, and the continuance of any such default or breach for a period of thirty (30) days after either (i) the Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time period, or (ii) after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 5.2 Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
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     (b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this  Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:
     (i) the Company has paid or deposited with the Trustee a sum sufficient to pay:
     (A) all overdue installments of interest on all Securities,
     (B) any accrued Additional Interest on all Securities,
     (C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and
     (ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in  Section 5.13 ;
     No such rescission shall affect any subsequent default or impair any right consequent thereon.
     SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Trustee.
     (a) The Company covenants that if:
     (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days, or
     (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
     the Company will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under  Section 6.6 .
     (b) If the Company fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for
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the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or any other obligor upon the Securities, wherever situated.
     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
     SECTION 5.4 Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 .
     SECTION 5.5 Trustee May Enforce Claim Without Possession of Securities.
     All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to  Article XII  and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
     SECTION 5.6 Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
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     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;
     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;
     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
     FOURTH: The balance, if any, to the Person or Persons entitled thereto.
     SECTION 5.7 Limitation on Suits.
     Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
     it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
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     SECTION 5.8 Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
     SECTION 5.9 Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.
     SECTION 5.10 Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
     SECTION 5.11 Delay or Omission Not Waiver.
     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this  Article V  or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.
     SECTION 5.12 Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with this Indenture,
     (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
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     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
     SECTION 5.13 Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
     (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
     (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.
     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
     SECTION 5.14 Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this  Section 5.14  shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
     SECTION 5.15 Waiver of Usury, Stay or Extension Laws.
     The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of,
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any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
     SECTION 5.16 OriginalKodiak Indentures Events of Default.
     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company shall not be deemed to be in default as a result of any payment default under that certain (a) Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b) hereof, together with any operative documents executed in connection therewith, collectively, the “ Original Kodiak Indentures ”); provided, however, that at such time as such Kodiak Indentures are terminated or all of the original preferred securities issued thereunder are exchanged by the holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or other securities, this  Section 5.16  shall be void and of no further force and effect.
ARTICLE VI
The Trustee
     SECTION 6.1 Corporate Trustee Required.
     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this  Section 6.1 , the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this  Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this  Article VI .
     SECTION 6.2 Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
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     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities;
     (iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law; and
     (iv) the Trustee shall not be liable for the failure to take any action with respect to any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h) unless and
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until there has been given to the Trustee and the Company by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 6.3 Notice of Defaults.
     Within thirty (30) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities. For the purpose of this  Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
     SECTION 6.4 Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company or any of its Affiliates, and may include any of its employees) and the
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advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the
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absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company;
     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the Trustee pursuant to this  Article VI  shall also be afforded such Paying Agent, Authenticating Agent, Securities Registrar and/or Calculation Agent.
     SECTION 6.5 May Hold Securities.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
     SECTION 6.6 Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities
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on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
     SECTION 6.7 Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under  Section 6.8 .
     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and the Company.
     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
     SECTION 6.8 Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring
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Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this  Article VI .
     SECTION 6.9 Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this  Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9  to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
     SECTION 6.10 Not Responsible for Recitals or Issuance of Securities.
     The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
     SECTION 6.11 Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to  Section 3.6 , and Securities so authenticated shall be entitled to the benefits
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of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this  Section 6.11  the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this  Section 6.11 .
     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this  Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this  Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
     (d) The Company agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this  Section 6.11  in such amounts as the Company and the Authenticating Agent shall agree from time to time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
This is one of the Securities referred to in the within mentioned Indenture.
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Dated:	 	THE BANK OF NEW YORK MELLON TRUST
COMPANY, NATIONAL ASSOCIATION, not in
its individual capacity, but solely as Trustee	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	  Authenticating Agent	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	  Authorized Signatory	 	 	
ARTICLE VII
Holder’s Lists and Reports by Company
     SECTION 7.1 Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
     (b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,
     in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
     SECTION 7.2 Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in  Section 7.1  and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in  Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of
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them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
     SECTION 7.3 Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with  Section 7.3(b)  hereof.
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Taberna Capital Management, LLC, 450 Park Avenue, New York, New York 10022, Attn: Raphael Licht or such other address as designated by Taberna Capital Management, LLC and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Taberna Capital Management, LLC.), a duly completed and executed certificate substantially and substantively in the form attached hereto as  Exhibit A , including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
     (c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “Commission” ) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval ( “EDGAR” ) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this  Section 7.3(c)  shall be solely for purposes of compliance with this  Section 7.3(c)  and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.
ARTICLE VIII
Consolidation, Merger, Conveyance, Transfer or Lease
     SECTION 8.1 Company May Consolidate, Etc., Only on Certain Terms.
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     The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
     (a) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
     (b) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this  Article VIII  and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this  Section 8.1 .
     SECTION 8.2 Successor Company Substituted.
     (a) Upon any consolidation or merger by the Company with or into any other Person, or any conveyance, transfer or lease by the Company of its properties and assets substantially as an entirety to any Person in accordance with  Section 8.1  and the execution and delivery to the Trustee of the supplemental indenture described in  Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company shall be discharged from all obligations and covenants under the Indenture and the Securities.
     (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the
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Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX
Supplemental Indentures
     SECTION 9.1 Supplemental Indentures without Consent of Holders.
     Without the consent of any Holders, the Company, when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
     (a) to evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company herein and in the Securities; or
     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (c) to add to the covenants, restrictions or obligations of the Company or to add to the Events of Default, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders.
     SECTION 9.2 Supplemental Indentures with Consent of Holders.
     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company and the Trustee, the Company, when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
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     (i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.
     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
     SECTION 9.3 Execution of Supplemental Indentures.
     In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.
     SECTION 9.4 Effect of Supplemental Indentures.
     Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
     SECTION 9.5 Reference in Securities to Supplemental Indentures.
     Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form
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approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE X
Covenants
     SECTION 10.1 Payment of Principal, Premium, if any, and Interest.
     The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
     SECTION 10.2 Money for Security Payments to be Held in Trust.
     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
     (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of
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applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
     SECTION 10.3 Statement as to Compliance.
     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’ Certificate (substantially in the form attached hereto as  Exhibit B ) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
     SECTION 10.4 Calculation Agent.
     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of  Schedule A  (the “Calculation Agent” ). The Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities at any time. If the Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in  Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each
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LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
     SECTION 10.5 Additional Indebtedness.
     (a) The Company shall be permitted to incur additional Debt (including convertible debt); provided, that, during the Modification Period any such additional Debt shall not be used, in whole or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of such election to the Holders within ten (10) days after such election and shall be deemed to have elected to terminate the Modification Period effective as of the first Interest Payment Date occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the Company inadvertently violates the terms hereof, then if the Company has not cured such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities within seven (7) days after such breach or violation, the Company shall be deemed to have elected to terminate the Modification Period effective nine (9) months after the incurrence of such Debt and such election shall not be deemed to constitute an Event of Default. The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to common or preferred stock or other Equity Interests.
     SECTION 10.6 Additional Covenants.
     (a) The Company covenants and agrees with each Holder of Securities that (i) during the Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank  pari passu  in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into while the Modification Period is not in effect prior to an Event of
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Default, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock upon substantially the same terms, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks  pari passu  with or junior to such stock), (F) with respect to the Taberna Indenture I, the Attentus Indenture I, the Attentus Indenture II, the Kodiak/Attentus Indenture III and the Original Kodiak Indentures or (G) any other dividends or distributions necessary in order for the Company to maintain its REIT status, provided that (x) such dividend or distributions shall be declared and paid in stock in an amount up to the maximum extent permitted by the Code or rules and regulations promulgated thereunder, with the balance payable in cash, and (y) the Company shall be permitted to increase its distributions from the minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one hundred percent (100%) of its taxable income and, with respect to this subsection (G), any violation of this subsection (G) shall not be an Event of Default unless the Company fails to cure to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities any such violation within seven (7) days after discovery thereof.
     (b) Intentionally omitted.
     (c) Notwithstanding the provisions of Section 10(a) the Company shall be permitted during the Modification Period to issue common or preferred shares of the Company’s stock (each, a “ New Stock Class ”) and to declare dividends upon such New Stock Class, provided that (i) such dividends are permitted to be declared without declaring or paying dividends upon or otherwise making payments upon any other Equity Interests (except to comply with the REIT status maintenance requirements described in  Section 10(a) ); (ii) the holders of such New Stock Class shall not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and (iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of the Company, then the Company may elect, and shall be deemed to have elected to, terminate the Modification Period effective nine (9) months after such repurchase or redemption. If the Company has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders and shall cure such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of which shall be deemed an election to terminate the Modification Period effective nine (9) months after such repurchase or redemption and such election shall not be deemed to constitute an Event of Default. So long as no Event of Default has occurred and is continuing, from and after the Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue common or preferred shares of the Company’s stock, declare or pay any dividends or distributions on, or redeem, purchase or
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otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests.
     SECTION 10.7 Waiver of Covenants.
     The Company may omit in any particular instance to comply with any covenant or condition contained in Sections 10.5 and 10.6  if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
     SECTION 10.8 Treatment of Securities.
     The Company will treat the Securities as indebtedness of the Company, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.
     SECTION 10.9 Inspection Rights.
     During the Modification Period, upon written notice from the Holders of a majority in aggregate principal amount of the Outstanding Securities at least five (5) Business Days in advance, the Company and Guarantor shall permit representatives appointed by the Holders the Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the books and records of account of the Company and Guarantor and its subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by such management representatives of the Company and its subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, either in person at the Company’s offices or telephonically, all at such reasonable times and intervals during normal business hours as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing the inspections provided for herein shall be limited to once per calendar quarter. Except to the extent (i) required by law, (ii) required by any court order, or any directive of a Governmental Authority, or (iii) that any such information is available or accessible in the public domain, the Holders shall maintain all information disclosed and/or copied in the course of any such inspection confidential in all respects, except that it may share such information with the Trustee, any collateral manager for the Holders, any other Holder and any of their respective counsel provided that such Person agrees to maintain the confidentially of such information.
ARTICLE XI
Redemption of Securities
     SECTION 11.1 Optional Redemption.
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     The Company may, at its option, on any Interest Payment Date, on or after July 30, 2011, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Optional Redemption Price” ).
     SECTION 11.2 Special Event Redemption.
     Prior to July 30, 2011, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Special Redemption Price” ).
     SECTION 11.3 Election to Redeem; Notice to Trustee.
     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by  Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
     SECTION 11.4 Selection of Securities to be Redeemed.
     (a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
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     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     SECTION 11.5 Notice of Redemption.
     (a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Trustee).
     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
     (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.
     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
     SECTION 11.6 Deposit of Redemption Price.
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     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
     SECTION 11.7 Payment of Securities Called for Redemption.
     (a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
     (c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
ARTICLE XII
Subordination of Securities
     SECTION 12.1 Securities Subordinate to Senior Debt.
     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this  Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
     SECTION 12.2 No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or
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indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a  “Proceeding” ), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior
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Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in aggregate principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
     SECTION 12.3 Payment Permitted If No Default.
     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of  Section 12.2  or of any Proceeding referred to in  Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with  Section 12.8 ) that such payment would have been prohibited by the provisions of this  Article XII , except as provided in  Section 12.8 .
     SECTION 12.4 Subrogation to Rights of Holders of Senior Debt.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this  Article XII  (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this  Article XII  to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
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     SECTION 12.5 Provisions Solely to Define Relative Rights.
     The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this  Article XII  or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this  Article XII  of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 12.6 Trustee to Effectuate Subordination.
     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this  Article XII  and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
     SECTION 12.7 No Waiver of Subordination Provisions.
     No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     SECTION 12.8 Notice to Trustee.
     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this  Article XII  or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this  Section 12.8  at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full
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power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this  Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XII , and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 12.9 Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this  Article XII .
     SECTION 12.10 Trustee Not Fiduciary for Holders of Senior Debt.
     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this  Article XII  or otherwise.
     SECTION 12.11 Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this  Article XII , and no implied covenant or obligations with respect to the holders of such Senior
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Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this Article XII shall apply to claims of, or payments to, the Trustee under or pursuant to  Section 6.6.
     SECTION 12.12 Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this  Article XII  shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this  Article XII  in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.
* * * *
     This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument.
* * * *
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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
 	 	 	 	 	 	 	 	 	 	
 	 	Arbor Realty SR, Inc.	 	
 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Guy R. Milone, Jr.	 	 	
 	 	 	 	   	 	 	 	
 	 	 	 	Name:	 	Guy R. Milone, Jr.	 	 	
 	 	 	 	Title:	 	Vice President	 	 	

 	 	 	 	 	 	 	 	 	 	 	 	
 	 	The Bank of New York Mellon Trust Company, National Association, as Trustee	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Bill Marshall	 	 	 	 	
 	 	 	 	   	 	 	 	 	 	
 	 	 	 	Name:	 	Bill Marshall	 	 	 	 	
 	 	 	 	Title:	 	Vice President	 	 	 	 	

 
EXHIBIT A
DETERMINATION OF LIBOR
     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market;  provided  that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
     (3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
EXH. A-1

 
EXHIBIT B
FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3
     Pursuant to Section 10.3 of the Indenture, dated as of May ___, 2009 (as amended or supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the “Company”) and The Bank of New York Mellon Trust Company, National Association, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the [fiscal/calendar]  year ending on ___, 20___  [, except as follows: specify each such default and the nature and status thereof ].
     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of                    , 20                    .

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

 	 	 	 	 	
 	 	  Name:	 	 	
 	 	Title: [Must be the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of Arbor Realty SR, Inc.]	 	 	
EXH. B-1

 
Schedule A
Form of Officer’s Financial Certificate
     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May [___], 2009 (the  “Indenture” ), among Arbor Realty SR, Inc. (the “Company” ) and The Bank of New York Mellon Trust Company, National Association, as trustee, that, as of [date], [20___]:
     [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Guarantor and its consolidated subsidiaries for the three years ending [date], 20___.]
     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Guarantor and its consolidated subsidiaries for the fiscal quarter ending [date], 20___.]
     The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ( “GAAP” ), the financial position of the Guarantor and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ending [date], 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
     There has been no monetary default with respect to any indebtedness owed by the Guarantor and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below:].
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this ___ day of                      , 200[___].
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	 	 	  Arbor Realty SR, Inc.
333 Earle Ovington Blvd., Suite 900
Uniondale, NY 11553
(516) 832-7408	 	 	
SCH. A-1

Exhibit 10.32
EXECUTION VERSION
JUNIOR SUBORDINATED INDENTURE
between
ARBOR REALTY SR, INC.
ARBOR REALTY TRUST, INC,
as guarantor
AND
WILMINGTON TRUST COMPANY,
as trustee
 
Dated as of May 6, 2009
 
Attentus Indenture I

 
TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	 	
ARTICLE I. Definitions and Other Provisions of General Application	 	 	1	 	
 	 	 	 	 	
SECTION 1.1. Definitions	 	 	1	 	
SECTION 1.2. Compliance Certificate and Opinions	 	 	10	 	
SECTION 1.3. Forms of Documents Delivered to Trustee	 	 	10	 	
SECTION 1.4. Acts of Holders	 	 	11	 	
SECTION 1.5. Notices, Etc. to Trustee and Company	 	 	13	 	
SECTION 1.6. Notice to Holders; Waiver	 	 	14	 	
SECTION 1.7. Effect of Headings and Table of Contents	 	 	14	 	
SECTION 1.8. Successors and Assigns	 	 	14	 	
SECTION 1.9. Separability Clause	 	 	14	 	
SECTION 1.10. Benefits of Indenture	 	 	14	 	
SECTION 1.11. Governing Law	 	 	15	 	
SECTION 1.12. Submission to Jurisdiction	 	 	15	 	
SECTION 1.13. Non-Business Days	 	 	15	 	
SECTION 1.14. Shareholder Communications Act	 	 	15	 	
 	 	 	 	 	
ARTICLE II. Security Forms	 	 	16	 	
 	 	 	 	 	
SECTION 2.1. Form of Security	 	 	16	 	
SECTION 2.2. Restricted Legend	 	 	20	 	
SECTION 2.3. Form of Trustee’s Certificate of Authentication	 	 	22	 	
SECTION 2.4. Temporary Securities	 	 	22	 	
SECTION 2.5. Definitive Securities	 	 	23	 	
 	 	 	 	 	
ARTICLE III. THE SECURITIES	 	 	23	 	
 	 	 	 	 	
SECTION 3.1. Payment of Principal and Interest	 	 	23	 	
SECTION 3.2. Denominations	 	 	25	 	
SECTION 3.3. Execution, Authentication, Delivery and Dating	 	 	25	 	
SECTION 3.4. Global Securities	 	 	26	 	
SECTION 3.5. Registration, Transfer and Exchange Generally	 	 	28	 	
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities	 	 	29	 	
SECTION 3.7. Persons Deemed Owners	 	 	30	 	
SECTION 3.8. Cancellation	 	 	30	 	
SECTION 3.9. Reserved	 	 	31	 	
SECTION 3.10. Reserved	 	 	31	 	
SECTION 3.11. Agreed Tax Treatment	 	 	31	 	
SECTION 3.12. CUSIP Numbers	 	 	31	 	
 	 	 	 	 	
ARTICLE IV. SATISFACTION AND DISCHARGE	 	 	32	 	
 	 	 	 	 	
SECTION 4.1. Satisfaction and Discharge of Indenture	 	 	32	 	
SECTION 4.2. Application of Trust Money	 	 	33	 	
i

 
 	 	 	 	 	
 	 	Page	 	
ARTICLE V. Remedies	 	 	33	 	
 	 	 	 	 	
SECTION 5.1. Events of Default	 	 	33	 	
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment	 	 	35	 	
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee	 	 	36	 	
SECTION 5.4. Trustee May File Proofs of Claim	 	 	36	 	
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities	 	 	37	 	
SECTION 5.6. Application of Money Collected	 	 	37	 	
SECTION 5.7. Limitation on Suits	 	 	37	 	
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest	 	 	38	 	
SECTION 5.9. Restoration of Rights and Remedies	 	 	38	 	
SECTION 5.10. Rights and Remedies Cumulative	 	 	38	 	
SECTION 5.11. Delay or Omission Not Waiver	 	 	39	 	
SECTION 5.12. Control by Holders	 	 	39	 	
SECTION 5.13. Waiver of Past Defaults	 	 	39	 	
SECTION 5.14. Undertaking for Costs	 	 	40	 	
SECTION 5.15. Waiver of Usury, Stay or Extension Laws	 	 	40	 	
SECTION 5.16. Original Kodiak Indentures Events of Default	 	 	40	 	
 	 	 	 	 	
ARTICLE VI. The Trustee	 	 	41	 	
 	 	 	 	 	
SECTION 6.1. Corporate Trustee Required	 	 	41	 	
SECTION 6.2. Certain Duties and Responsibilities	 	 	41	 	
SECTION 6.3. Notice of Defaults	 	 	42	 	
SECTION 6.4. Certain Rights of Trustee	 	 	42	 	
SECTION 6.5. May Hold Securities	 	 	44	 	
SECTION 6.6. Compensation; Reimbursement; Indemnity	 	 	45	 	
SECTION 6.7. Resignation and Removal; Appointment of Successor	 	 	46	 	
SECTION 6.8. Acceptance of Appointment by Successor	 	 	46	 	
SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business	 	 	47	 	
SECTION 6.10. Not Responsible for Recitals or Issuance of Securities	 	 	47	 	
SECTION 6.11. Appointment of Authenticating Agent	 	 	47	 	
 	 	 	 	 	
ARTICLE VII. Holder’s Lists and Reports by Company	 	 	49	 	
 	 	 	 	 	
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders	 	 	49	 	
SECTION 7.2. Preservation of Information, Communications to Holders	 	 	49	 	
SECTION 7.3. Reports by Company	 	 	50	 	
 	 	 	 	 	
ARTICLE VIII. Consolidation, Merger, Conveyance, Transfer or Lease	 	 	50	 	
 	 	 	 	 	
SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms	 	 	50	 	
SECTION 8.2. Successor Company or Guarantor Substituted	 	 	52	 	
 	 	 	 	 	
ARTICLE IX. Supplemental Indentures	 	 	52	 	
 	 	 	 	 	
SECTION 9.1. Supplemental Indentures without Consent of Holders	 	 	52	 	
ii

 
 	 	 	 	 	
 	 	Page	 	
SECTION 9.2. Supplemental Indentures with Consent of Holders	 	 	53	 	
SECTION 9.3. Execution of Supplemental Indentures	 	 	54	 	
SECTION 9.4. Effect of Supplemental Indentures	 	 	54	 	
SECTION 9.5. Reference in Securities to Supplemental Indentures	 	 	54	 	
 	 	 	 	 	
ARTICLE X. Covenants	 	 	54	 	
 	 	 	 	 	
SECTION 10.1. Payment of Principal, Premium, if any, and Interest	 	 	54	 	
SECTION 10.2. Money for Security Payments to be Held in Trust	 	 	55	 	
SECTION 10.3. Statement as to Compliance	 	 	55	 	
SECTION 10.4. Calculation Agent	 	 	56	 	
SECTION 10.5. Additional Indebtedness	 	 	56	 	
SECTION 10.6. Additional Covenants	 	 	57	 	
SECTION 10.7. Waiver of Covenants	 	 	58	 	
SECTION 10.8. Treatment of Securities	 	 	59	 	
SECTION 10.9. Inspection Rights	 	 	59	 	
 	 	 	 	 	
ARTICLE XI. Redemption of Securities	 	 	59	 	
 	 	 	 	 	
SECTION 11.1. Optional Redemption	 	 	59	 	
SECTION 11.2. Special Event Redemption	 	 	59	 	
SECTION 11.3. Election to Redeem; Notice to Trustee	 	 	60	 	
SECTION 11.4. Selection of Securities to be Redeemed	 	 	60	 	
SECTION 11.5. Notice of Redemption	 	 	60	 	
SECTION 11.6. Deposit of Redemption Price	 	 	61	 	
SECTION 11.7. Payment of Securities Called for Redemption	 	 	61	 	
 	 	 	 	 	
ARTICLE XII. Subordination of Securities	 	 	62	 	
 	 	 	 	 	
SECTION 12.1. Securities Subordinate to Senior Debt	 	 	62	 	
SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	62	 	
SECTION 12.3. Payment Permitted If No Default	 	 	64	 	
SECTION 12.4. Subrogation to Rights of Holders of Senior Debt	 	 	64	 	
SECTION 12.5. Provisions Solely to Define Relative Rights	 	 	64	 	
SECTION 12.6. Trustee to Effectuate Subordination	 	 	65	 	
SECTION 12.7. No Waiver of Subordination Provisions	 	 	65	 	
SECTION 12.8. Notice to Trustee	 	 	65	 	
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	66	 	
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt	 	 	66	 	
SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights	 	 	66	 	
SECTION 12.12. Article Applicable to Paying Agents	 	 	66	 	
 	 	 	 	 	
ARTICLE XIII. Guarantee	 	 	67	 	
 	 	 	 	 	
SECTION 13.1. The Guarantee	 	 	67	 	
SECTION 13.2. Guarantee Unconditional, etc.	 	 	67	 	
iii

 
 	 	 	 	 	
 	 	Page	 	
SECTION 13.3. Reinstatement	 	 	67	 	
SECTION 13.4. Subrogation	 	 	68	 	
SECTION 13.5. Pari Passu Guarantees	 	 	68	 	
 	 	 	 	 	
ARTICLE XIV. Subordination of Guarantee	 	 	68	 	
 	 	 	 	 	
SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor	 	 	68	 	
SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	68	 	
SECTION 14.3. Payment Permitted If No Default	 	 	70	 	
SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor	 	 	70	 	
SECTION 14.5. Provisions Solely to Define Relative Rights	 	 	71	 	
SECTION 14.6. Trustee to Effectuate Subordination	 	 	71	 	
SECTION 14.7. No Waiver of Subordination Provisions	 	 	71	 	
SECTION 14.8. Notice to Trustee	 	 	72	 	
SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	72	 	
SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor	 	 	73	 	
SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights	 	 	73	 	
SECTION 14.12. Article Applicable to Paying Agents	 	 	73	 	
 	 	 	 	 	
SCHEDULES	 	 	 	 	
 	 	 	 	 	
Schedule A  –  Determination of LIBOR	 	 	 	 	
 	 	 	 	 	
Exhibit A  –  Form of Officer’s Financial Certificate	 	 	 	 	
 	 	 	 	 	
Exhibit B — Form of Officers’ Certificate Under Section 10.3	 	 	 	 	
iv

 
     This Junior Subordinated Indenture (the “Indenture”), dated as of May 6, 2009, between ARBOR REALTY SR, INC.,  a Maryland corporation (the  “Company” ),  ARBOR REALTY TRUST, INC. , a Maryland Corporation (the  “Guarantor” ) and  WILMINGTON TRUST COMPANY , a national banking association, as Trustee (in such capacity, the  “Trustee” ).
Recitals of the Company
     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the  “Securities” ) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
     WHEREAS, the Guarantor has duly authorized the issuance of its guarantee of the Securities (the “Guarantee” ) under this Indenture; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been done.
     NOW, THEREFORE, this Indenture Witnesseth:
     For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I.
Definitions and Other Provisions of General Application
     SECTION 1.1. Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I;
     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
- 1 -

 
     (f) a reference to the singular includes the plural and vice versa; and
     (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.
     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
     “Affiliate” means in relation to any Person, any other Person (a) that is directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such first Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total voting power of the first Person or of rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or more of whose Equity Interests or total voting power is directly or indirectly beneficially owned by the first Person or such first Person has rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of such Person, or (d) any officer or director of such Person.
     “Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
     “Attentus Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Two Million Six Hundred Thirty Two Thousand Dollars ($2,632,000) in original principal amount of Junior Subordinated Notes due 2036.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
     “Board of Directors” means the board of directors of the Company or the Guarantor, as the context requires, or any duly authorized committee of that board.
     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the context requires, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
- 2 -

 
     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
     “Control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
- 3 -

 
     “Defaulted Interest” has the meaning specified in Section 3.1.
     “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
     “Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by and among the Company and the parties named therein, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.
     “GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
     “Guarantee” has the meaning specified in the second recital of this Indenture.
     “Guarantor” means the Person named as the “Guarantor” in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Guarantor ” shall mean such successor corporation.
     “Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is
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pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Security is registered in the Securities Register ; provided, that, for purposes of Article XIII hereof, in determining whether the Holders of the requisite percentage of Securities have given any direction, request, notice, consent or waiver hereunder, and for purposes of enforcement of the Guarantee provisions, Holder shall mean any Holder other than the Company, the Guarantor or any Affiliate of the Company or the Guarantor.
     “Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Payment Date” means July 30, October 30, January 30 and April 30 of each year during the term of this Indenture.
     “Interest Period” means the period commencing on, and including, an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date; provided, however, that the initial Interest Period shall commence on May 6, 2009.
     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
     “Kodiak/Attentus Indenture III” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) in original principal amount of Junior Subordinated Notes due 2037.
     “Kodiak CDO Management, LLC” means Kodiak CDO Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “LIBOR” has the meaning specified in Schedule A.
     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
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     “Maturity,” means when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
     “Modification Period” means the period commencing as of May 6, 2009 and continuing through, but excluding, the Modification Period Termination Date.
     “Modification Period Termination Date” means the earliest of (a) April 30, 2012, (b) the first Interest Payment Date occurring after the Company has elected to terminate the Modification Period in accordance with the terms of Section 3.1(g) , (c) the effective date set forth in  Section 10.5 , if applicable, and (d) the effective date set forth in  Section 10.6 , if applicable.
     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.
     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or the Guarantor, as the context requires, and delivered to the Trustee.
     “Operative Documents” means the Indenture and the Securities, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company and the Guarantor.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Security.
     “Original Kodiak Indentures” has the meaning specified in Section 5.16.
     “Other Taxes” has the meaning set forth in Section 3.11(c).
     “Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
     (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
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     (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or the Guarantor, if any, or any other obligor upon the Securities, if any, or any Affiliate of the Company, the Guarantor or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor.
     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
     “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or any government or agency or political subdivision thereof, or any other entity of whatever nature.
     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
     “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under  Section 3.6  in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
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     “Reference Banks” has the meaning specified in Schedule A.
     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer, or any other officer in the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.
     “Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5 .
     “Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or the Guarantor, as the context requires, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company or the Guarantor, as the context requires, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company or the Guarantor that is a financing vehicle of the Company or the Guarantor (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.
     “Special Event” means the occurrence of a Tax Event.
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     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
     “Special Redemption Price” has the meaning set forth in Section 11.2.
     “Stated Maturity” means April 30, 2035.
     “Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent 50% of the ownership interests having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.
     “Taberna Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which the Company issued Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of Junior Subordinated Notes due 2032.
     “Taberna Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which Company issued One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of Junior Subordinated Notes due 2034.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.
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     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
     SECTION 1.2. Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.
     (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to  Section 10.3 ) shall include:
     (i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
     SECTION 1.3. Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual
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matters is in the possession of the Company or the Guarantor, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
     SECTION 1.4. Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company or the Guarantor, if made in the manner provided in this  Section 1.4 .
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Securities shall be proved by the Securities Register.
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     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security.
     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in  Section 5.2 , (iii) any request to institute proceedings referred to in  Section 5.7(b)  or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
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     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in  Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 th ) day after the applicable record date.
     SECTION 1.5. Notices, Etc. to Trustee and Company.
     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
     (i) The Trustee by any Holder, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or
     (ii) The Company or the Guarantor by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention:  John Natalone and Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company and/or the Guarantor, as applicable.
     (b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.
     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions
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conflict or are inconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.
     SECTION 1.6. Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, (if any) and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     SECTION 1.7. Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
     SECTION 1.8. Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company, the Guarantor and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under  Article VIII  and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
     SECTION 1.9. Separability Clause.
     If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
     SECTION 1.10. Benefits of Indenture.
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     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.
     SECTION 1.11. Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the Company, the Guarantor and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     SECTION 1.12. Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
     SECTION 1.13. Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
     SECTION 1.14. Shareholder Communications Act.
     (a) With respect to securities under and as defined in the Shareholders Communications Act of 1985 (the “SCA”) issued in the United States, the SCA requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (i) the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA) with respect to the securities. Under the SCA, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’
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request. The SCA defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee. Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”
     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.
     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a Holder, Trustee shall release the name, address and securities position to the Company, if the Company requests such information pursuant to the SCA for the specific purpose of direct communications between the Company and such Holder. With respect to securities issued outside of the United States, if applicable, information shall be released to issuers only if required by law or regulation of the particular country in which the securities are located.
ARTICLE II.
Security Forms
     SECTION 2.1. Form of Security.
     Any Security issued hereunder shall be in substantially the following form:
Arbor Realty SR, Inc.
Junior Subordinated Note due 2035

No.                                                             	 	$[                    ]	
Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,”  which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to                            , the principal sum of [                                          ] ($[                      ]) or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture, on April 30, 2035. The Company further promises to pay interest on said principal sum from May 6, 2009, or from the most recent date on and to which interest has been paid or duly provided for, quarterly in arrears on July 30, October 30, January 30 and April 30, of each year, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus
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3.20 % per annum until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 3.20 % per annum (in each case, to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
     Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable for any Interest Period shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her
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acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), between the Company, the Guarantor and Wilmington Trust Company, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after April 30, 2010 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of  Article XI  of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
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     The Indenture permits, with certain exceptions as therein provided, the Company, the Guarantor and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company, the Guarantor and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company or the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for
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United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
     This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6 day of May, 2009.
 	 	 	 	 	 	 	 	 	
 	 	ARBOR REALTY SR, INC.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	 	 	 	
 	 	 	 	Title:	 	 	 	 	
 	 	 	 	 	 	 	 	 	
     SECTION 2.2. Restricted Legend.
     (a) Any Security issued hereunder shall bear a legend in substantially the following form:
“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT” ), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( “ERISA” ), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE  “CODE” ) (EACH A “PLAN” ), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
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INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE. ”
     (b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.
     SECTION 2.3. Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the following form:
     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.
     Dated:
 	 	 	 	 	
 	WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	 	Authorized signatory 	 	

     SECTION 2.4. Temporary Securities.
     (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
     (b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the
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temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
     SECTION 2.5. Definitive Securities.
     The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
ARTICLE III.
THE SECURITIES
     SECTION 3.1. Payment of Principal and Interest.
     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during the Modification Period and thereafter at a variable rate of LIBOR plus 3.20% per annum until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus 3.20% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made legally available for payment.
     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
     (c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date
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by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
     (d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.
     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and
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interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in Article II hereof shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. The Company shall promptly notify the Trustee of any such modifications, which notice shall identify with particularity the necessary changes to the form of security set forth in Article II. The Company agrees to cooperate with all reasonable requests of the Trustee and the Holders in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to the Securities.
     (g) The Company may, at its option from time to time, upon not less than thirty (30) days prior written notice to the Trustee and the Holders, elect to terminate the Modification Period.
     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
     SECTION 3.2. Denominations.
     The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
     SECTION 3.3. Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture
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in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that:  (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.
     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
     (c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in  Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
     (d) Each Security shall be dated the date of its authentication.
     SECTION 3.4. Global Securities.
     (a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
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     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial interests as Holders.
     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this  Article III  or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
     (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
     (e) Reserved.
     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities,
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and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
     (h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
     SECTION 3.5. Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of  Article VI  shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
     (c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of
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the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g):  (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to  Article XI  and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
     (h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.
     SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
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     (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its receipt of a Company Order written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
     SECTION 3.7. Persons Deemed Owners.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
     SECTION 3.8. Cancellation.
     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be
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promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this  Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
     SECTION 3.9. Reserved.
     SECTION 3.10. Reserved.
     SECTION 3.11. Agreed Tax Treatment.
     (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless otherwise required by law, to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
     (b) Intentionally Omitted.
     (c) The Company shall pay to the relevant taxing authority in accordance with applicable law, and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Securities or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Indenture or the Securities (hereinafter referred to as “ Other Taxes ”).
     (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any jurisdiction on amounts payable under this  Section 3.11 , imposed on or paid by any such Holder and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date any such Holder makes written demand therefor.
     (e) Intentionally Omitted.
     SECTION 3.12. CUSIP Numbers.
     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
     SECTION 4.1. Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this  Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
     (a) either
     (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
     (ii) all such Securities not theretofore delivered to the Trustee for cancellation
     (A) have become due and payable, or
     (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or
     (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
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     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under  Section 6.11  and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this  Section 4.1 , the obligations of the Trustee under  Section 4.2  and Section 10.2(e)  shall survive.
     SECTION 4.2. Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with  Section 3.1 , either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this  Section 4.2  shall not be subject to the claims of holders of Senior Debt under  Article XII .
ARTICLE V.
Remedies
     SECTION 5.1. Events of Default.
     “Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days;
     (b) default in the payment of the principal of or any premium on any Security at its Maturity;
     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any covenant or warranty of the Company or Guarantor in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default
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or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;
     (e) the institution by the Company or the Guarantor of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or the Guarantor to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company or the Guarantor of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property or the Guarantor or of any substantial part of its property, or the making by the Company or the Guarantor of an assignment for the benefit of creditors, or the admission by the Company or the Guarantor in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company or the Guarantor in furtherance of any such action;
     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;
     (g) default in the performance or breach of any covenant or warranty of the Company set forth in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten (10) days;
     (h) any Event of Default under any of the Taberna Indenture I, Taberna Indenture II, Attentus Indenture II, or Kodiak/Attentus Indenture III;
     (i) intentionally omitted;
     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement that has a material adverse effect on the Company’s ability to make payments on the Securities or the Guarantor’s ability to make payments required hereunder, or that has a material adverse effect on the value of the Securities, and the continuance of any such default or breach for a period of thirty (30) days after either (i) the Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time period, or (ii) after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company
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and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
     (k) the Guarantee shall cease to be in full force and effect or the Guarantor shall, in writing to the Trustee, to a Holder or a holder of the Preferred Securities or to any governmental agency or regulatory authority, deny or disaffirm its obligations under the Guarantee.
     SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company and the Guarantor (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
     (b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this  Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:
     (i) the Company or the Guarantor has paid or deposited with the Trustee a sum sufficient to pay:
     (A) all overdue installments of interest on all Securities,
     (B) any accrued Additional Interest on all Securities,
     (C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and
     (ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in  Section 5.13 ;
     No such rescission shall affect any subsequent default or impair any right consequent thereon.
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     SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
     (a) Each of the Company and the Guarantor covenants that if:
     (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days, or
     (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
     the Company and the Guarantor will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under  Section 6.6 .
     (b) If the Company or the Guarantor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company, the Guarantor or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon the Securities, wherever situated.
     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
     SECTION 5.4. Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company or the Guarantor (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and
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any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.
     SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
     All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to  Article XII  and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
     SECTION 5.6. Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;
     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;
     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
     FOURTH: The balance, if any, to the Person or Persons entitled thereto.
     SECTION 5.7. Limitation on Suits.
     Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
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     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
     it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
     SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
     SECTION 5.9. Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Guarantor, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.
     SECTION 5.10. Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
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     SECTION 5.11. Delay or Omission Not Waiver.
     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this  Article V  or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.
     SECTION 5.12. Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with this Indenture,
     (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
     SECTION 5.13. Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
     (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company or the Guarantor has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
     (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.
     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this
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Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
     SECTION 5.14. Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this  Section 5.14  shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
     SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
     Each of the Company and the Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
     SECTION 5.16. Original Kodiak Indentures Events of Default.
     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company shall not be deemed to be in default as a result of any payment default under that certain (a) Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b) hereof, together with any operative documents executed in connection therewith, collectively, the “ Original Kodiak Indentures ”); provided, however, that at such time as such Kodiak Indentures are terminated or all of the original preferred securities issued thereunder are exchanged by the holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or other securities, this  Section 5.16  shall be void and of no further force and effect.
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ARTICLE VI.
The Trustee
     SECTION 6.1. Corporate Trustee Required.
     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this  Section 6.1 , the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this  Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this  Article VI .
     SECTION 6.2. Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the
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extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities;
     (iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law; and
     (iv) the Trustee shall not be liable for the failure to take any action with respect to any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h), unless and until there has been given to the Trustee and the Company by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 6.3. Notice of Defaults.
     Within thirty (30)days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities. For the purpose of this  Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
     SECTION 6.4. Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution,
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certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company, the Guarantor or any of their Affiliates, and may include any of its employees) 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, suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and
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the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company or the Guarantor;
     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company, the Guarantor or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the Trustee pursuant to this  Article VI  shall also be afforded such Paying Agent, Authenticating Agent, Securities Registrar and/or Calculation Agent.
     SECTION 6.5. May Hold Securities.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company and the Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
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     SECTION 6.6. Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company and the Guarantor under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
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     SECTION 6.7. Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under  Section 6.8 .
     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and the Company and the Guarantor.
     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
     SECTION 6.8. Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this  Article VI .
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     SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this  Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9  to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
     SECTION 6.10. Not Responsible for Recitals or Issuance of Securities.
     The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
     SECTION 6.11. Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to  Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this  Section 6.11  the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in
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accordance with the provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this  Section 6.11 .
     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this  Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this  Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
     (d) The Company or the Guarantor agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this  Section 6.11  in such amounts as the Company and the Authenticating Agent shall agree from time to time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
     This is one of the Securities referred to in the within mentioned Indenture.
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Dated:	 	WILMINGTON TRUST COMPANY, not in
its individual capacity, but solely as Trustee	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Authenticating Agent	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Authorized Signatory	
ARTICLE VII.
Holder’s Lists and Reports by Company
     SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
     (b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,
     in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
     SECTION 7.2. Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in  Section 7.1  and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in  Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
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     SECTION 7.3. Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with  Section 7.3(b)  hereof.
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii)  Kodiak CDO Management, LLC c/o EJF Capital LLC, 2107 Wilson Boulevard, Suite 400, Arlington, Virginia, Attn:  Lindsay Kucera or such other address as designated by Kodiak CDO Management, LLC and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Kodiak CDO Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as  Exhibit A , including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
     (c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “ Commission ”) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“ EDGAR ”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this  Section 7.3(c)  shall be solely for purposes of compliance with this  Section 7.3(c)  and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.
ARTICLE VIII.
Consolidation, Merger, Conveyance, Transfer or Lease
     SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms.
     (a) The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and
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no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
     (i) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
     (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this  Article VIII  and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this  Section 8.1 .
     (b) The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor, unless:
     (i) if the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Guarantor is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Guarantor substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Guarantor to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
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     (iii) the Guarantor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.
     SECTION 8.2. Successor Company or Guarantor Substituted.
     (a) Upon any consolidation or merger by the Company or the Guarantor with or into any other Person, or any conveyance, transfer or lease by the Company or the Guarantor of its properties and assets substantially as an entirety to any Person in accordance with  Section 8.1  and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company or the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.
     (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX.
Supplemental Indentures
     SECTION 9.1. Supplemental Indentures without Consent of Holders.
     Without the consent of any Holders, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
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     (a) to evidence the succession of another Person to the Company or the Guarantor, and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Securities; or
     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (c) to add to the covenants, restrictions or obligations of the Company or the Guarantor or to add to the Events of Default, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders.
     SECTION 9.2. Supplemental Indentures with Consent of Holders.
     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
     (i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to
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provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.
     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
     SECTION 9.3. Execution of Supplemental Indentures.
     In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.
     SECTION 9.4. Effect of Supplemental Indentures.
     Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
     SECTION 9.5. Reference in Securities to Supplemental Indentures.
     Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE X.
Covenants
     SECTION 10.1. Payment of Principal, Premium, if any, and Interest.
     The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
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     SECTION 10.2. Money for Security Payments to be Held in Trust.
     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
     (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
     SECTION 10.3. Statement as to Compliance.
     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’
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Certificate (substantially in the form attached hereto as Exhibit B) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
     SECTION 10.4. Calculation Agent.
     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of  Schedule A  (the “ Calculation Agent ”). The Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities at any time. If the Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in  Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either:  (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
     SECTION 10.5. Additional Indebtedness.
     (a) The Company shall be permitted to incur additional Debt (including convertible debt); provided, that, during the Modification Period any such additional Debt shall not be used, in whole or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of such election to the Holders within ten (10) days after such
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election and shall be deemed to have elected to terminate the Modification Period effective as of the first Interest Payment Date occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the Company inadvertently violates the terms hereof, then if the Company has not cured such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities within seven (7) days after such breach or violation, the Company shall be deemed to have elected to terminate the Modification Period effective nine (9) months after the incurrence of such Debt and such election shall not be deemed to constitute an Event of Default. The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to common or preferred stock or other Equity Interests.
     SECTION 10.6. Additional Covenants.
     (a) The Company covenants and agrees with each Holder of Securities that (i) during the Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into while the Modification Period is not in effect prior to an Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock upon substantially the same terms, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock) (F) with respect to the Taberna Indenture I, the Taberna Indenture II, the Attentus Indenture II, the Kodiak/Attentus Indenture III and the Original Kodiak Indentures or (G) any other dividends or distributions necessary in order for the Company to maintain its REIT status, provided that (x) such dividend or distributions shall be declared and paid in stock in an amount up to the maximum extent permitted by the Code or rules and regulations promulgated thereunder, with
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the balance payable in cash, and (y) the Company shall be permitted to increase its distribution from the minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one hundred percent (100%) of the taxable income and, with respect to this subsection (G), any violation of this subsection G shall not be an Event of Default unless the Company or the Guarantor fail to cure to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities any breach or default within seven (7) days after discovery thereof.
     (b) Intentionally omitted.
     (c) Notwithstanding the provisions of Section 10.6(a) the Company shall be permitted during the Modification Period to issue common or preferred shares of the Company’s stock (each, a “ New Stock Class ”) and to declare dividends upon such New Stock Class, provided that (i) such dividends are permitted to be declared without declaring or paying dividends upon or otherwise making payments upon any other Equity Interests (except to comply with the REIT status maintenance requirements described in  Section 10.6(a ); (ii) the holders of such New Stock Class shall not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and (iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of the Company, then the Company may elect, and shall be deemed to have elected to, terminate the Modification Period effective nine (9) months after such repurchase or redemption. If the Company has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders and shall cure such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of which shall be deemed an election to terminate the Modification Period effective nine (9) months after such repurchase or redemption and such election shall not be deemed to constitute an Event of Default. So long as no Event of Default has occurred and is continuing, from and after the Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue common or preferred shares of the Company’s stock, declare or pay any dividends or distributions on, or redeem, purchase or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests.
     (d) Intentionally Omitted.
     SECTION 10.7. Waiver of Covenants.
     The Company may omit in any particular instance to comply with any covenant or condition contained in Sections 10.5 and 10.6  if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
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     SECTION 10.8. Treatment of Securities.
     The Company will treat the Securities as indebtedness of the Company, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.
     SECTION 10.9. Inspection Rights.
     During the Modification Period, upon written notice from the Holders of a majority in aggregate principal amount of the Outstanding Securities at least five (5) Business Days in advance, the Company and Guarantor shall permit representatives appointed by the Holders the Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the books and records of account of the Company and Guarantor and its subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by such management representatives of the Company and its subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, either in person at the Company’s offices or telephonically, all at such reasonable times and intervals during normal business hours as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing the inspections provided for herein shall be limited to once per calendar quarter. Except to the extent (i) required by law, (ii) required by any court order, or any directive of a Governmental Authority, or (iii) that any such information is available or accessible in the public domain, the Holders shall maintain all information disclosed and/or copied in the course of any such inspection confidential in all respects, except that it may share such information with the Trustee, any collateral manager for the Holders, any other Holder and any of their respective counsel provided that such Person agrees to maintain the confidentially of such information.
ARTICLE XI.
Redemption of Securities
     SECTION 11.1. Optional Redemption.
     The Company may, at its option, on any Interest Payment Date, on or after April 30, 2010, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Optional Redemption Price” ).
     SECTION 11.2. Special Event Redemption.
     Prior to April 30, 2010, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including
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any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption Price” ).
     SECTION 11.3. Election to Redeem; Notice to Trustee.
     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by  Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
     SECTION 11.4. Selection of Securities to be Redeemed.
     (a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     SECTION 11.5. Notice of Redemption.
     (a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Trustee).
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     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
     (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.
     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
     SECTION 11.6. Deposit of Redemption Price.
     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
     SECTION 11.7. Payment of Securities Called for Redemption.
     (a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and
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redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
     (c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
ARTICLE XII.
Subordination of Securities
     SECTION 12.1. Securities Subordinate to Senior Debt.
     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this  Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
     SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the
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Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in aggregate principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
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     SECTION 12.3. Payment Permitted If No Default.
     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of  Section 12.2  or of any Proceeding referred to in  Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with  Section 12.8 ) that such payment would have been prohibited by the provisions of this  Article XII , except as provided in  Section 12.8 .
     SECTION 12.4. Subrogation to Rights of Holders of Senior Debt.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this  Article XII  (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this  Article XII  to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
     SECTION 12.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this  Article XII  or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and
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voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 12.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this  Article XII  and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
     SECTION 12.7. No Waiver of Subordination Provisions.
     No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     SECTION 12.8. Notice to Trustee.
     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this  Article XII  or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this  Section 12.8  at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this  Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any
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other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this  Article XII .
     SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt.
     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this  Article XII  or otherwise.
     SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this  Article XII , and no implied covenant or obligations with respect to the holders of such Senior Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this  Article XII  shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
     SECTION 12.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this  Article XII  shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this  Article XII  in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.
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ARTICLE XIII.
Guarantee
     SECTION 13.1. The Guarantee.
     The Guarantor hereby fully, unconditionally and irrevocably guarantees to each holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on such Security, when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, in accordance with the terms of such Security and this Indenture, as well as the due and punctual performance of all other obligations contained in the Securities and this Indenture. In case of the failure of the Company to punctually pay its obligations on any Security, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, and as if such payment were made by the Company.
     SECTION 13.2. Guarantee Unconditional, etc.
     To the extent provided herein, the Guarantor hereby agrees that it shall be liable as principal and as debtor hereunder with respect to its obligations under this Article. This Article creates a guarantee of payment and not of collection on the part of the Guarantor. The Guarantor’s obligations hereunder shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security or this Indenture, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of and premium, if any, and interest (including Additional Interest) on the Securities and the complete performance of all other obligations contained in the Securities and this Indenture. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the Securities shall or may, as the case may be, be accelerated as provided in this Indenture for purposes of the Guarantor’s obligations under this Guarantee, notwithstanding any stay, injunction or prohibition existing under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.
     SECTION 13.3. Reinstatement.
     This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time a payment in respect of any Security, in whole or in part, is rescinded or must otherwise
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be restored to the Company or the Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.
     SECTION 13.4. Subrogation.
     The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders (other than the Company or its Affiliates) and to pay such amount to the Holders (other than the Company or its Affiliates).
     SECTION 13.5. Pari Passu Guarantees.
     The obligations of the Guarantor under this Section 13 shall rank pari passu with the obligations of the Guarantor under any similar guarantees or guarantee agreements issued by the Guarantor with respect to Securities (if any) similar to the Securities or any preferred securities, of the Company or related to trusts established or to be established by the Company (if any), including, without limitation, the guarantee agreements issued by the Guarantor in connection with Attentus Indenture II, Kodiak/Attentus Indenture III, Taberna Indenture I and Taberna Indenture II.
ARTICLE XIV.
Subordination of Guarantee
     SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor.
     The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XIV, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor.
     SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Guarantor by the holders of such Senior Debt of the Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any
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premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a Proceeding, all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt of the Guarantor, the Holders of the Securities, together with the holders of any obligations of the Guarantor ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Guarantor the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Guarantor ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt of the Guarantor shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt of the Guarantor at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt of the Guarantor remaining unpaid, to the extent necessary to pay all such Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt of the Guarantor is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Guarantor, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt of the Guarantor or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the
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Senior Debt of the Guarantor at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 14.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Guarantor in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Guarantor, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
     SECTION 14.3. Payment Permitted If No Default.
     Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 14.2 or of any Proceeding referred to in Section 14.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 14.8) that such payment would have been prohibited by the provisions of this Article XIV, except as provided in Section 14.8.
     SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Guarantor pursuant to the provisions of this Article XIV (equally and ratably with the holders of all indebtedness of the Guarantor that by its express terms is subordinated to Senior Debt of the Guarantor to substantially the same extent as the Securities are subordinated to the Senior Debt of the Guarantor and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Guarantor) to the rights of the holders of such Senior Debt of the Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XIV, and no payments made pursuant to the provisions of this Article XIV to the holders of Senior Debt of the Guarantor by Holders of the Securities or the Trustee, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.
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     SECTION 14.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XIV are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Trustee or the Holder of any Security (other than the Company and its Affiliates) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XIV of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 14.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XIV and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.
     SECTION 14.7. No Waiver of Subordination Provisions.
     (a) No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     (b) Without in any way limiting the generality of paragraph (a) of this Section 14.7, the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.
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     SECTION 14.8. Notice to Trustee.
     (a) The Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Guarantor or a holder of Senior Debt of the Guarantor or from any trustee, agent or representative therefor;  provided , that if the Trustee shall not have received the notice provided for in this Section 14.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Guarantor to participate in any payment or distribution pursuant to this Article XIV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIV, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV.
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     SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.
     The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt of the Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Guarantor shall be entitled by virtue of this Article XIV or otherwise.
     SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Debt of the Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Guarantor, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to the holders of such Senior Debt of the Guarantor shall be read into this Indenture against the Trustee. Nothing in this Article XIV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
     SECTION 14.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “ Trustee ” as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee.
* * * *
     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.
* * * *
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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
 	 	 	 	 	 	 	 	 	
 	 	Arbor Realty SR, Inc.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ Guy R. Milone, Jr.	 	 	
 	 	 	 	Title:	 	Vice President	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Arbor Realty Trust, Inc.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ Paul Elenio	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Wilmington Trust Company, as Trustee	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ W. Thomas Morris, II	 	 	
 	 	 	 	Title:	 	Vice President	 	 	

 
EXHIBIT A
DETERMINATION OF LIBOR
     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market;  provided  that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
     (3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
Exh. A-1

 
EXHIBIT B
FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3
     Pursuant to Section 10.3 of the Indenture, dated as of May ___, 2009 (as amended or supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the “Company”) and Wilmington Trust Company, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the  [fiscal/calendar]  year ending on                                          , 20___  [, except as follows: specify each such default and the nature and status thereof ].
     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of                                         , 20___.

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

 	 	  Name:	 	 	
 	 	Title: [Must be the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of Arbor Realty SR, Inc.]	 	 	
Exh. B-1

 
Schedule A
Form of Officer’s Financial Certificate
     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), among Arbor Realty SR, Inc. (the “Company” ), Arbor Realty Trust, Inc. (the  “Guarantor” ) and Wilmington Trust Company, as trustee, that, as of [date], [20___]:
FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Guarantor and its consolidated subsidiaries for the three years ending [date], 20___.]
     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Guarantor and its consolidated subsidiaries for the fiscal quarter ending [date], 20___.]
     The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ( “GAAP” ), the financial position of the Guarantor and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
     There has been no monetary default with respect to any indebtedness owed by the Guarantor and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below:].
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this                      day of                                           , 200[___].
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	 	 	  Arbor Realty SR, Inc.	 	 	
 	 	 	 	333 Earle Ovington Blvd., Suite 900	 	 	
 	 	 	 	Uniondale, NY 11553	 	 	
 	 	 	 	(516) 832-7408	 	 	
Sch. A-1

Exhibit 10.33
EXECUTION VERSION
JUNIOR SUBORDINATED INDENTURE
between
ARBOR REALTY SR, INC.
ARBOR REALTY TRUST, INC,
as guarantor
AND
WILMINGTON TRUST COMPANY,
as trustee
 
Dated as of May 6, 2009
 
Attentus Indenture II

 
TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	 	
ARTICLE I. Definitions and Other Provisions of General Application	 	 	1	 	
 	 	 	 	 	
SECTION 1.1. Definitions	 	 	1	 	
SECTION 1.2. Compliance Certificate and Opinions	 	 	10	 	
SECTION 1.3. Forms of Documents Delivered to Trustee	 	 	10	 	
SECTION 1.4. Acts of Holders	 	 	11	 	
SECTION 1.5. Notices, Etc. to Trustee and Company	 	 	13	 	
SECTION 1.6. Notice to Holders; Waiver	 	 	14	 	
SECTION 1.7. Effect of Headings and Table of Contents	 	 	14	 	
SECTION 1.8. Successors and Assigns	 	 	14	 	
SECTION 1.9. Separability Clause	 	 	14	 	
SECTION 1.10. Benefits of Indenture	 	 	14	 	
SECTION 1.11. Governing Law	 	 	15	 	
SECTION 1.12. Submission to Jurisdiction	 	 	15	 	
SECTION 1.13. Non-Business Days	 	 	15	 	
SECTION 1.14. Shareholder Communications Act	 	 	15	 	
 	 	 	 	 	
ARTICLE II. Security Forms	 	 	16	 	
 	 	 	 	 	
SECTION 2.1. Form of Security	 	 	16	 	
SECTION 2.2. Restricted Legend	 	 	20	 	
SECTION 2.3. Form of Trustee’s Certificate of Authentication	 	 	22	 	
SECTION 2.4. Temporary Securities	 	 	22	 	
SECTION 2.5. Definitive Securities	 	 	23	 	
 	 	 	 	 	
ARTICLE III. The Securities	 	 	23	 	
 	 	 	 	 	
SECTION 3.1. Payment of Principal and Interest	 	 	23	 	
SECTION 3.2. Denominations	 	 	25	 	
SECTION 3.3. Execution, Authentication, Delivery and Dating	 	 	25	 	
SECTION 3.4. Global Securities	 	 	26	 	
SECTION 3.5. Registration, Transfer and Exchange Generally	 	 	28	 	
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities	 	 	29	 	
SECTION 3.7. Persons Deemed Owners	 	 	30	 	
SECTION 3.8. Cancellation	 	 	30	 	
SECTION 3.9. Reserved	 	 	31	 	
SECTION 3.10. Reserved	 	 	31	 	
SECTION 3.11. Agreed Tax Treatment	 	 	31	 	
SECTION 3.12. CUSIP Numbers	 	 	31	 	
 	 	 	 	 	
ARTICLE IV. Satisfaction and Discharge	 	 	32	 	
 	 	 	 	 	
SECTION 4.1. Satisfaction and Discharge of Indenture	 	 	32	 	
SECTION 4.2. Application of Trust Money	 	 	33	 	
- i -

 
 	 	 	 	 	
 	 	Page	 	
ARTICLE V. Remedies	 	 	33	 	
 	 	 	 	 	
SECTION 5.1. Events of Default	 	 	33	 	
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment	 	 	35	 	
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee	 	 	36	 	
SECTION 5.4. Trustee May File Proofs of Claim	 	 	36	 	
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities	 	 	37	 	
SECTION 5.6. Application of Money Collected	 	 	37	 	
SECTION 5.7. Limitation on Suits	 	 	37	 	
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest	 	 	38	 	
SECTION 5.9. Restoration of Rights and Remedies	 	 	38	 	
SECTION 5.10. Rights and Remedies Cumulative	 	 	38	 	
SECTION 5.11. Delay or Omission Not Waiver	 	 	39	 	
SECTION 5.12. Control by Holders	 	 	39	 	
SECTION 5.13. Waiver of Past Defaults	 	 	39	 	
SECTION 5.14. Undertaking for Costs	 	 	40	 	
SECTION 5.15. Waiver of Usury, Stay or Extension Laws	 	 	40	 	
SECTION 5.16. Original Kodiak Indentures Events of Default	 	 	40	 	
 	 	 	 	 	
ARTICLE VI. The Trustee	 	 	41	 	
 	 	 	 	 	
SECTION 6.1. Corporate Trustee Required	 	 	41	 	
SECTION 6.2. Certain Duties and Responsibilities	 	 	41	 	
SECTION 6.3. Notice of Defaults	 	 	42	 	
SECTION 6.4. Certain Rights of Trustee	 	 	42	 	
SECTION 6.5. May Hold Securities	 	 	44	 	
SECTION 6.6. Compensation; Reimbursement; Indemnity	 	 	45	 	
SECTION 6.7. Resignation and Removal; Appointment of Successor	 	 	46	 	
SECTION 6.8. Acceptance of Appointment by Successor	 	 	46	 	
SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business	 	 	47	 	
SECTION 6.10. Not Responsible for Recitals or Issuance of Securities	 	 	47	 	
SECTION 6.11. Appointment of Authenticating Agent	 	 	47	 	
 	 	 	 	 	
ARTICLE VII. Holder’s Lists and Reports by Company	 	 	49	 	
 	 	 	 	 	
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders	 	 	49	 	
SECTION 7.2. Preservation of Information, Communications to Holders	 	 	49	 	
SECTION 7.3. Reports by Company	 	 	50	 	
 	 	 	 	 	
ARTICLE VIII. Consolidation, Merger, Conveyance, Transfer or Lease	 	 	50	 	
 	 	 	 	 	
SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms	 	 	50	 	
SECTION 8.2. Successor Company or Guarantor Substituted	 	 	52	 	
 	 	 	 	 	
ARTICLE IX. Supplemental Indentures	 	 	52	 	
 	 	 	 	 	
SECTION 9.1. Supplemental Indentures without Consent of Holders	 	 	52	 	
- ii -

 
 	 	 	 	 	
 	 	Page	 	
SECTION 9.2. Supplemental Indentures with Consent of Holders	 	 	53	 	
SECTION 9.3. Execution of Supplemental Indentures	 	 	54	 	
SECTION 9.4. Effect of Supplemental Indentures	 	 	54	 	
SECTION 9.5. Reference in Securities to Supplemental Indentures	 	 	54	 	
 	 	 	 	 	
ARTICLE X. Covenants	 	 	54	 	
 	 	 	 	 	
SECTION 10.1. Payment of Principal, Premium, if any, and Interest	 	 	54	 	
SECTION 10.2. Money for Security Payments to be Held in Trust	 	 	55	 	
SECTION 10.3. Statement as to Compliance	 	 	55	 	
SECTION 10.4. Calculation Agent	 	 	56	 	
SECTION 10.5. Additional Indebtedness	 	 	56	 	
SECTION 10.6. Additional Covenants	 	 	57	 	
SECTION 10.7. Waiver of Covenants	 	 	58	 	
SECTION 10.8. Treatment of Securities	 	 	59	 	
SECTION 10.9. Inspection Rights	 	 	59	 	
 	 	 	 	 	
ARTICLE XI. Redemption of Securities	 	 	59	 	
 	 	 	 	 	
SECTION 11.1. Optional Redemption	 	 	59	 	
SECTION 11.2. Special Event Redemption	 	 	59	 	
SECTION 11.3. Election to Redeem; Notice to Trustee	 	 	60	 	
SECTION 11.4. Selection of Securities to be Redeemed	 	 	60	 	
SECTION 11.5. Notice of Redemption	 	 	60	 	
SECTION 11.6. Deposit of Redemption Price	 	 	61	 	
SECTION 11.7. Payment of Securities Called for Redemption	 	 	61	 	
 	 	 	 	 	
ARTICLE XII. Subordination of Securities	 	 	62	 	
 	 	 	 	 	
SECTION 12.1. Securities Subordinate to Senior Debt	 	 	62	 	
SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	62	 	
SECTION 12.3. Payment Permitted If No Default	 	 	64	 	
SECTION 12.4. Subrogation to Rights of Holders of Senior Debt	 	 	64	 	
SECTION 12.5. Provisions Solely to Define Relative Rights	 	 	64	 	
SECTION 12.6. Trustee to Effectuate Subordination	 	 	65	 	
SECTION 12.7. No Waiver of Subordination Provisions	 	 	65	 	
SECTION 12.8. Notice to Trustee	 	 	65	 	
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	66	 	
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt	 	 	66	 	
SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights	 	 	66	 	
SECTION 12.12. Article Applicable to Paying Agents	 	 	66	 	
 	 	 	 	 	
ARTICLE XIII. Guarantee	 	 	67	 	
 	 	 	 	 	
SECTION 13.1. The Guarantee	 	 	67	 	
SECTION 13.2. Guarantee Unconditional, etc	 	 	67	 	
- iii -

 
 	 	 	 	 	
 	 	Page	 	
SECTION 13.3. Reinstatement	 	 	67	 	
SECTION 13.4. Subrogation	 	 	68	 	
SECTION 13.5. Pari Passu Guarantees	 	 	68	 	
 	 	 	 	 	
ARTICLE XIV. Subordination of Guarantee	 	 	68	 	
 	 	 	 	 	
SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor	 	 	68	 	
SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc	 	 	68	 	
SECTION 14.3. Payment Permitted If No Default	 	 	70	 	
SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor	 	 	70	 	
SECTION 14.5. Provisions Solely to Define Relative Rights	 	 	71	 	
SECTION 14.6. Trustee to Effectuate Subordination	 	 	71	 	
SECTION 14.7. No Waiver of Subordination Provisions	 	 	71	 	
SECTION 14.8. Notice to Trustee	 	 	72	 	
SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	72	 	
SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor	 	 	73	 	
SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights	 	 	73	 	
SECTION 14.12. Article Applicable to Paying Agents	 	 	73	 	
SCHEDULES
Schedule A — Determination of LIBOR
Exhibit A — Form of Officer’s Financial Certificate
Exhibit B — Form of Officers’ Certificate Under Section 10.3
- iv -

 
     This Junior Subordinated Indenture (the “Indenture"), dated as of May 6, 2009, between ARBOR REALTY SR, INC.,  a Maryland corporation (the  “Company” ),  ARBOR REALTY TRUST, INC. , a Maryland Corporation (the “Guarantor" ) and  WILMINGTON TRUST COMPANY , a national banking association, as Trustee (in such capacity, the  “Trustee” ).
Recitals of the Company
     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the  “Securities” ) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
     WHEREAS, the Guarantor has duly authorized the issuance of its guarantee of the Securities (the “Guarantee” ) under this Indenture; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been done.
     NOW, THEREFORE, this Indenture Witnesseth:
     For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I.
Definitions and Other Provisions of General Application
     SECTION 1.1. Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I;
     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
- 1 -

 
     (f) a reference to the singular includes the plural and vice versa; and
     (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.
     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
     “Affiliate” means in relation to any Person, any other Person (a) that is directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such first Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total voting power of the first Person or of rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or more of whose Equity Interests or total voting power is directly or indirectly beneficially owned by the first Person or such first Person has rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of such Person, or (d) any officer or director of such Person.
     “Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
     “Attentus Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) in original principal amount of Junior Subordinated Notes due 2035.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
     “Board of Directors” means the board of directors of the Company or the Guarantor, as the context requires, or any duly authorized committee of that board.
     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the context requires, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
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     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
     “Control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
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     “Defaulted Interest” has the meaning specified in Section 3.1.
     “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
     “Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by and among the Company and the parties named therein, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.
     “GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
     “Guarantee” has the meaning specified in the second recital of this Indenture.
     “Guarantor” means the Person named as the “Guarantor” in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Guarantor ” shall mean such successor corporation.
     “Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is
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pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Security is registered in the Securities Register; provided, that, for purposes of Article XIII hereof, in determining whether the Holders of the requisite percentage of Securities have given any direction, request, notice, consent or waiver hereunder, and for purposes of enforcement of the Guarantee provisions, Holder shall mean any Holder other than the Company, the Guarantor or any Affiliate of the Company or the Guarantor.
     “Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Payment Date” means June 30, September 30, December 30 and March 30 of each year during the term of this Indenture.
     “Interest Period” means the period commencing on, and including, an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date; provided, however, that the initial Interest Period shall commence on May 6, 2009.
     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
     “Kodiak/Attentus Indenture III” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) in original principal amount of Junior Subordinated Notes due 2037.
     “Kodiak CDO Management, LLC” means Kodiak CDO Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “LIBOR” has the meaning specified in Schedule A.
     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
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     “Maturity,” means when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
     “Modification Period” means the period commencing as of May 6, 2009 and continuing through, but excluding, the Modification Period Termination Date.
     “Modification Period Termination Date” means the earliest of (a) March 30, 2012, (b) the first Interest Payment Date occurring after the Company has elected to terminate the Modification Period in accordance with the terms of Section 3.1(g) , (c) the effective date set forth in  Section 10.5 , if applicable, and (d) the effective date set forth in  Section 10.6 , if applicable.
     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.
     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or the Guarantor, as the context requires, and delivered to the Trustee.
     “Operative Documents” means the Indenture and the Securities, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company and the Guarantor.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Security.
     “Original Kodiak Indentures” has the meaning specified in Section 5.16.
     “Other Taxes” has the meaning set forth in Section 3.11(c).
     “Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
     (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
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     (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or the Guarantor, if any, or any other obligor upon the Securities, if any, or any Affiliate of the Company, the Guarantor or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor.
     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
     “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or any government or agency or political subdivision thereof, or any other entity of whatever nature.
     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
     “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under  Section 3.6  in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
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     “Reference Banks” has the meaning specified in Schedule A.
     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer, or any other officer in the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.
     “Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5 .
     “Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or the Guarantor, as the context requires, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company or the Guarantor, as the context requires, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company or the Guarantor that is a financing vehicle of the Company or the Guarantor (a “financing entity”) in connection with the issuance by such financing entity of equity securities or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.
     “Special Event” means the occurrence of a Tax Event.
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     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
     “Special Redemption Price” has the meaning set forth in Section 11.2.
     “Stated Maturity” means June 30, 2036.
     "Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent 50% of the ownership interests having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.
     “Taberna Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which the Company issued Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of Junior Subordinated Notes due 2032.
     “Taberna Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which Company issued One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of Junior Subordinated Notes due 2034.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.
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     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
     SECTION 1.2. Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.
     (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to  Section 10.3 ) shall include:
     (i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
     SECTION 1.3. Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual
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matters is in the possession of the Company or the Guarantor, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
     SECTION 1.4. Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company or the Guarantor, if made in the manner provided in this  Section 1.4 .
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Securities shall be proved by the Securities Register.
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     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security.
     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in  Section 5.2 , (iii) any request to institute proceedings referred to in  Section 5.7(b)  or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
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     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in  Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 th ) day after the applicable record date.
     SECTION 1.5. Notices, Etc. to Trustee and Company.
     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
     (i) The Trustee by any Holder, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or
     (ii) The Company or the Guarantor by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention: John Natalone and Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company and/or the Guarantor, as applicable.
     (b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.
     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions
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conflict or are inconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.
     SECTION 1.6. Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, (if any) and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     SECTION 1.7. Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
     SECTION 1.8. Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company, the Guarantor and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under  Article VIII  and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
     SECTION 1.9. Separability Clause.
     If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
     SECTION 1.10. Benefits of Indenture.
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     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.
     SECTION 1.11. Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the Company, the Guarantor and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     SECTION 1.12. Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
     SECTION 1.13. Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
     SECTION 1.14. Shareholder Communications Act.
     (a) With respect to securities under and as defined in the Shareholders Communications Act of 1985 (the “SCA”) issued in the United States, the SCA requires the Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (i) the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA) with respect to the securities. Under the SCA, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’
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request. The SCA defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee. Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”
     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.
     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a Holder, Trustee shall release the name, address and securities position to the Company, if the Company requests such information pursuant to the SCA for the specific purpose of direct communications between the Company and such Holder. With respect to securities issued outside of the United States, if applicable, information shall be released to issuers only if required by law or regulation of the particular country in which the securities are located.
ARTICLE II.
Security Forms
     SECTION 2.1. Form of Security.
     Any Security issued hereunder shall be in substantially the following form:
Arbor Realty SR, Inc.
Junior Subordinated Note due 2036

No.                                         	 	$[                    ]	
Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,”  which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to [                            ], the principal sum of [                                  ] ($[                      ]) or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture, on June 30, 2036. The Company further promises to pay interest on said principal sum from May 6, 2009, or from the most recent date on and to which interest has been paid or duly provided for, quarterly in arrears on June 30, September 30, December 30 and March 30, of each year, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus
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2.52% per annum until the principal hereof is paid or duly provided for or made available for payment; provided, further, that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.52% per annum (in each case, to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
     Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable for any Interest Period shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her
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acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), between the Company, the Guarantor and Wilmington Trust Company, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after June 30, 2011 and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of  Article XI  of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
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     The Indenture permits, with certain exceptions as therein provided, the Company, the Guarantor and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company, the Guarantor and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company or the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.
     The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for
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United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
     This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6th day of May, 2009.
 	 	 	 	 	
 	ARBOR REALTY SR, INC.
 	 	
 	By:  	 	 	
 	 	Name:  	 	 	
 	 	Title:  	 	 	
 	
     SECTION 2.2. Restricted Legend.
     (a) Any Security issued hereunder shall bear a legend in substantially the following form:
“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT” ), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( “ERISA” ), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE  “CODE” ) (EACH A “PLAN” ), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
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INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE. ”
     (b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.
     SECTION 2.3. Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the following form:
     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.
     Dated:
 	 	 	 	 	
 	WILMINGTON TRUST COMPANY, not in
its individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	 	Authorized signatory 	 	

     SECTION 2.4. Temporary Securities.
     (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
     (b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the
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temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
     SECTION 2.5. Definitive Securities.
     The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
ARTICLE III.
THE SECURITIES
     SECTION 3.1. Payment of Principal and Interest.
     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during the Modification Period and thereafter at a variable rate of LIBOR plus 2.52% per annum until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus 2.52% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made legally available for payment.
     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
     (c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date
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by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
     (d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.
     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and
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interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in Article II hereof shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. The Company shall promptly notify the Trustee of any such modifications, which notice shall identify with particularity the necessary changes to the form of security set forth in Article II. The Company agrees to cooperate with all reasonable requests of the Trustee and the Holders in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to the Securities.
     (g) The Company may, at its option from time to time, upon not less than thirty (30) days prior written notice to the Trustee and the Holders, elect to terminate the Modification Period.
     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
     SECTION 3.2. Denominations.
     The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
     SECTION 3.3. Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Two Million Six Hundred Thirty-Two Thousand Dollars ($2,632,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture
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in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.
     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
     (c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in  Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
     (d) Each Security shall be dated the date of its authentication.
     SECTION 3.4. Global Securities.
     (a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
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     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial interests as Holders.
     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this  Article III  or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
     (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
     (e) Reserved.
     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities,
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and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
     (h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
     SECTION 3.5. Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of  Article VI  shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
     (c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of
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the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to  Article XI  and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
     (h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.
     SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
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     (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its receipt of a Company Order written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
     SECTION 3.7. Persons Deemed Owners.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
     SECTION 3.8. Cancellation.
     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be
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promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this  Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
     SECTION 3.9. Reserved.
     SECTION 3.10. Reserved.
     SECTION 3.11. Agreed Tax Treatment.
     (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless otherwise required by law, to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
     (b) Intentionally Omitted.
     (c) The Company shall pay to the relevant taxing authority in accordance with applicable law, and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Securities or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Indenture or the Securities (hereinafter referred to as “ Other Taxes ”).
     (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any jurisdiction on amounts payable under this  Section 3.11 , imposed on or paid by any such Holder and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date any such Holder makes written demand therefor.
     (e) Intentionally Omitted.
     SECTION 3.12. CUSIP Numbers.
     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
     SECTION 4.1. Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this  Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
     (a) either
     (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
     (ii) all such Securities not theretofore delivered to the Trustee for cancellation
     (A) have become due and payable, or
     (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or
     (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
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     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under  Section 6.11  and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this  Section 4.1 , the obligations of the Trustee under  Section 4.2  and Section 10.2(e)  shall survive.
     SECTION 4.2. Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with  Section 3.1 , either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this  Section 4.2  shall not be subject to the claims of holders of Senior Debt under  Article XII .
ARTICLE V.
Remedies
     SECTION 5.1. Events of Default.
     “Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days;
     (b) default in the payment of the principal of or any premium on any Security at its Maturity;
     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any covenant or warranty of the Company or Guarantor in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default
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or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;
     (e) the institution by the Company or the Guarantor of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or the Guarantor to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company or the Guarantor of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property or the Guarantor or of any substantial part of its property, or the making by the Company or the Guarantor of an assignment for the benefit of creditors, or the admission by the Company or the Guarantor in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company or the Guarantor in furtherance of any such action;
     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;
     (g) default in the performance or breach of any covenant or warranty of the Company set forth in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten (10) days;
     (h) any Event of Default under any of the Taberna Indenture I, Taberna Indenture II, Attentus Indenture I, or Kodiak/Attentus Indenture III;
     (i) intentionally omitted;
     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement that has a material adverse effect on the Company’s ability to make payments on the Securities or the Guarantor’s ability to make payments required hereunder, or that has a material adverse effect on the value of the Securities, and the continuance of any such default or breach for a period of thirty (30) days after either (i) the Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time period, or (ii) after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company
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and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
     (k) the Guarantee shall cease to be in full force and effect or the Guarantor shall, in writing to the Trustee, to a Holder or a holder of the Preferred Securities or to any governmental agency or regulatory authority, deny or disaffirm its obligations under the Guarantee.
     SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company and the Guarantor (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
     (b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this  Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:
     (i) the Company or the Guarantor has paid or deposited with the Trustee a sum sufficient to pay:
     (A) all overdue installments of interest on all Securities,
     (B) any accrued Additional Interest on all Securities,
     (C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and
     (ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in  Section 5.13 ;
     No such rescission shall affect any subsequent default or impair any right consequent thereon.
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     SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
     (a) Each of the Company and the Guarantor covenants that if:
     (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days, or
     (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
     the Company and the Guarantor will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under  Section 6.6 .
     (b) If the Company or the Guarantor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company, the Guarantor or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon the Securities, wherever situated.
     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
     SECTION 5.4. Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company or the Guarantor (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and
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any other amounts owing the Trustee, any predecessor Trustee and other Persons under Section 6.6.
     SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
     All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to  Article XII  and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
     SECTION 5.6. Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;
     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;
     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
     FOURTH: The balance, if any, to the Person or Persons entitled thereto.
     SECTION 5.7. Limitation on Suits.
     Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
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     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
     it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
     SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
     SECTION 5.9. Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Guarantor, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.
     SECTION 5.10. Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
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     SECTION 5.11. Delay or Omission Not Waiver.
     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this  Article V  or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.
     SECTION 5.12. Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with this Indenture,
     (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
     SECTION 5.13. Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
     (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company or the Guarantor has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
     (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.
     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this
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Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
     SECTION 5.14. Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this  Section 5.14  shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
     SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
     Each of the Company and the Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
     SECTION 5.16. Original Kodiak Indentures Events of Default.
     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company shall not be deemed to be in default as a result of any payment default under that certain (a) Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b) hereof, together with any operative documents executed in connection therewith, collectively, the " Original Kodiak Indentures ”); provided, however, that at such time as such Kodiak Indentures are terminated or all of the original preferred securities issued thereunder are exchanged by the holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or other securities, this  Section 5.16  shall be void and of no further force and effect.
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ARTICLE VI.
The Trustee
     SECTION 6.1. Corporate Trustee Required.
     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this  Section 6.1 , the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this  Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this  Article VI .
     SECTION 6.2. Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the
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extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities;
     (iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law; and
     (iv) the Trustee shall not be liable for the failure to take any action with respect to any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h), unless and until there has been given to the Trustee and the Company by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 6.3. Notice of Defaults.
     Within thirty (30) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities. For the purpose of this  Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
     SECTION 6.4. Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution,
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certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company, the Guarantor or any of their Affiliates, and may include any of its employees) 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, suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and
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the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company or the Guarantor;
     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company, the Guarantor or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the Trustee pursuant to this  Article VI  shall also be afforded such Paying Agent, Authenticating Agent, Securities Registrar and/or Calculation Agent.
     SECTION 6.5. May Hold Securities.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company and the Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
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     SECTION 6.6. Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company and the Guarantor under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
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     SECTION 6.7. Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under  Section 6.8 .
     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and the Company and the Guarantor.
     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
     SECTION 6.8. Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this  Article VI .
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     SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this  Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9  to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated, and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
     SECTION 6.10. Not Responsible for Recitals or Issuance of Securities.
     The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
     SECTION 6.11. Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to  Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this  Section 6.11  the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in
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accordance with the provisions of this Section 6.11, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this  Section 6.11 .
     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this  Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this  Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
     (d) The Company or the Guarantor agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this  Section 6.11  in such amounts as the Company and the Authenticating Agent shall agree from time to time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
     This is one of the Securities referred to in the within mentioned Indenture.
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Dated: 	WILMINGTON TRUST COMPANY, not in
its individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	Authenticating Agent 	 	
 	 	 	 	
 	By:  	 	 	
 	Authorized Signatory 	 	
ARTICLE VII.
Holder’s Lists and Reports by Company
     SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
     (b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,
     in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
     SECTION 7.2. Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in  Section 7.1  and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in  Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
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     SECTION 7.3. Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with  Section 7.3(b)  hereof.
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Kodiak CDO Management, LLC c/o EJF Capital LLC, 2107 Wilson Boulevard, Suite 400, Arlington, Virginia, Attn: Lindsay Kucera or such other address as designated by Kodiak CDO Management, LLC and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Kodiak CDO Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as  Exhibit A , including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
     (c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “ Commission ”) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“ EDGAR ”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this  Section 7.3(c)  shall be solely for purposes of compliance with this  Section 7.3(c)  and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.
ARTICLE VIII.
Consolidation, Merger, Conveyance, Transfer or Lease
     SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms.
     (a) The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and
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no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
     (i) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
     (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this  Article VIII  and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this  Section 8.1 .
     (b) The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor, unless:
     (i) if the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Guarantor is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Guarantor substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Guarantor to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
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     (iii) the Guarantor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.
     SECTION 8.2.Successor Company or Guarantor Substituted.
     (a) Upon any consolidation or merger by the Company or the Guarantor with or into any other Person, or any conveyance, transfer or lease by the Company or the Guarantor of its properties and assets substantially as an entirety to any Person in accordance with  Section 8.1  and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company or the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.
     (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX.
Supplemental Indentures
     SECTION 9.1.Supplemental Indentures without Consent of Holders.
     Without the consent of any Holders, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
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     (a) to evidence the succession of another Person to the Company or the Guarantor, and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Securities; or
     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (c) to add to the covenants, restrictions or obligations of the Company or the Guarantor or to add to the Events of Default, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders.
     SECTION 9.2. Supplemental Indentures with Consent of Holders.
     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
     (i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to
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provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.
     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
     SECTION 9.3. Execution of Supplemental Indentures.
     In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.
     SECTION 9.4. Effect of Supplemental Indentures.
     Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
     SECTION 9.5. Reference in Securities to Supplemental Indentures.
     Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE X.
Covenants
     SECTION 10.1. Payment of Principal, Premium, if any, and Interest.
     The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
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     SECTION 10.2. Money for Security Payments to be Held in Trust.
     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
     (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
     SECTION 10.3. Statement as to Compliance.
     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’
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Certificate (substantially in the form attached hereto as Exhibit B) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
     SECTION 10.4. Calculation Agent.
     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of  Schedule A  (the “ Calculation Agent ”). The Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities at any time. If the Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in  Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
     SECTION 10.5. Additional Indebtedness.
     (a) The Company shall be permitted to incur additional Debt (including convertible debt); provided, that, during the Modification Period any such additional Debt shall not be used, in whole or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of such election to the Holders within ten (10) days after such
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election and shall be deemed to have elected to terminate the Modification Period effective as of the first Interest Payment Date occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the Company inadvertently violates the terms hereof, then if the Company has not cured such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities within seven (7) days after such breach or violation, the Company shall be deemed to have elected to terminate the Modification Period effective nine (9) months after the incurrence of such Debt and such election shall not be deemed to constitute an Event of Default. The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to common or preferred stock or other Equity Interests.
     SECTION 10.6. Additional Covenants.
     (a) The Company covenants and agrees with each Holder of Securities that (i) during the Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into while the Modification Period is not in effect prior to an Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock upon substantially the same terms, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock) (F) with respect to the Taberna Indenture I, the Taberna Indenture II, the Attentus Indenture I, the Kodiak/Attentus Indenture III and the Original Kodiak Indentures or (G) any other dividends or distributions necessary in order for the Company to maintain its REIT status, provided that (x) such dividend or distributions shall be declared and paid in stock in an amount up to the maximum extent permitted by the Code or rules and regulations promulgated thereunder, with
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the balance payable in cash, and (y) the Company shall be permitted to increase its distribution from the minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one hundred percent (100%) of the taxable income and, with respect to this subsection (G), any violation of this subsection G shall not be an Event of Default unless the Company or the Guarantor fail to cure to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities any breach or default within seven (7) days after discovery thereof.
     (b) Intentionally omitted.
     (c) Notwithstanding the provisions of Section 10.6(a) the Company shall be permitted during the Modification Period to issue common or preferred shares of the Company’s stock (each, a " New Stock Class ”) and to declare dividends upon such New Stock Class, provided that (i) such dividends are permitted to be declared without declaring or paying dividends upon or otherwise making payments upon any other Equity Interests (except to comply with the REIT status maintenance requirements described in  Section 10.6(a) ); (ii) the holders of such New Stock Class shall not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and (iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of the Company, then the Company may elect, and shall be deemed to have elected to, terminate the Modification Period effective nine (9) months after such repurchase or redemption. If the Company has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders and shall cure such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of which shall be deemed an election to terminate the Modification Period effective nine (9) months after such repurchase or redemption and such election shall not be deemed to constitute an Event of Default. So long as no Event of Default has occurred and is continuing, from and after the Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue common or preferred shares of the Company’s stock, declare or pay any dividends or distributions on, or redeem, purchase or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests.
     (d) Intentionally Omitted.
     SECTION 10.7. Waiver of Covenants.
     The Company may omit in any particular instance to comply with any covenant or condition contained in Sections 10.5 and 10.6  if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
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     SECTION 10.8. Treatment of Securities.
     The Company will treat the Securities as indebtedness of the Company, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.
     SECTION 10.9. Inspection Rights.
     During the Modification Period, upon written notice from the Holders of a majority in aggregate principal amount of the Outstanding Securities at least five (5) Business Days in advance, the Company and Guarantor shall permit representatives appointed by the Holders the Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the books and records of account of the Company and Guarantor and its subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by such management representatives of the Company and its subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, either in person at the Company’s offices or telephonically, all at such reasonable times and intervals during normal business hours as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing the inspections provided for herein shall be limited to once per calendar quarter. Except to the extent (i) required by law, (ii) required by any court order, or any directive of a Governmental Authority, or (iii) that any such information is available or accessible in the public domain, the Holders shall maintain all information disclosed and/or copied in the course of any such inspection confidential in all respects, except that it may share such information with the Trustee, any collateral manager for the Holders, any other Holder and any of their respective counsel provided that such Person agrees to maintain the confidentially of such information.
ARTICLE XI.
Redemption of Securities
     SECTION 11.1. Optional Redemption.
     The Company may, at its option, on any Interest Payment Date, on or after June 30, 2011, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Optional Redemption Price” ).
     SECTION 11.2. Special Event Redemption.
     Prior to June 30, 2011, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including
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any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption Price” ).
     SECTION 11.3. Election to Redeem; Notice to Trustee.
     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by  Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
     SECTION 11.4. Selection of Securities to be Redeemed.
     (a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     SECTION 11.5. Notice of Redemption.
     (a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Trustee).
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     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
     (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.
     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
     SECTION 11.6. Deposit of Redemption Price.
     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
     SECTION 11.7. Payment of Securities Called for Redemption.
     (a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and
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redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
     (c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
ARTICLE XII.
Subordination of Securities
     SECTION 12.1. Securities Subordinate to Senior Debt.
     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this  Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
     SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the
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Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in aggregate principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
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     SECTION 12.3. Payment Permitted If No Default.
     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of  Section 12.2  or of any Proceeding referred to in  Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with  Section 12.8 ) that such payment would have been prohibited by the provisions of this  Article XII , except as provided in  Section 12.8 .
     SECTION 12.4. Subrogation to Rights of Holders of Senior Debt.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this  Article XII  (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this  Article XII  to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
     SECTION 12.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this  Article XII  or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and
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voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 12.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this  Article XII  and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
     SECTION 12.7. No Waiver of Subordination Provisions.
     No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     SECTION 12.8. Notice to Trustee.
     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this  Article XII  or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this  Section 12.8  at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this  Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any
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other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this  Article XII .
     SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt.
     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this  Article XII  or otherwise.
     SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this  Article XII , and no implied covenant or obligations with respect to the holders of such Senior Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this  Article XII  shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
     SECTION 12.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this  Article XII  shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this  Article XII  in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.
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ARTICLE XIII.
Guarantee
     SECTION 13.1. The Guarantee.
     The Guarantor hereby fully, unconditionally and irrevocably guarantees to each holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on such Security, when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, in accordance with the terms of such Security and this Indenture, as well as the due and punctual performance of all other obligations contained in the Securities and this Indenture. In case of the failure of the Company to punctually pay its obligations on any Security, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, and as if such payment were made by the Company.
     SECTION 13.2. Guarantee Unconditional, etc.
     To the extent provided herein, the Guarantor hereby agrees that it shall be liable as principal and as debtor hereunder with respect to its obligations under this Article. This Article creates a guarantee of payment and not of collection on the part of the Guarantor. The Guarantor’s obligations hereunder shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security or this Indenture, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of and premium, if any, and interest (including Additional Interest) on the Securities and the complete performance of all other obligations contained in the Securities and this Indenture. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the Securities shall or may, as the case may be, be accelerated as provided in this Indenture for purposes of the Guarantor’s obligations under this Guarantee, notwithstanding any stay, injunction or prohibition existing under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.
     SECTION 13.3. Reinstatement.
     This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time a payment in respect of any Security, in whole or in part, is rescinded or must otherwise
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be restored to the Company or the Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.
     SECTION 13.4. Subrogation.
     The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders (other than the Company or its Affiliates) and to pay such amount to the Holders (other than the Company or its Affiliates).
     SECTION 13.5. Pari Passu Guarantees.
     The obligations of the Guarantor under this Section 13 shall rank pari passu with the obligations of the Guarantor under any similar guarantees or guarantee agreements issued by the Guarantor with respect to Securities (if any) similar to the Securities or any preferred securities, of the Company or related to trusts established or to be established by the Company (if any), including, without limitation, the guarantee agreements issued by the Guarantor in connection with Attentus Indenture I, Kodiak/Attentus Indenture III, Taberna Indenture I and Taberna Indenture II.
ARTICLE XIV.
Subordination of Guarantee
     SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor.
     The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XIV, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor.
     SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc .
     (a) In the event and during the continuation of any default by the Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Guarantor by the holders of such Senior Debt of the Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any
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premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a Proceeding, all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt of the Guarantor, the Holders of the Securities, together with the holders of any obligations of the Guarantor ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Guarantor the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Guarantor ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt of the Guarantor shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt of the Guarantor at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt of the Guarantor remaining unpaid, to the extent necessary to pay all such Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt of the Guarantor is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Guarantor, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt of the Guarantor or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the
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Senior Debt of the Guarantor at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 14.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Guarantor in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Guarantor, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
     SECTION 14.3. Payment Permitted If No Default.
     Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 14.2 or of any Proceeding referred to in Section 14.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 14.8) that such payment would have been prohibited by the provisions of this Article XIV, except as provided in Section 14.8.
     SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Guarantor pursuant to the provisions of this Article XIV (equally and ratably with the holders of all indebtedness of the Guarantor that by its express terms is subordinated to Senior Debt of the Guarantor to substantially the same extent as the Securities are subordinated to the Senior Debt of the Guarantor and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Guarantor) to the rights of the holders of such Senior Debt of the Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XIV, and no payments made pursuant to the provisions of this Article XIV to the holders of Senior Debt of the Guarantor by Holders of the Securities or the Trustee, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.
- 70 -

 
     SECTION 14.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XIV are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Trustee or the Holder of any Security (other than the Company and its Affiliates) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XIV of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 14.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XIV and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.
     SECTION 14.7. No Waiver of Subordination Provisions.
     (a) No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     (b) Without in any way limiting the generality of paragraph (a) of this Section 14.7, the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.
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     SECTION 14.8. Notice to Trustee.
     (a) The Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Guarantor or a holder of Senior Debt of the Guarantor or from any trustee, agent or representative therefor;  provided , that if the Trustee shall not have received the notice provided for in this Section 14.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Guarantor to participate in any payment or distribution pursuant to this Article XIV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIV, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV.
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     SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.
     The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt of the Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Guarantor shall be entitled by virtue of this Article XIV or otherwise.
     SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Debt of the Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Guarantor, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to the holders of such Senior Debt of the Guarantor shall be read into this Indenture against the Trustee. Nothing in this Article XIV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
     SECTION 14.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “ Trustee ” as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee.
* * * *
     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.
* * * *
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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
 	 	 	 	 	
 	Arbor Realty SR, Inc.
 	 	
 	By:  	 	 	
 	 	Name:  	/s/ Guy R. Milone, Jr.	 	
 	 	Title:  	Vice President	 	
 	
 	Arbor Realty Trust, Inc.
 	 	
 	By:  	 	 	
 	 	Name:  	/s/ Paul Elenio	 	
 	 	Title:  	Chief Financial Officer	 	
 	
 	Wilmington Trust Company, as Trustee
 	 	
 	By:  	 	 	
 	 	Name:  	/s/ W. Thomas Morris, II	 	
 	 	Title:  	Vice President	 	

 
 	 	 	 	 	
EXHIBIT A
DETERMINATION OF LIBOR
     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market;  provided  that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
     (3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
Exh. A-1

 
EXHIBIT B
FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3
     Pursuant to Section 10.3 of the Indenture, dated as of May 6, 2009 (as amended or supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the “Company”) and Wilmington Trust Company, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the  [fiscal/calendar]  year ending on ___, 20___  [, except as follows: specify each such default and the nature and status thereof ].
     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of ___, 20___.

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

 	 	 	
 	Name:  	 	 	
 	Title:  [Must be the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of Arbor Realty SR, Inc.]  	 	
Exh. B-1

 
 	 	 	 	 	
Schedule A
Form of Officer’s Financial Certificate
     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), among Arbor Realty SR, Inc. (the “Company” ), Arbor Realty Trust, Inc. (the  “Guarantor” ) and Wilmington Trust Company, as trustee, that, as of [date], [20___]:
     [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Guarantor and its consolidated subsidiaries for the three years ended [date], 20___.]
     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Guarantor and its consolidated subsidiaries for the fiscal quarter ended [date], 20___.]
     The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ( “GAAP” ), the financial position of the Guarantor and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
     There has been no monetary default with respect to any indebtedness owed by the Guarantor and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below:].
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this ___ day of                        , 200[___].

 	By:  	 	 	
 	Name:  	 	 	
 	 	 	Arbor Realty SR, Inc.
333 Earle Ovington Blvd., Suite 900
Uniondale, NY 11553
(516) 832-7408 	 	
 	
Sch. A-1

Exhibit 10.34
EXECUTION VERSION
JUNIOR SUBORDINATED INDENTURE
between
ARBOR REALTY SR, INC.
ARBOR REALTY TRUST, INC,
as guarantor
AND
WILMINGTON TRUST COMPANY,
as trustee
 
Dated as of May 6, 2009
 
Kodiak/Attentus Indenture III

 
TABLE OF CONTENTS
 	 	 	 	 	
 	 	Page	
ARTICLE I. Definitions and Other Provisions of General Application	 	 	1	 	
 	 	 	 	 	
SECTION 1.1. Definitions	 	 	1	 	
SECTION 1.2. Compliance Certificate and Opinions	 	 	10	 	
SECTION 1.3. Forms of Documents Delivered to Trustee	 	 	10	 	
SECTION 1.4. Acts of Holders	 	 	11	 	
SECTION 1.5. Notices, Etc. to Trustee and Company	 	 	13	 	
SECTION 1.6. Notice to Holders; Waiver	 	 	14	 	
SECTION 1.7. Effect of Headings and Table of Contents	 	 	14	 	
SECTION 1.8. Successors and Assigns	 	 	14	 	
SECTION 1.9. Separability Clause	 	 	14	 	
SECTION 1.10. Benefits of Indenture	 	 	15	 	
SECTION 1.11. Governing Law	 	 	15	 	
SECTION 1.12. Submission to Jurisdiction	 	 	15	 	
SECTION 1.13. Non-Business Days	 	 	15	 	
SECTION 1.14. Shareholder Communications Act	 	 	15	 	
 	 	 	 	 	
ARTICLE II. Security Forms	 	 	16	 	
 	 	 	 	 	
SECTION 2.1. Form of Security	 	 	16	 	
SECTION 2.2. Restricted Legend	 	 	20	 	
SECTION 2.3. Form of Trustee’s Certificate of Authentication	 	 	22	 	
SECTION 2.4. Temporary Securities	 	 	22	 	
SECTION 2.5. Definitive Securities	 	 	23	 	
 	 	 	 	 	
ARTICLE III. THE SECURITIES	 	 	23	 	
 	 	 	 	 	
SECTION 3.1. Payment of Principal and Interest	 	 	23	 	
SECTION 3.2. Denominations	 	 	25	 	
SECTION 3.3. Execution, Authentication, Delivery and Dating	 	 	25	 	
SECTION 3.4. Global Securities	 	 	26	 	
SECTION 3.5. Registration, Transfer and Exchange Generally	 	 	28	 	
SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities	 	 	29	 	
SECTION 3.7. Persons Deemed Owners	 	 	30	 	
SECTION 3.8. Cancellation	 	 	30	 	
SECTION 3.9. Reserved	 	 	31	 	
SECTION 3.10. Reserved	 	 	31	 	
SECTION 3.11. Agreed Tax Treatment	 	 	31	 	
SECTION 3.12. CUSIP Numbers	 	 	31	 	
 	 	 	 	 	
ARTICLE IV. SATISFACTION AND DISCHARGE	 	 	32	 	
 	 	 	 	 	
SECTION 4.1. Satisfaction and Discharge of Indenture	 	 	32	 	
SECTION 4.2. Application of Trust Money	 	 	33	 	
- i -

 
 	 	 	 	 	
 	 	Page	
ARTICLE V. Remedies	 	 	33	 	
 	 	 	 	 	
SECTION 5.1. Events of Default	 	 	33	 	
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment	 	 	35	 	
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee	 	 	35	 	
SECTION 5.4. Trustee May File Proofs of Claim	 	 	36	 	
SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities	 	 	37	 	
SECTION 5.6. Application of Money Collected	 	 	37	 	
SECTION 5.7. Limitation on Suits	 	 	37	 	
SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest	 	 	38	 	
SECTION 5.9. Restoration of Rights and Remedies	 	 	38	 	
SECTION 5.10. Rights and Remedies Cumulative	 	 	38	 	
SECTION 5.11. Delay or Omission Not Waiver	 	 	38	 	
SECTION 5.12. Control by Holders	 	 	39	 	
SECTION 5.13. Waiver of Past Defaults	 	 	39	 	
SECTION 5.14. Undertaking for Costs	 	 	40	 	
SECTION 5.15. Waiver of Usury, Stay or Extension Laws	 	 	40	 	
SECTION 5.16. Original Kodiak Indentures Events of Default	 	 	40	 	
 	 	 	 	 	
ARTICLE VI. The Trustee	 	 	40	 	
 	 	 	 	 	
SECTION 6.1. Corporate Trustee Required	 	 	40	 	
SECTION 6.2. Certain Duties and Responsibilities	 	 	41	 	
SECTION 6.3. Notice of Defaults	 	 	42	 	
SECTION 6.4. Certain Rights of Trustee	 	 	42	 	
SECTION 6.5. May Hold Securities	 	 	44	 	
SECTION 6.6. Compensation; Reimbursement; Indemnity	 	 	44	 	
SECTION 6.7. Resignation and Removal; Appointment of Successor	 	 	45	 	
SECTION 6.8. Acceptance of Appointment by Successor	 	 	46	 	
SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business	 	 	46	 	
SECTION 6.10. Not Responsible for Recitals or Issuance of Securities	 	 	47	 	
SECTION 6.11. Appointment of Authenticating Agent	 	 	47	 	
 	 	 	 	 	
ARTICLE VII. Holder’s Lists and Reports by Company	 	 	49	 	
 	 	 	 	 	
SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders	 	 	49	 	
SECTION 7.2. Preservation of Information, Communications to Holders	 	 	49	 	
SECTION 7.3. Reports by Company	 	 	50	 	
 	 	 	 	 	
ARTICLE VIII. Consolidation, Merger, Conveyance, Transfer or Lease	 	 	50	 	
 	 	 	 	 	
SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms	 	 	50	 	
SECTION 8.2. Successor Company or Guarantor Substituted	 	 	52	 	
 	 	 	 	 	
ARTICLE IX. Supplemental Indentures	 	 	52	 	
 	 	 	 	 	
SECTION 9.1. Supplemental Indentures without Consent of Holders	 	 	52	 	
- ii -

 
 	 	 	 	 	
 	 	Page	
SECTION 9.2. Supplemental Indentures with Consent of Holders	 	 	53	 	
SECTION 9.3. Execution of Supplemental Indentures	 	 	54	 	
SECTION 9.4. Effect of Supplemental Indentures	 	 	54	 	
SECTION 9.5. Reference in Securities to Supplemental Indentures	 	 	54	 	
 	 	 	 	 	
ARTICLE X. Covenants	 	 	54	 	
 	 	 	 	 	
SECTION 10.1. Payment of Principal, Premium, if any, and Interest	 	 	54	 	
SECTION 10.2. Money for Security Payments to be Held in Trust	 	 	55	 	
SECTION 10.3. Statement as to Compliance	 	 	55	 	
SECTION 10.4. Calculation Agent	 	 	56	 	
SECTION 10.5. Additional Indebtedness	 	 	56	 	
SECTION 10.6. Additional Covenants	 	 	57	 	
SECTION 10.7. Waiver of Covenants	 	 	58	 	
SECTION 10.8. Treatment of Securities	 	 	59	 	
SECTION 10.9. Inspection Rights	 	 	59	 	
 	 	 	 	 	
ARTICLE XI. Redemption of Securities	 	 	59	 	
 	 	 	 	 	
SECTION 11.1. Optional Redemption	 	 	59	 	
SECTION 11.2. Special Event Redemption	 	 	59	 	
SECTION 11.3. Election to Redeem; Notice to Trustee	 	 	60	 	
SECTION 11.4. Selection of Securities to be Redeemed	 	 	60	 	
SECTION 11.5. Notice of Redemption	 	 	60	 	
SECTION 11.6. Deposit of Redemption Price	 	 	61	 	
SECTION 11.7. Payment of Securities Called for Redemption	 	 	61	 	
 	 	 	 	 	
ARTICLE XII. Subordination of Securities	 	 	62	 	
 	 	 	 	 	
SECTION 12.1. Securities Subordinate to Senior Debt	 	 	62	 	
SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	62	 	
SECTION 12.3. Payment Permitted If No Default	 	 	64	 	
SECTION 12.4. Subrogation to Rights of Holders of Senior Debt	 	 	64	 	
SECTION 12.5. Provisions Solely to Define Relative Rights	 	 	64	 	
SECTION 12.6. Trustee to Effectuate Subordination	 	 	65	 	
SECTION 12.7. No Waiver of Subordination Provisions	 	 	65	 	
SECTION 12.8. Notice to Trustee	 	 	65	 	
SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	66	 	
SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt	 	 	66	 	
SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights	 	 	66	 	
SECTION 12.12. Article Applicable to Paying Agents	 	 	66	 	
 	 	 	 	 	
ARTICLE XIII. Guarantee	 	 	67	 	
 	 	 	 	 	
SECTION 13.1. The Guarantee	 	 	67	 	
SECTION 13.2. Guarantee Unconditional, etc	 	 	67	 	
- iii -

 
 	 	 	 	 	
 	 	Page	
SECTION 13.3. Reinstatement	 	 	67	 	
SECTION 13.4. Subrogation	 	 	68	 	
SECTION 13.5. Pari Passu Guarantees	 	 	68	 	
 	 	 	 	 	
ARTICLE XIV. Subordination of Guarantee	 	 	68	 	
 	 	 	 	 	
SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor	 	 	68	 	
SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc.	 	 	68	 	
SECTION 14.3. Payment Permitted If No Default	 	 	70	 	
SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor	 	 	70	 	
SECTION 14.5. Provisions Solely to Define Relative Rights	 	 	71	 	
SECTION 14.6. Trustee to Effectuate Subordination	 	 	71	 	
SECTION 14.7. No Waiver of Subordination Provisions	 	 	71	 	
SECTION 14.8. Notice to Trustee	 	 	72	 	
SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent	 	 	72	 	
SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor	 	 	73	 	
SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights	 	 	73	 	
SECTION 14.12. Article Applicable to Paying Agents	 	 	73	 	
SCHEDULES
Schedule A  –  Determination of LIBOR
Exhibit A  –  Form of Officer’s Financial Certificate
Exhibit B — Form of Officers’ Certificate Under Section 10.3
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     This Junior Subordinated Indenture (the “Indenture”), dated as of May 6, 2009, between ARBOR REALTY SR, INC.,  a Maryland corporation (the  “Company” ),  ARBOR REALTY TRUST, INC. , a Maryland Corporation (the  “Guarantor” ) and  WILMINGTON TRUST COMPANY , a national banking association, as Trustee (in such capacity, the  “Trustee” ).
Recitals of the Company
     WHEREAS, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its unsecured junior subordinated notes (the  “Securities” ) and to provide the terms and conditions upon which the Securities are to be authenticated, issued and delivered; and
     WHEREAS, the Guarantor has duly authorized the issuance of its guarantee of the Securities (the “Guarantee” ) under this Indenture; and
     WHEREAS, all things necessary to make this Indenture a valid agreement of the Company and the Guarantor, in accordance with its terms, have been done.
     NOW, THEREFORE, this Indenture Witnesseth:
     For and in consideration of the premises and the purchase of the Securities by the Holders thereof, it is mutually covenanted and agreed, for the equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE I.
Definitions and Other Provisions of General Application
     SECTION 1.1. Definitions.
     For all purposes of this Indenture, except as otherwise expressly provided or unless the context otherwise requires:
     (a) the terms defined in this Article I have the meanings assigned to them in this Article I;
     (b) the words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”;
     (c) all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP;
     (d) unless the context otherwise requires, any reference to an “Article” or a “Section” refers to an Article or a Section, as the case may be, of this Indenture;
     (e) the words “hereby”, “herein”, “hereof” and “hereunder” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision;
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     (f) a reference to the singular includes the plural and vice versa; and
     (g) the masculine, feminine or neuter genders used herein shall include the masculine, feminine and neuter genders.
     “Act” when used with respect to any Holder, has the meaning specified in Section 1.4.
     “Additional Interest” means the interest, if any, that shall accrue on any amounts payable on the Securities, the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the rate per annum specified or determined as specified in such Security, in each case to the extent legally enforceable.
     “Affiliate” means in relation to any Person, any other Person (a) that is directly or indirectly Controlling or Controlled by or under direct or indirect common Control with such first Person, (b) that is directly or indirectly the beneficial owner of twenty-five percent (25%) or more of the Equity Interests in the first Person or twenty-five percent (25%) or more of the total voting power of the first Person or of rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of the first Person, (c) twenty-five percent (25%) or more of whose Equity Interests or total voting power is directly or indirectly beneficially owned by the first Person or such first Person has rights or warrants to purchase Equity Interests or voting power (whether or not currently exercisable) of such Person, or (d) any officer or director of such Person.
     “Applicable Depositary Procedures” means, with respect to any transfer or transaction involving a Global Security or beneficial interest therein, the rules and procedures of the Depositary for such Security, in each case to the extent applicable to such transaction and as in effect from time to time.
     “Attentus Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) in original principal amount of Junior Subordinated Notes due 2035.
     “Attentus Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009 by and among the Company, Arbor Realty Trust, Inc., as guarantor and Wilmington Trust Company, as trustee, pursuant to which Company issued Two Million Six Hundred Thirty Two Thousand Dollars ($2,632,000) in original principal amount of Junior Subordinated Notes due 2036.
     “Authenticating Agent” means any Person authorized by the Trustee pursuant to Section 6.11 to act on behalf of the Trustee to authenticate the Securities.
     “Bankruptcy Code” means Title 11 of the United States Code or any successor statute(s) thereto, or any similar federal or state law for the relief of debtors, in each case as amended from time to time.
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     “Board of Directors” means the board of directors of the Company or the Guarantor, as the context requires, or any duly authorized committee of that board.
     “Board Resolution” means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company or the Guarantor, as the context requires, to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification.
     “Business Day” means any day other than (i) a Saturday or Sunday, (ii) a day on which banking institutions in the City of New York are authorized or required by law or executive order to remain closed or (iii) a day on which the Corporate Trust Office of the Trustee is closed for business.
     “Calculation Agent” has the meaning specified in Section 10.4.
     “Commission” has the meaning specified in Section 7.3(c).
     “Company” means the Person named as the “Company” in the first paragraph of this Indenture until a successor Person shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “Company” shall mean such successor Person.
     “Company Request” and “Company Order” mean, respectively, the written request or order signed in the name of the Company by its Chairman of the Board of Directors, its Vice Chairman of the Board of Directors, its Chief Executive Officer, President or a Vice President, and by its Chief Financial Officer, its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.
     “Control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
     “Corporate Trust Office” means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered, which office at the date of this Indenture is located at Rodney Square North, 1100 North Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Capital Markets.
     “Debt” means, with respect to any Person, whether recourse is to all or a portion of the assets of such Person, whether currently existing or hereafter incurred and whether or not contingent and without duplication, (i) every obligation of such Person for money borrowed; (ii) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (iii) every reimbursement obligation of such Person with respect to letters of credit, bankers’ acceptances or similar facilities issued for the account of such Person; (iv) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or other accrued liabilities arising in the ordinary course of business); (v) every capital lease obligation of such Person; (vi) all indebtedness of such Person, whether incurred on or prior to the date of this Indenture or thereafter incurred, for
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claims in respect of derivative products, including interest rate, foreign exchange rate and commodity forward contracts, options and swaps and similar arrangements; (vii) every obligation of the type referred to in clauses (i) through (vi) of another Person and all dividends of another Person the payment of which, in either case, such Person has guaranteed or is responsible or liable for, directly or indirectly, as obligor or otherwise; and (viii) any renewals, extensions, refundings, amendments or modifications of any obligation of the type referred to in clauses (i) through (vii).
     “Defaulted Interest” has the meaning specified in Section 3.1.
     “Depositary” means an organization registered as a clearing agency under the Exchange Act that is designated as Depositary by the Company or any successor thereto.
     “Depositary Participant” means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Depositary effects book-entry transfers and pledges of securities deposited with the Depositary.
     “Dollar” or “$” means the currency of the United States of America that, as at the time of payment, is legal tender for the payment of public and private debts.
     “EDGAR” has the meaning specified in Section 7.3(c).
     “Equity Interests” means with respect to any person (a) if such Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stock interests (both common stock and preferred stock) in a corporation.
     “Event of Default” has the meaning specified in Section 5.1.
     “Exchange Act” means the Securities Exchange Act of 1934 or any statute successor thereto, in each case as amended from time to time.
     “Exchange Agreement” means that certain Exchange Agreement executed and delivered contemporaneously with this Indenture by and among the Company and the parties named therein, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Expiration Date” has the meaning specified in Section 1.4(h).
     “Fixed Rate” means a fixed rate equal to one half of one percent (0.50%) per annum.
     “GAAP” means United States generally accepted accounting principles, consistently applied, from time to time in effect.
     “Guarantee” has the meaning specified in the second recital of this Indenture.
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     “Guarantor” means the Person named as the “Guarantor” in the first paragraph of this Indenture until a successor corporation shall have become such pursuant to the applicable provisions of this Indenture, and thereafter “ Guarantor ” shall mean such successor corporation.
     “Global Security” means a Security that evidences all or part of the Securities, the ownership and transfers of which shall be made through book entries by a Depositary.
     “Government Obligation” means (a) any security that is (i) a direct obligation of the United States of America of which the full faith and credit of the United States of America is pledged or (ii) an obligation of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America or the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America, which, in either case (i) or (ii), is not callable or redeemable at the option of the issuer thereof, and (b) any depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act) as custodian with respect to any Government Obligation that is specified in clause (a) above and held by such bank for the account of the holder of such depositary receipt, or with respect to any specific payment of principal of or interest on any Government Obligation that is so specified and held, provided, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Government Obligation or the specific payment of principal or interest evidenced by such depositary receipt.
     “Holder” means a Person in whose name a Security is registered in the Securities Register ; provided, that, for purposes of Article XIII hereof, in determining whether the Holders of the requisite percentage of Securities have given any direction, request, notice, consent or waiver hereunder, and for purposes of enforcement of the Guarantee provisions, Holder shall mean any Holder other than the Company, the Guarantor or any Affiliate of the Company, or the Guarantor.
     “Indenture” means this instrument as originally executed or as it may from time to time be amended or supplemented by one or more amendments or indentures supplemental hereto entered into pursuant to the applicable provisions hereof.
     “Interest Payment Date” means July 30, October 30, January 30 and April 30 of each year during the term of this Indenture.
     “Interest Period” means the period commencing on, and including, an Interest Payment Date and continuing through and including the day prior to the next succeeding Interest Payment Date; provided, however, that the initial Interest Period shall commence on May 6, 2009.
     “Investment Company Act” means the Investment Company Act of 1940 or any successor statute thereto, in each case as amended from time to time.
     “Kodiak CDO Management, LLC” means Kodiak CDO Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “LIBOR” has the meaning specified in Schedule A.
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     “LIBOR Business Day” has the meaning specified in Schedule A.
     “LIBOR Determination Date” has the meaning specified in Schedule A.
     “Maturity,” means when used with respect to any Security, the date on which the principal of such Security or any installment of principal becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption or otherwise.
     “Modification Period” means the period commencing as of May 6, 2009 and continuing through, but excluding, the Modification Period Termination Date.
     “Modification Period Termination Date” means the earliest of (a) April 30, 2012, (b) the first Interest Payment Date occurring after the Company has elected to terminate the Modification Period in accordance with the terms of Section 3.1(g) , (c) the effective date set forth in  Section 10.5 , if applicable, and (d) the effective date set forth in  Section 10.6 , if applicable.
     “New Stock Class” shall have the definition set forth in Section 10.6(c) herein.
     “Notice of Default” means a written notice of the kind specified in Section 5.1(c).
     “Officers’ Certificate” means a certificate signed by the Chairman of the Board, a Vice Chairman of the Board, the Chief Executive Officer, the President or a Vice President, and by the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary, of the Company or the Guarantor, as the context requires, and delivered to the Trustee.
     “Operative Documents” means the Indenture and the Securities, as the same may be modified, amended, supplemented, restated or replaced from time to time.
     “Opinion of Counsel” means a written opinion of counsel, who may be counsel for or an employee of the Company and the Guarantor.
     “Optional Redemption Price” has the meaning set forth in Section 11.1.
     “Original Issue Date” means the date of original issuance of each Security.
     “Original Kodiak Indentures” has the meaning specified in Section 5.16.
     “Other Taxes” has the meaning set forth in Section 3.11(c).
     “Outstanding” means, when used in reference to any Securities, as of the date of determination, all Securities theretofore authenticated and delivered under this Indenture, except:
     (i) Securities theretofore canceled by the Trustee or delivered to the Trustee for cancellation;
     (ii) Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Trustee or any Paying Agent in trust for
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the Holders of such Securities; provided, that, if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made; and
     (iii) Securities that have been paid or in substitution for or in lieu of which other Securities have been authenticated and delivered pursuant to the provisions of this Indenture, unless proof satisfactory to the Trustee is presented that any such Securities are held by Holders in whose hands such Securities are valid, binding and legal obligations of the Company;
provided, that in determining whether the Holders of the requisite principal amount of Outstanding Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or the Guarantor, if any, or any other obligor upon the Securities, if any, or any Affiliate of the Company, the Guarantor or such other obligor shall be disregarded and deemed not to be Outstanding unless the Company shall hold all Outstanding Securities, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities that a Responsible Officer of the Trustee actually knows to be so owned shall be so disregarded. Securities so owned that have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Securities and that the pledgee is not the Company, the Guarantor or any other obligor upon the Securities or any Affiliate of the Company, the Guarantor or such other obligor.
     “Paying Agent” means the Trustee or any Person (other than the Company or any Affiliate of the Company) authorized by the Trustee to pay the principal of or any premium or interest on, or other amounts in respect of, any Securities on behalf of the Company.
     “Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or any government or agency or political subdivision thereof, or any other entity of whatever nature.
     “Place of Payment” means, with respect to the Securities, the Corporate Trust Office of the Trustee.
     “Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security. For the purposes of this definition, any security authenticated and delivered under  Section 3.6  in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.
     “Proceeding” has the meaning specified in Section 12.2(b).
     “Redemption Date” means, when used with respect to any Security to be redeemed, the date fixed for such redemption by or pursuant to this Indenture.
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     “Redemption Price” means, when used with respect to any Security to be redeemed, in whole or in part, the Special Redemption Price or the Optional Redemption Price, as applicable, at which such Security or portion thereof is to be redeemed as fixed by or pursuant to this Indenture.
     “Reference Banks” has the meaning specified in Schedule A.
     “Regular Record Date” for the interest payable on any Interest Payment Date with respect to the Securities means the date that is fifteen (15) days preceding such Interest Payment Date (whether or not a Business Day).
     “Responsible Officer” means, when used with respect to the Trustee, any Senior Vice President, any Vice President, any Assistant Vice President, the Secretary, any Assistant Secretary, the Treasurer, any Assistant Treasurer, any Trust Officer or Assistant Trust Officer, or any other officer in the Corporate Trust Office of the Trustee with direct responsibility for the administration of this Indenture and also means, with respect to a particular corporate trust matter, any other officer of the Trustee to whom such matter is referred because of that officer’s knowledge of and familiarity with the particular subject.
     “Rights Plan” means a plan of the Company providing for the issuance by the Company to all holders of its Equity Interests of rights entitling the holders thereof to subscribe for or purchase Equity Interests or any class or series of Equity Interests in the Company which rights (i) are deemed to be transferred with such Equity Interests and (ii) are also issued in respect of future issuances of such Equity Interests, in each case until the occurrence of a specified event or events.
     “Securities” or “Security” means any debt securities or debt security, as the case may be, authenticated and delivered under this Indenture.
     “Securities Act” means the Securities Act of 1933 or any successor statute thereto, in each case as amended from time to time.
     “Securities Register” and “Securities Registrar” have the respective meanings specified in Section 3.5 .
     “Senior Debt” means the principal of and any premium and interest on (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or the Guarantor, as the context requires, whether or not such claim for post-petition interest is allowed in such proceeding) all Debt of the Company or the Guarantor, as the context requires, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless it is provided in the instrument creating or evidencing the same or pursuant to which the same is outstanding, that such obligations are not superior in right of payment to the Securities issued under this Indenture; provided, that Senior Debt shall not be deemed to include any (i) debt or (ii) other debt securities (and guarantees, if any, in respect of such debt securities) issued to any trust (or a trustee of any such trust), partnership or other entity affiliated with the Company or the Guarantor that is a financing vehicle of the Company or the Guarantor (a “financing entity”) in connection with the issuance by such financing entity of equity securities
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or other securities, in each case of (i) or (ii) pursuant to an instrument that ranks pari passu with or junior in right of payment to this Indenture.
     “Special Event” means the occurrence of a Tax Event.
     “Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 3.1 .
     “Special Redemption Price” has the meaning set forth in Section 11.2.
     “Stated Maturity” means April 30, 2037.
     “Subsidiary” of a Person means (a) any corporation more than fifty percent 50% of the outstanding securities having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries or (b) any partnership, limited liability company, association, joint venture or similar business organization more than fifty percent 50% of the ownership interests having ordinary voting power of which shall at the time be owned or Controlled, directly or indirectly, by such Person and/or by one or more of its Subsidiaries.
     “Taberna Indenture I” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which the Company issued Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of Junior Subordinated Notes due 2032.
     “Taberna Indenture II” means that certain Junior Subordinated Indenture dated as of May 6, 2009, between the Company and The Bank of New York Mellon Trust Company, National Association, as trustee, pursuant to which Company issued One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of Junior Subordinated Notes due 2034.
     “Tax Event” means the receipt by the Company of an Opinion of Counsel experienced in such matters to the effect that, as a result of (a) any amendment to or change (including any announced prospective change) in the laws or any regulations thereunder of the United States or any political subdivision or taxing authority thereof or therein or (b) any judicial decision or any official administrative pronouncement (including any private letter ruling, technical advice memorandum or field service advice) or regulatory procedure, including any notice or announcement of intent to adopt any such pronouncement or procedure (an “Administrative Action”), regardless of whether such judicial decision or Administrative Action is issued to or in connection with a proceeding involving the Company and whether or not subject to review or appeal, which amendment, change, judicial decision or Administrative Action is enacted, promulgated or announced, in each case, on or after the date of issuance of the Securities, there is more than an insubstantial risk that interest payable by the Company on the Securities is not, or within ninety (90) days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes.
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     “Trustee” means the Person named as the “Trustee” in the first paragraph of this instrument, solely in its capacity as such and not in its individual capacity, until a successor Trustee shall have become such pursuant to the applicable provisions of this Indenture, and, thereafter, “Trustee” shall mean or include each Person who is then a Trustee hereunder.
     “Trust Indenture Act” means the Trust Indenture Act of 1939, as amended and as in effect on the date as of this Indenture.
     SECTION 1.2. Compliance Certificate and Opinions.
     (a) Upon any application or request by the Company or the Guarantor to the Trustee to take any action under any provision of this Indenture, the Company or the Guarantor shall, if requested by the Trustee, furnish to the Trustee an Officers’ Certificate stating that all conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent (including covenants compliance with which constitutes a condition precedent), if any, have been complied with.
     (b) Every certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than the certificate provided pursuant to  Section 10.3 ) shall include:
     (i) a statement by each individual signing such certificate or opinion that such individual has read such covenant or condition and the definitions herein relating thereto;
     (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions of such individual contained in such certificate or opinion are based;
     (iii) a statement that, in the opinion of such individual, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and
     (iv) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with.
     SECTION 1.3. Forms of Documents Delivered to Trustee.
     (a) In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents.
     (b) Any certificate or opinion of an officer of the Company or the Guarantor may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by,
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counsel, unless such officer knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to matters upon which his or her certificate or opinion is based are erroneous. Any such certificate or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Company or the Guarantor stating that the information with respect to such factual matters is in the possession of the Company or the Guarantor, unless such counsel knows, or after reasonable inquiry should know, that the certificate or opinion or representations with respect to such matters are erroneous.
     (c) Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this Indenture, they may, but need not, be consolidated and form one instrument.
     (d) Whenever, subsequent to the receipt by the Trustee of any Board Resolution, Officers’ Certificate, Opinion of Counsel or other document or instrument, a clerical, typographical or other inadvertent or unintentional error or omission shall be discovered therein, a new document or instrument may be substituted therefor in corrected form with the same force and effect as if originally received in the corrected form and, irrespective of the date or dates of the actual execution and/or delivery thereof, such substitute document or instrument shall be deemed to have been executed and/or delivered as of the date or dates required with respect to the document or instrument for which it is substituted. Without limiting the generality of the foregoing, any Securities issued under the authority of such defective document or instrument shall nevertheless be the valid obligations of the Company entitled to the benefits of this Indenture equally and ratably with all other Outstanding Securities.
     SECTION 1.4. Acts of Holders.
     (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given to or taken by Holders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Holders in person or by an agent thereof duly appointed in writing; and, except as herein otherwise expressly provided, such action shall become effective when such instrument or instruments (including any appointment of an agent) is or are delivered to the Trustee, and, where it is hereby expressly required, to the Company or the Guarantor. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” of the Holders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and conclusive in favor of the Trustee and the Company or the Guarantor, if made in the manner provided in this  Section 1.4 .
     (b) The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a Person acting in other than his or her individual capacity, such certificate or affidavit shall also constitute sufficient proof of his or her authority. The fact and date of the execution by any Person of any such instrument or writing, or the authority of the
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Person executing the same, may also be proved in any other manner that the Trustee deems sufficient and in accordance with such reasonable rules as the Trustee may determine.
     (c) The ownership of Securities shall be proved by the Securities Register.
     (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Holder of any Security shall bind every future Holder of the same Security and the Holder of every Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done or suffered to be done by the Trustee or the Company or the Guarantor in reliance thereon, whether or not notation of such action is made upon such Security.
     (e) Without limiting the foregoing, a Holder entitled to take any action hereunder with regard to any particular Security may do so with regard to all or any part of the principal amount of such Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such principal amount.
     (f) Except as set forth in paragraph (g) of this Section 1.4, the Company may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to give, make or take any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Indenture to be given, made or taken by Holders of Securities. If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to take the relevant action, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date (as defined in Section 1.4(h) ) by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Company from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after any record date is set pursuant to this paragraph, the Company, at its own expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Trustee in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (g) The Trustee may set any day as a record date for the purpose of determining the Holders of Outstanding Securities entitled to join in the giving or making of (i) any Notice of Default, (ii) any declaration of acceleration or rescission or annulment thereof referred to in  Section 5.2 , (iii) any request to institute proceedings referred to in  Section 5.7(b)  or (iv) any direction referred to in Section 5.12 . If any record date is set pursuant to this paragraph, the Holders of Outstanding Securities on such record date, and no other Holders, shall be entitled to join in such notice, declaration, request or direction, whether or not such Holders remain Holders after such record date; provided, that no such action shall be effective hereunder unless taken on or prior to the applicable Expiration Date by Holders of the requisite principal amount of Outstanding Securities on such record date. Nothing in this paragraph shall be construed to prevent the Trustee from setting a new record date for any action for which a record date has previously been set pursuant to this paragraph (whereupon the record date previously set shall automatically and with no action by any Person be canceled and of no effect). Promptly after
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any record date is set pursuant to this paragraph, the Trustee, at the Company’s expense, shall cause notice of such record date, the proposed action by Holders and the applicable Expiration Date to be given to the Company in writing and to each Holder of Securities in the manner set forth in  Section 1.6 .
     (h) With respect to any record date set pursuant to paragraph (f) or (g) of this Section 1.4, the party hereto that sets such record date may designate any day as the “Expiration Date” and from time to time may change the Expiration Date to any earlier or later day; provided, that no such change shall be effective unless notice of the proposed new Expiration Date is given to the other party hereto in writing, and to each Holder of Securities in the manner set forth in  Section 1.6 , on or prior to the existing Expiration Date. If an Expiration Date is not designated with respect to any record date set pursuant to this Section 1.4 , the party hereto that set such record date shall be deemed to have initially designated the ninetieth (90 th ) day after such record date as the Expiration Date with respect thereto, subject to its right to change the Expiration Date as provided in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be later than the one hundred eightieth (180 th ) day after the applicable record date.
     SECTION 1.5. Notices, Etc. to Trustee and Company.
     (a) Any request, demand, authorization, direction, notice, consent, waiver, Act of Holders, or other document provided or permitted by this Indenture to be made upon, given or furnished to, or filed with:
     (i) The Trustee by any Holder, the Company or the Guarantor shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with and received by the Trustee at its Corporate Trust Office, or
     (ii) The Company or the Guarantor by the Trustee or any Holder shall be sufficient for every purpose hereunder if in writing and mailed, first class, postage prepaid, to the Company addressed to it at 333 Earle Ovington Blvd., Suite 900, Uniondale, NY 11553, Attention: John Natalone and Attn: Chief Financial Officer, or at any other address previously furnished in writing to the Trustee by the Company and/or the Guarantor, as applicable.
     (b) The Trustee may, but is not required to, rely upon and comply with instructions and directions sent by email or facsimile, (or any other reasonable means of communication) by persons believed by the Trustee in good faith to be authorized to provide such instructions or direction; provided, however, that the Trustee may require such additional evidence, confirmation or certification from any such party or parties as the Trustee, in its reasonable discretion, deems necessary or advisable before acting or refraining from acting upon any such instruction or direction.
     (c) The Trustee agrees to accept and act upon instructions or directions pursuant to this Agreement sent by unsecured email, facsimile transmission or other similar unsecured electronic methods; provided, however, that any Person providing such instructions or directions shall provide to the Trustee an incumbency certificate listing such designated persons, which incumbency certificate shall be amended whenever a person is to be added or deleted from the
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listing. If such Person elects to give the Trustee email or facsimile instructions (or instructions by a similar electronic method) and the Trustee in its discretion elects to act upon such instructions, the Trustee’s understanding of such instructions shall be deemed controlling. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such instructions notwithstanding such instructions conflict or are inconsistent with a subsequent written instruction. Each Person providing instructions or directions to the Trustee hereunder agrees to assume all risks arising out of the use of such electronic methods to submit instructions and directions to the Trustee, including without limitation the risk of the Trustee acting, in good faith, on unauthorized instructions, and the risk of interception and misuse by third parties.
     SECTION 1.6. Notice to Holders; Waiver.
     Where this Indenture provides for notice to Holders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first class, postage prepaid, to each Holder affected by such event to the address of such Holder as it appears in the Securities Register, not later than the latest date, (if any) and not earlier than the earliest date (if any), prescribed for the giving of such notice. If, by reason of the suspension of or irregularities in regular mail service or for any other reason, it shall be impossible or impracticable to mail notice of any event to Holders when said notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Trustee shall be deemed to be a sufficient giving of such notice. In any case where notice to Holders is given by mail, neither the failure to mail such notice, nor any defect in any notice so mailed, to any particular Holder shall affect the sufficiency of such notice with respect to other Holders. Where this Indenture provides for notice in any manner, such notice may be waived in writing by the Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Holders shall be filed with the Trustee, but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such waiver.
     SECTION 1.7. Effect of Headings and Table of Contents.
     The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction of this Indenture.
     SECTION 1.8. Successors and Assigns.
     This Indenture shall be binding upon and shall inure to the benefit of any successor to the Company, the Guarantor and the Trustee, including any successor by operation of law. Except in connection with a transaction involving the Company that is permitted under  Article VIII  and pursuant to which the assignee agrees in writing to perform the Company’s obligations hereunder, the Company shall not assign its obligations hereunder.
     SECTION 1.9. Separability Clause.
     If any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in
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any way be affected or impaired thereby, and there shall be deemed substituted for the provision at issue a valid, legal and enforceable provision as similar as possible to the provision at issue.
     SECTION 1.10. Benefits of Indenture.
     Nothing in this Indenture or in the Securities, express or implied, shall give to any Person, other than the parties hereto and their successors and assigns, the holders of Senior Debt and the Holders of the Securities any benefit or any legal or equitable right, remedy or claim under this Indenture.
     SECTION 1.11. Governing Law.
     This Indenture and the rights and obligations of each of the Holders, the Company, the Guarantor and the Trustee shall be construed and enforced in accordance with and governed by the laws of the State of New York without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     SECTION 1.12. Submission to Jurisdiction.
     ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS INDENTURE MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS INDENTURE, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS INDENTURE.
     SECTION 1.13. Non-Business Days.
     If any Interest Payment Date, Redemption Date or Stated Maturity of any Security shall not be a Business Day, then (notwithstanding any other provision of this Indenture or the Securities) payment of interest, premium, if any, or principal or other amounts in respect of such Security shall not be made on such date, but shall be made on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date, Redemption Date or Stated Maturity, as the case may be, until such next succeeding Business Day) except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the Interest Payment Date or Redemption Date or at the Stated Maturity.
     SECTION 1.14. Shareholder Communications Act.
     (a) With respect to securities under and as defined in the Shareholders Communications Act of 1985 (the “SCA”) issued in the United States, the SCA requires the
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Trustee to disclose to the issuers, upon their request, the name, address and securities position of its customers who are (i) the “beneficial owners” (as defined in the SCA) of the issuer’s securities if the beneficial owner does not object to such disclosure, or (ii) acting as a “respondent bank” (as defined in the SCA) with respect to the securities. Under the SCA, “respondent banks” do not have the option of objecting to such disclosure upon the issuers’ request. The SCA defines a “beneficial owner” as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The SCA defines a “respondent bank” as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as Trustee. Under the SCA, each Holder is either the “beneficial owner” or a “respondent bank.”
     (b) For purposes of this Indenture, until Trustee receives a contrary written instruction from a Holder, Trustee shall assume that such Holder is the beneficial owner of the Securities.
     (c) For purposes of this Indenture, until Trustee receives a contrary instruction from a Holder, Trustee shall release the name, address and securities position to the Company, if the Company requests such information pursuant to the SCA for the specific purpose of direct communications between the Company and such Holder. With respect to securities issued outside of the United States, if applicable, information shall be released to issuers only if required by law or regulation of the particular country in which the securities are located.
ARTICLE II.
Security Forms
     SECTION 2.1. Form of Security.
     Any Security issued hereunder shall be in substantially the following form:
Arbor Realty SR, Inc.
Junior Subordinated Note due 2037

No.                                         	 	$[                    ]	
     Arbor Realty SR, Inc., a corporation organized and existing under the laws of Maryland (hereinafter called the “Company,”  which term includes any successor Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to                       , the principal sum of [                                          ] ($[                      ]) or such other principal amount represented hereby as may be set forth in the records of the Securities Registrar hereinafter referred to in accordance with the Indenture, on April 30, 2037. The Company further promises to pay interest on said principal sum from May 6, 2009, or from the most recent date on and to which interest has been paid or duly provided for, quarterly in arrears on July 30, October 30, January 30 and April 30, of each year, or if any such day is not a Business Day, on the next succeeding Business Day (and no interest shall accrue in respect of the amounts whose payment is so delayed for the period from and after such Interest Payment Date
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until such next succeeding Business Day), except that, if such Business Day falls in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on the Interest Payment Date, at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.43% per annum until the principal hereof is paid or duly provided for or made available for payment;  provided, further , that any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate equal to LIBOR plus 2.43% per annum (in each case, to the extent that the payment of such interest shall be legally enforceable), compounded quarterly, from the dates such amounts are due until they are paid or made available for payment, and such interest shall be payable on demand.
     Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable for any Interest Period shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date shall, as provided in the Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest installment. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than ten (10) days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements of any securities exchange on which the Securities may be listed, and upon such notice as may be required by such exchange, all as more fully provided in the Indenture.
     Payment of principal of, premium, if any, and interest on this Security shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and interest due at the Maturity of this Security shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent, and payments of interest shall be made, subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     The indebtedness evidenced by this Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Debt, and this Security is issued subject to the provisions of the Indenture with respect thereto. Each Holder
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of this Security, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such actions as may be necessary or appropriate to effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in-fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.
     Unless the certificate of authentication hereon has been executed by the Trustee by manual signature, this Security shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose.
[FORM OF REVERSE OF SECURITY]
     This Security is one of a duly authorized issue of securities of the Company (the “Securities”) issued under the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), between the Company, the Guarantor and Wilmington Trust Company, as Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under the Indenture), to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Guarantor, the Trustee, the holders of Senior Debt and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and delivered.
     All terms used in this Security that are defined in the Indenture shall have the meanings assigned to them in the Indenture. The Company may, on any Interest Payment Date, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee) on or after April 30, 2012, and subject to the terms and conditions of Article XI of the Indenture, redeem this Security in whole at any time or in part from time to time at a Redemption Price equal to one hundred percent (100%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In addition, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, upon not less than thirty (30) days’ nor more than sixty (60) days’ written notice to the Holders of the Securities (unless a shorter notice period shall be satisfactory to the Trustee), redeem this Security, in whole but not in part, subject to the terms and conditions of  Article XI  of the Indenture at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount hereof, together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date.
     In the event of redemption of this Security in part only, a new Security or Securities for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected not more than sixty (60) days prior to the Redemption Date by the
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Trustee from the Outstanding Securities not previously called for redemption, by such method as the Trustee shall deem fair and appropriate and which may provide for the selection for redemption of a portion of the principal amount of any Security.
     The Indenture permits, with certain exceptions as therein provided, the Company, the Guarantor and the Trustee at any time to enter into a supplemental indenture or indentures for the purpose of modifying in any manner the rights and obligations of the Company, the Guarantor and of the Holders of the Securities, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities. The Indenture also contains provisions permitting Holders of specified percentages in principal amount of the Securities, on behalf of the Holders of all Securities, to waive compliance by the Company or the Guarantor with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Security.
     No reference herein to the Indenture and no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of and any premium, if any, and interest, including any Additional Interest (to the extent legally enforceable), on this Security at the times, place and rate, and in the coin or currency, herein prescribed.
     As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Security is restricted to transfers to “Qualified Purchasers” (as such term is defined in the Investment Company Act of 1940, as amended), and is registrable in the Securities Register, upon surrender of this Security for registration of transfer at the office or agency of the Company maintained for such purpose, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar and duly executed by, the Holder hereof or such Holder’s attorney duly authorized in writing, and thereupon one or more new Securities, of like tenor, of authorized denominations and for the same aggregate principal amount, will be issued to the designated transferee or transferees.
     The Securities are issuable only in registered form without coupons in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof. As provided in the Indenture and subject to certain limitations therein set forth, Securities are exchangeable for a like aggregate principal amount of Securities and of like tenor of a different authorized denomination, as requested by the Holder surrendering the same.
     No service charge shall be made for any such registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in connection therewith.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee may treat the Person in whose name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the Company, the Guarantor, the Trustee nor any such agent shall be affected by notice to the contrary.
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     The Company and, by its acceptance of this Security or a beneficial interest herein, the Holder of, and any Person that acquires a beneficial interest in, this Security agree that, for United States federal, state and local tax purposes, it is intended that this Security constitute indebtedness.
     This Security shall be construed and enforced in accordance with and governed by the laws of the State of New York, without reference to its conflict of laws provisions (other than Section 5-1401 of the General Obligations Law).
     IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed on this 6 day of May, 2009.
 	 	 	 	 	 	 	 	 	 	 	
 	 	ARBOR REALTY SR, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	 	 	 	 	 	
 	 	 	 	Title:	 	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	
     SECTION 2.2. Restricted Legend.
     (a) Any Security issued hereunder shall bear a legend in substantially the following form:
“[IF THIS SECURITY IS A GLOBAL SECURITY INSERT: THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE OF DTC. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
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THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT” ), AND SUCH SECURITIES, AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF ANY SECURITIES IS HEREBY NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER THE SECURITIES ACT.
THE HOLDER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY OR (II) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED PURCHASER” (AS DEFINED IN SECTION 2(a)(51) OF THE INVESTMENT COMPANY ACT OF 1940, AS AMENDED), AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
THE SECURITIES WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN SUCH SECURITIES.
THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ( “ERISA” ), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE  “CODE” ) (EACH A  “PLAN” ), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
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INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE. ”
     (b) The above legends shall not be removed from any Security unless there is delivered to the Company satisfactory evidence, which may include an Opinion of Counsel, as may be reasonably required to ensure that any future transfers thereof may be made without restriction under or violation of the provisions of the Securities Act and other applicable law. Upon provision of such satisfactory evidence, the Company shall execute and deliver to the Trustee, and the Trustee shall deliver, upon receipt of a Company Order directing it to do so, a Security that does not bear the legend.
     SECTION 2.3. Form of Trustee’s Certificate of Authentication.
     The Trustee’s certificate of authentication shall be in substantially the following form:
     This is one of the within mentioned Securities referred to in the within-mentioned Indenture.
     Dated:
 	 	 	 	 	
 	WILMINGTON TRUST COMPANY, not in its
individual capacity, but solely as Trustee
 	 	
 	By:  	 	 	
 	 	Authorized signatory 	 	

     SECTION 2.4. Temporary Securities.
     (a) Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities that are printed, lithographed, typewritten, mimeographed or otherwise produced, in any denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as evidenced by their execution of such Securities.
     (b) If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay. After the preparation of definitive Securities, the
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temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for that purpose without charge to the Holder. Upon surrender for cancellation of any one or more temporary Securities, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor one or more definitive Securities of any authorized denominations having the same Original Issue Date and Stated Maturity and having the same terms as such temporary Securities. Until so exchanged, the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.
     SECTION 2.5. Definitive Securities.
     The Securities issued on the Original Issue Date shall be in definitive form. The definitive Securities shall be printed, lithographed or engraved, or produced by any combination of these methods, if required by any securities exchange on which the Securities may be listed, on a steel engraved border or steel engraved borders or may be produced in any other manner permitted by the rules of any securities exchange on which the Securities may be listed, all as determined by the officers executing such Securities, as evidenced by their execution of such Securities.
ARTICLE III.
THE SECURITIES
     SECTION 3.1. Payment of Principal and Interest.
     (a) The unpaid principal amount of the Securities shall bear interest at the Fixed Rate during the Modification Period and thereafter at a variable rate of LIBOR plus 2.43% per annum until paid or duly provided for, such interest to accrue from the Original Issue Date or from the most recent Interest Payment Date on and to which interest has been paid or duly provided for, and any overdue principal, premium, if any, and any overdue installment of interest shall bear Additional Interest at the Fixed Rate during the Modification Period, and thereafter at a variable rate of LIBOR plus 2.43% per annum, compounded quarterly from the dates such amounts are due until they are paid or funds for the payment thereof are made legally available for payment.
     (b) Interest and Additional Interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, except that interest and any Additional Interest payable on the Stated Maturity (or any date of principal repayment upon early maturity) of the principal of a Security or on a Redemption Date shall be paid to the Person to whom principal is paid. The initial payment of interest on any Security that is issued between a Regular Record Date and the related Interest Payment Date shall be payable as provided in such Security.
     (c) Any interest on any Security that is due and payable, but is not timely paid or duly provided for, on any Interest Payment Date for Securities (herein called “Defaulted Interest”) shall forthwith cease to be payable to the registered Holder on the relevant Regular Record Date
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by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in paragraph (i) or (ii) below:
     (i) The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest (a “ Special Record Date ”), which shall be fixed in the following manner. At least thirty (30) days prior to the date of the proposed payment, the Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest, which shall be not more than fifteen (15) days and not less than ten (10) days prior to the date of the proposed payment and not less than ten (10) days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first class, postage prepaid, to each Holder of a Security at the address of such Holder as it appears in the Securities Register not less than ten (10) days prior to such Special Record Date. Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered on such Special Record Date; or
     (ii) The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or automated quotation system on which the Securities may be listed, traded or quoted and, upon such notice as may be required by such exchange or automated quotation system (or by the Trustee if the Securities are not listed), if, after notice given by the Company to the Trustee of the proposed payment pursuant to this clause, such payment shall be deemed practicable by the Trustee.
     (d) Payments of interest on the Securities shall include interest accrued to but excluding the respective Interest Payment Dates. During the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year of twelve 30-day months and the amount payable for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. Upon expiration of the Modification Period, the amount of interest payable shall be computed on the basis of a 360-day year and the actual number of days elapsed in the relevant Interest Period.
     (e) Payment of principal of, premium, if any, and interest on the Securities shall be made in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. Payments of principal, premium, if any, and
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interest due at the Maturity of such Securities shall be made at the Place of Payment upon surrender of such Securities to the Paying Agent and payments of interest shall be made subject to such surrender where applicable, by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Paying Agent at least ten (10) Business Days prior to the date for payment by the Person entitled thereto unless proper written transfer instructions have not been received by the relevant record date, in which case such payments shall be made by check mailed to the address of such Person as such address shall appear in the Security Register.
     (f) The parties hereto acknowledge and agree that the Holders of the Securities have certain rights to direct the Company to modify the Interest Payment Dates and corresponding Redemption Date and Stated Maturity of the Securities or a portion of the Securities pursuant to the Exchange Agreement. In the event any such modifications are made to the Securities or a portion of the Securities, appropriate changes to the form of Security set forth in Article II hereof shall be made prior to the issuance and authentication of new or replacement Securities. Any such modification of the Interest Payment Date and corresponding Redemption Date and Stated Maturity with respect to any Securities or tranche of Securities shall not require or be subject to the consent of the Trustee. The Company shall promptly notify the Trustee of any such modifications, which notice shall identify with particularity the necessary changes to the form of security set forth in Article II. The Company agrees to cooperate with all reasonable requests of the Trustee and the Holders in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to the Securities.
     (g) The Company may, at its option from time to time, upon not less than thirty (30) days prior written notice to the Trustee and the Holders, elect to terminate the Modification Period.
     (h) Subject to the foregoing provisions of this Section 3.1, each Security delivered under this Indenture upon transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Security.
     SECTION 3.2. Denominations.
     The Securities shall be in registered form without coupons and shall be issuable in minimum denominations of $100,000 and any integral multiple of $1,000 in excess thereof.
     SECTION 3.3. Execution, Authentication, Delivery and Dating.
     (a) At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities in an aggregate principal amount (including all then Outstanding Securities) not in excess of Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities, and the Trustee in accordance with the Company Order shall authenticate and deliver such Securities. In authenticating such Securities, and accepting the additional responsibilities under this Indenture
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in relation to such Securities, the Trustee shall be entitled to receive, and shall be fully protected in relying upon:
     (i) a copy of any Board Resolution relating thereto; and
     (ii) an Opinion of Counsel stating that: (1) such Securities, when authenticated and delivered by the Trustee and issued by the Company in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute, and the Indenture constitutes, valid and legally binding obligations of the Company, each enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles; (2) the Securities have been duly authorized and executed by the Company and have been delivered to the Trustee for authentication in accordance with this Indenture; (3) the Securities are not required to be registered under the Securities Act; and (4) the Indenture is not required to be qualified under the Trust Indenture Act.
     (b) The Securities shall be executed on behalf of the Company by its Chairman of the Board, its Vice Chairman of the Board, its Chief Executive Officer, its President or one of its Vice Presidents. The signature of any of these officers on the Securities may be manual or facsimile. Securities bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of such Securities.
     (c) No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Security a certificate of authentication substantially in the form provided for herein executed by the Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder. Notwithstanding the foregoing, if any Security shall have been authenticated and delivered hereunder but never issued and sold by the Company, and the Company shall deliver such Security to the Trustee for cancellation as provided in  Section 3.8 , for all purposes of this Indenture such Security shall be deemed never to have been authenticated and delivered hereunder and shall never be entitled to the benefits of this Indenture.
     (d) Each Security shall be dated the date of its authentication.
     SECTION 3.4. Global Securities.
     (a) Upon the election of the Holder after the Original Issue Date, which election need not be in writing, the Securities owned by such Holder shall be issued in the form of one or more Global Securities registered in the name of the Depositary or its nominee. Each Global Security issued under this Indenture shall be registered in the name of the Depositary designated by the Company for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.
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     (b) Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for registered Securities, and no transfer of a Global Security in whole or in part may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (i) such Depositary advises the Trustee and the Company in writing that such Depositary is no longer willing or able to properly discharge its responsibilities as Depositary with respect to such Global Security, and no qualified successor is appointed by the Company within ninety (90) days of receipt by the Company of such notice, (ii) such Depositary ceases to be a clearing agency registered under the Exchange Act and no successor is appointed by the Company within ninety (90) days after obtaining knowledge of such event, (iii) the Company executes and delivers to the Trustee a Company Order stating that the Company elects to terminate the book-entry system through the Depositary or (iv) an Event of Default shall have occurred and be continuing. Upon the occurrence of any event specified in clause (i), (ii), (iii) or (iv) above, the Trustee shall notify the Depositary and instruct the Depositary to notify all owners of beneficial interests in such Global Security of the occurrence of such event and of the availability of Securities to such owners of beneficial interests requesting the same. The Trustee may conclusively rely, and be protected in relying, upon the written identification of the owners of beneficial interests furnished by the Depositary, and shall not be liable for any delay resulting from a delay by the Depositary. Upon the issuance of such Securities and the registration in the Securities Register of such Securities in the names of the Holders of the beneficial interests therein, the Trustee shall recognize such holders of beneficial interests as Holders.
     (c) If any Global Security is to be exchanged for other Securities or canceled in part, or if another Security is to be exchanged in whole or in part for a beneficial interest in any Global Security, then either (i) such Global Security shall be so surrendered for exchange or cancellation as provided in this  Article III  or (ii) the principal amount thereof shall be reduced or increased by an amount equal to (x) the portion thereof to be so exchanged or canceled, or (y) the principal amount of such other Security to be so exchanged for a beneficial interest therein, as the case may be, by means of an appropriate adjustment made on the records of the Securities Registrar, whereupon the Trustee, in accordance with the Applicable Depositary Procedures, shall instruct the Depositary or its authorized representative to make a corresponding adjustment to its records. Upon any such surrender or adjustment of a Global Security by the Depositary, accompanied by registration instructions, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver any Securities issuable in exchange for such Global Security (or any portion thereof) in accordance with the instructions of the Depositary. The Trustee shall not be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be fully protected in relying on, such instructions.
     (d) Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.
     (e) Reserved.
     (f) The Depositary or its nominee, as the registered owner of a Global Security, shall be the Holder of such Global Security for all purposes under this Indenture and the Securities,
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and owners of beneficial interests in a Global Security shall hold such interests pursuant to the Applicable Depositary Procedures. Accordingly, any such owner’s beneficial interest in a Global Security shall be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its Depositary Participants. The Securities Registrar and the Trustee shall be entitled to deal with the Depositary for all purposes of this Indenture relating to a Global Security (including the payment of principal and interest thereon and the giving of instructions or directions by owners of beneficial interests therein and the giving of notices) as the sole Holder of the Security and shall have no obligations to the owners of beneficial interests therein. Neither the Trustee nor the Securities Registrar shall have any liability in respect of any transfers effected by the Depositary.
     (g) The rights of owners of beneficial interests in a Global Security shall be exercised only through the Depositary and shall be limited to those established by law and agreements between such owners and the Depositary and/or its Depositary Participants.
     (h) No holder of any beneficial interest in any Global Security held on its behalf by a Depositary shall have any rights under this Indenture with respect to such Global Security, and such Depositary may be treated by the Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee as the owner of such Global Security for all purposes whatsoever. None of the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests of a Global Security or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Guarantor, the Trustee or any agent of the Company, the Guarantor or the Trustee from giving effect to any written certification, proxy or other authorization furnished by a Depositary or impair, as between a Depositary and such holders of beneficial interests, the operation of customary practices governing the exercise of the rights of the Depositary (or its nominee) as Holder of any Security.
     SECTION 3.5. Registration, Transfer and Exchange Generally.
     (a) The Trustee shall cause to be kept at the Corporate Trust Office a register (the “Securities Register”) in which the registrar and transfer agent with respect to the Securities (the “ Securities Registrar ”), subject to such reasonable regulations as it may prescribe, shall provide for the registration of Securities and of transfers and exchanges of Securities. The Trustee shall at all times also be the Securities Registrar. The provisions of  Article VI  shall apply to the Trustee in its role as Securities Registrar.
     (b) Subject to compliance with Section 2.2(b), upon surrender for registration of transfer of any Security at the offices or agencies of the Company designated for that purpose the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations of like tenor and aggregate principal amount.
     (c) At the option of the Holder, Securities may be exchanged for other Securities of any authorized denominations, of like tenor and aggregate principal amount, upon surrender of
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the Securities to be exchanged at such office or agency. Whenever any Securities are so surrendered for exchange, the Company shall execute, and the Trustee upon receipt of a Company Order shall authenticate and deliver, the Securities that the Holder making the exchange is entitled to receive.
     (d) All Securities issued upon any transfer or exchange of Securities shall be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange.
     (e) Every Security presented or surrendered for transfer or exchange shall (if so required by the Company or the Trustee) be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar, duly executed by the Holder thereof or such Holder’s attorney duly authorized in writing.
     (f) No service charge shall be made to a Holder for any transfer or exchange of Securities, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Securities.
     (g) Neither the Company nor the Trustee shall be required pursuant to the provisions of this Section 3.5 (g): (i) to issue, register the transfer of or exchange any Security during a period beginning at the opening of business fifteen (15) days before the day of selection for redemption of Securities pursuant to  Article XI  and ending at the close of business on the day of mailing of the notice of redemption or (ii) to register the transfer of or exchange any Security so selected for redemption in whole or in part, except, in the case of any such Security to be redeemed in part, any portion thereof not to be redeemed.
     (h) The Company shall designate an office or offices or agency or agencies where Securities may be surrendered for registration or transfer or exchange. The Company initially designates the Corporate Trust Office as its office and agency for such purposes. The Company shall give prompt written notice to the Trustee and to the Holders of any change in the location of any such office or agency.
     (i) The Securities may only be transferred to the Company or a “Qualified Purchaser” as such term is defined in Section 2(a)(51) of the Investment Company Act.
     (j) Neither the Trustee nor the Securities Registrar shall be responsible for ascertaining whether any transfer hereunder complies with the registration provisions of or any exemptions from the Securities Act, applicable state securities laws or the applicable laws of any other jurisdiction, ERISA, the United States Internal Revenue Code of 1986, as amended, or the Investment Company Act; provided, that if a certificate is specifically required by the express terms of this Section 3.5 to be delivered to the Trustee or the Securities Registrar by a Holder or transferee of a Security, the Trustee and the Securities Registrar shall be under a duty to receive and examine the same to determine whether or not the certificate substantially conforms on its face to the requirements of this Indenture and shall promptly notify the party delivering the same if such certificate does not comply with such terms.
     SECTION 3.6. Mutilated, Destroyed, Lost and Stolen Securities.
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     (a) If any mutilated Security is surrendered to the Trustee together with such security or indemnity as may be required by the Trustee to save the Company and the Trustee harmless, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver in exchange therefor a new Security of like tenor and aggregate principal amount and bearing a number not contemporaneously outstanding.
     (b) If there shall be delivered to the Trustee (i) evidence to its satisfaction of the destruction, loss or theft of any Security and (ii) such security or indemnity as may be required by it to save each of the Company and the Trustee harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its receipt of a Company Order written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and aggregate principal amount as such destroyed, lost or stolen Security, and bearing a number not contemporaneously outstanding.
     (c) If any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Security, pay such Security.
     (d) Upon the issuance of any new Security under this Section 3.6, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.
     (e) Every new Security issued pursuant to this Section 3.6 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.
     (f) The provisions of this Section 3.6 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.
     SECTION 3.7. Persons Deemed Owners.
     The Company, the Guarantor, the Trustee and any agent of the Company, the Guarantor or the Trustee shall treat the Person in whose name any Security is registered as the owner of such Security for the purpose of receiving payment of principal of and any interest on such Security and for all other purposes whatsoever, and neither the Company, the Guarantor, the Trustee nor any agent of the Company, the Guarantor or the Trustee shall be affected by notice to the contrary.
     SECTION 3.8. Cancellation.
     All Securities surrendered for payment, redemption, transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee, and any such Securities and Securities surrendered directly to the Trustee for any such purpose shall be
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promptly canceled by it. The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder that the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee. No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this  Section 3.8 , except as expressly permitted by this Indenture. All canceled Securities shall be retained or disposed of by the Trustee in accordance with its customary practices and the Trustee shall deliver to the Company a certificate of such disposition.
     SECTION 3.9.  Reserved.
     SECTION 3.10.  Reserved.
     SECTION 3.11. Agreed Tax Treatment.
     (a) Each Security issued hereunder shall provide that the Company and, by its acceptance or acquisition of a Security or a beneficial interest therein, the Holder of, and any Person that acquires a direct or indirect beneficial interest in, such Security, intend and agree, unless otherwise required by law, to treat such Security as indebtedness of the Company for United States Federal, state and local and foreign tax purposes. The provisions of this Indenture shall be interpreted to further this intention and agreement of the parties.
     (b) Intentionally Omitted.
     (c) The Company shall pay to the relevant taxing authority in accordance with applicable law, and indemnify and hold the Holders harmless from, any present or future stamp, documentary, excise, property or similar taxes, charges or levies that arise from any payment made hereunder or under the Securities or from the execution, delivery or registration of, performance under, or otherwise with respect to, this Indenture or the Securities (hereinafter referred to as “ Other Taxes ”).
     (d) The Company shall indemnify each Holder for and hold each Holder harmless against the full amount of Other Taxes, and for the full amount of Other Taxes of any kind imposed by any jurisdiction on amounts payable under this  Section 3.11 , imposed on or paid by any such Holder and any liability (including penalties, additions to tax, interest and expenses) arising therefrom or with respect thereto. This indemnification shall be made within thirty (30) days from the date any such Holder makes written demand therefor.
     (e) Intentionally Omitted.
     SECTION 3.12. CUSIP Numbers.
     The Company in issuing the Securities may use “CUSIP” numbers (if then generally in use), and, if so, the Trustee shall use “CUSIP” numbers in notices of redemption and other similar or related materials as a convenience to Holders; provided, that any such notice or other materials may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of redemption or other materials and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers.
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ARTICLE IV.
SATISFACTION AND DISCHARGE
     SECTION 4.1. Satisfaction and Discharge of Indenture.
     This Indenture shall, upon Company Request, cease to be of further effect (except as to any surviving rights of registration of transfer or exchange of Securities herein expressly provided for and as otherwise provided in this  Section 4.1 ) and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when
     (a) either
     (i) all Securities theretofore authenticated and delivered (other than (A) Securities that have been mutilated, destroyed, lost or stolen and that have been replaced or paid as provided in Section 3.6 and (B) Securities for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Company and thereafter repaid to the Company or discharged from such trust as provided in Section 10.2) have been delivered to the Trustee for cancellation; or
     (ii) all such Securities not theretofore delivered to the Trustee for cancellation
     (A) have become due and payable, or
     (B) will become due and payable at their Stated Maturity within one year of the date of deposit, or
     (C) are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of subclause (ii)(A), (B) or (C) above, has deposited or caused to be deposited with the Trustee as trust funds in trust for such purpose (x) an amount in the currency or currencies in which the Securities are payable, (y) Government Obligations which through the scheduled payment of principal and interest in respect thereof in accordance with their terms will provide, not later than the due date of any payment, money in an amount or (z) a combination thereof, in each case sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and any premium and interest (including any Additional Interest) to the date of such deposit (in the case of Securities that have become due and payable) or to the Stated Maturity (or any date of principal repayment upon early maturity) or Redemption Date, as the case may be;
     (b) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and
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     (c) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with.
     Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 6.6 , the obligations of the Company to any Authenticating Agent under  Section 6.11  and, if money shall have been deposited with the Trustee pursuant to subclause (a)(ii) of this  Section 4.1 , the obligations of the Trustee under  Section 4.2  and Section 10.2(e)  shall survive.
     SECTION 4.2. Application of Trust Money.
     Subject to the provisions of Section 10.2(e), all money deposited with the Trustee pursuant to Section 4.1 shall be held in trust and applied by the Trustee, in accordance with the provisions of the Securities and this Indenture, to the payment in accordance with  Section 3.1 , either directly or through any Paying Agent as the Trustee may determine, to the Persons entitled thereto, of the principal and any premium and interest (including any Additional Interest) for the payment of which such money or obligations have been deposited with or received by the Trustee. Moneys held by the Trustee under this  Section 4.2  shall not be subject to the claims of holders of Senior Debt under  Article XII .
ARTICLE V.
Remedies
     SECTION 5.1. Events of Default.
     “Event of Default” means, wherever used herein with respect to the Securities, any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
     (a) default in the payment of any interest upon any Security, including any Additional Interest in respect thereof, when it becomes due and payable, and continuance of such default for a period of thirty (30) days; provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days;
     (b) default in the payment of the principal of or any premium on any Security at its Maturity;
     (c) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any covenant or warranty of the Company or Guarantor in this Indenture and continuance of such default or breach for a period of thirty (30) days after there has been given, by registered or certified mail, to the Company and the Guarantor by the Trustee or to the Company, the Guarantor and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default
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or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder;
     (d) the entry by a court having jurisdiction in the premises of a decree or order adjudging the Company or the Guarantor a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company or the Guarantor under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or the Guarantor or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period of sixty (60) consecutive days;
     (e) the institution by the Company or the Guarantor of proceedings to be adjudicated a bankrupt or insolvent, or the consent by the Company or the Guarantor to the institution of bankruptcy or insolvency proceedings against it, or the filing by the Company or the Guarantor of a petition or answer or consent seeking reorganization or relief under any applicable Federal or state bankruptcy, insolvency, reorganization or other similar law, or the consent by it to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of the Company or of any substantial part of its property or the Guarantor or of any substantial part of its property, or the making by the Company or the Guarantor of an assignment for the benefit of creditors, or the admission by the Company or the Guarantor in writing of its inability to pay its debts generally as they become due and its willingness to be adjudicated a bankrupt or insolvent, or the taking of corporate action by the Company or the Guarantor in furtherance of any such action;
     (f) subject to the limitations contained in Section 5.16, any Event of Default (as defined in the applicable Original Kodiak Indentures) under any of the Original Kodiak Indentures;
     (g) default in the performance or breach of any covenant or warranty of the Company set forth in Section 10.9 (Inspections), and the continuance of such default or breach for a period of ten (10) days;
     (h) any Event of Default under any of the Taberna Indenture I, Taberna Indenture II, Attentus Indenture I, or Attentus Indenture II;
     (i) intentionally omitted;
     (j) except as otherwise set forth in this Section 5.1, default in the performance, or breach, of any representation, covenant or warranty of the Company or Guarantor in the Exchange Agreement that has a material adverse effect on the Company’s ability to make payments on the Securities or the Guarantor’s ability to make payments required hereunder, or that has a material adverse effect on the value of the Securities, and the continuance of any such default or breach for a period of thirty (30) days after either (i) the Company’s or Guarantor’s discovery thereof and failure to cure or remedy same within such time period, or (ii) after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company
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and the Trustee by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder; or
     (k) the Guarantee shall cease to be in full force and effect or the Guarantor shall, in writing to the Trustee, to a Holder or a holder of the Preferred Securities or to any governmental agency or regulatory authority, deny or disaffirm its obligations under the Guarantee.
     SECTION 5.2. Acceleration of Maturity; Rescission and Annulment.
     (a) If an Event of Default occurs and is continuing, then and in every such case the Trustee or the Holders of not less than twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities may declare the principal amount of all the Securities to be due and payable immediately, by a notice in writing to the Company and the Guarantor (and to the Trustee if given by Holders), and upon any such declaration the principal amount of and the accrued interest (including any Additional Interest) on all the Securities shall become immediately due and payable.
     (b) At any time after such a declaration of acceleration with respect to Securities has been made and before a judgment or decree for payment of the money due has been obtained by the Trustee as hereinafter provided in this  Article V , the Holders of a majority in aggregate principal amount of the Outstanding Securities, by written notice to the Trustee, may rescind and annul such declaration and its consequences if:
     (i) the Company or the Guarantor has paid or deposited with the Trustee a sum sufficient to pay:
     (A) all overdue installments of interest on all Securities,
     (B) any accrued Additional Interest on all Securities,
     (C) the principal of and any premium on any Securities that have become due otherwise than by such declaration of acceleration and interest (including any Additional Interest) thereon at the rate borne by the Securities, and
     (D) all sums paid or advanced by the Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Trustee and its agents and counsel; and
     (ii) all Events of Default with respect to Securities, other than the non-payment of the principal of Securities that has become due solely by such acceleration, have been cured or waived as provided in  Section 5.13 ;
     No such rescission shall affect any subsequent default or impair any right consequent thereon.
     SECTION 5.3. Collection of Indebtedness and Suits for Enforcement by Trustee.
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     (a) Each of the Company and the Guarantor covenants that if:
     (i) default is made in the payment of any installment of interest (including any Additional Interest) on any Security when such interest becomes due and payable and such default continues for a period of thirty (30) days, provided, however, that during the Modification Period, such thirty (30) day period shall be reduced to fifteen (15) Business Days, or
     (ii) default is made in the payment of the principal of and any premium on any Security at the Maturity thereof,
     the Company and the Guarantor will, upon demand of the Trustee, pay to the Trustee, for the benefit of the Holders of such Securities, the whole amount then due and payable on such Securities for principal and any premium and interest (including any Additional Interest) and, in addition thereto, all amounts owing the Trustee under  Section 6.6 .
     (b) If the Company or the Guarantor fails to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, may institute a judicial proceeding for the collection of the sums so due and unpaid, and may prosecute such proceeding to judgment or final decree, and may enforce the same against the Company, the Guarantor or any other obligor upon such Securities and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company, the Guarantor or any other obligor upon the Securities, wherever situated.
     (c) If an Event of Default with respect to Securities occurs and is continuing, the Trustee may in its discretion proceed to protect and enforce its rights and the rights of the Holders of Securities by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy.
     SECTION 5.4. Trustee May File Proofs of Claim.
     In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or similar judicial proceeding relative to the Company or the Guarantor (or any other obligor upon the Securities), its property or its creditors, the Trustee shall be entitled and empowered, by intervention in such proceeding or otherwise, to take any and all actions authorized hereunder in order to have claims of the Holders and the Trustee allowed in any such proceeding. In particular, the Trustee shall be authorized to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to first pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 .
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     SECTION 5.5. Trustee May Enforce Claim Without Possession of Securities.
     All rights of action and claims under this Indenture or the Securities may be prosecuted and enforced by the Trustee without the possession of any of the Securities or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, subject to  Article XII  and after provision for the payment of all the amounts owing the Trustee, any predecessor Trustee and other Persons under  Section 6.6 , be for the ratable benefit of the Holders of the Securities in respect of which such judgment has been recovered.
     SECTION 5.6. Application of Money Collected.
     Any money or property collected or to be applied by the Trustee with respect to the Securities pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such money or property on account of principal or any premium or interest (including any Additional Interest), upon presentation of the Securities and the notation thereon of the payment if only partially paid and upon surrender thereof if fully paid:
     FIRST: To the payment of all amounts due the Trustee, any predecessor Trustee and other Persons under Section 6.6;
     SECOND: To the payment of all Senior Debt of the Company if and to the extent required by Article XII;
     THIRD: Subject to Article XII, to the payment of the amounts then due and unpaid upon the Securities for principal and any premium and interest (including any Additional Interest) in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and any premium and interest (including any Additional Interest), respectively; and
     FOURTH: The balance, if any, to the Person or Persons entitled thereto.
     SECTION 5.7. Limitation on Suits.
     Subject to Section 5.8, no Holder of any Securities shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture or for the appointment of a custodian, receiver, assignee, trustee, liquidator, sequestrator (or other similar official) or for any other remedy hereunder, unless:
     (a) such Holder has previously given written notice to the Trustee of a continuing Event of Default with respect to the Securities;
     (b) the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder;
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     (c) such Holder or Holders have offered to the Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in compliance with such request;
     (d) the Trustee after its receipt of such notice, request and offer of indemnity has failed to institute any such proceeding for sixty (60) days; and
     (e) no direction inconsistent with such written request has been given to the Trustee during such sixty (60)-day period by the Holders of a majority in aggregate principal amount of the Outstanding Securities;
     it being understood and intended that no one or more of such Holders shall have any right in any manner whatever by virtue of, or by availing itself of, any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders of Securities, or to obtain or to seek to obtain priority or preference over any other of such Holders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all such Holders.
     SECTION 5.8. Unconditional Right of Holders to Receive Principal, Premium, if any, and Interest.
     Notwithstanding any other provision in this Indenture, the Holder of any Security shall have the right, which is absolute and unconditional, to receive payment of the principal of and any premium on such Security at its Maturity and payment of interest (including any Additional Interest) on such Security when due and payable and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Holder.
     SECTION 5.9. Restoration of Rights and Remedies.
     If the Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Indenture and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Trustee or such Holder, then and in every such case the Company, the Guarantor, the Trustee and such Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Trustee and such Holder shall continue as though no such proceeding had been instituted.
     SECTION 5.10. Rights and Remedies Cumulative.
     Except as otherwise provided in Section 3.6(f), no right or remedy herein conferred upon or reserved to the Trustee or the Holders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
     SECTION 5.11. Delay or Omission Not Waiver.
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     No delay or omission of the Trustee or any Holder of any Securities to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this  Article V  or by law to the Trustee or to the Holders may be exercised from time to time, and as often as may be deemed expedient, by the Trustee or the Holders, as the case may be.
     SECTION 5.12. Control by Holders.
     The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on the Trustee; provided, that:
     (a) such direction shall not be in conflict with any rule of law or with this Indenture,
     (b) the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction, and
     (c) subject to the provisions of Section 6.2, the Trustee shall have the right to decline to follow such direction if a Responsible Officer or Officers of the Trustee shall, in good faith, reasonably determine that the proceeding so directed would be unjustly prejudicial to the Holders not joining in any such direction or would involve the Trustee in personal liability.
     SECTION 5.13. Waiver of Past Defaults.
     (a) The Holders of not less than a majority in aggregate principal amount of the Outstanding Securities may waive any past Event of Default hereunder and its consequences except an Event of Default:
     (i) in the payment of the principal of or any premium or interest (including any Additional Interest) on any Outstanding Security (unless such Event of Default has been cured and the Company or the Guarantor has paid to or deposited with the Trustee a sum sufficient to pay all installments of interest (including any Additional Interest) due and past due and all principal of and any premium on all Securities due otherwise than by acceleration), or
     (ii) in respect of a covenant or provision hereof that under Article IX cannot be modified or amended without the consent of each Holder of any Outstanding Security.
     (b) Any such waiver shall be deemed to be on behalf of the Holders of all the Outstanding Securities.
     (c) Upon any such waiver, such Event of Default shall cease to exist and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Event of Default or impair any right consequent thereon.
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     SECTION 5.14. Undertaking for Costs.
     All parties to this Indenture agree, and each Holder of any Security by his or her acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys’ fees and expenses, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this  Section 5.14  shall not apply to any suit instituted by the Trustee, to any suit instituted by any Holder, or group of Holders, holding in the aggregate more than ten percent (10%) in aggregate principal amount of the Outstanding Securities, or to any suit instituted by any Holder for the enforcement of the payment of the principal of or any premium on the Security after the Stated Maturity or any interest (including any Additional Interest) on any Security after it is due and payable.
     SECTION 5.15. Waiver of Usury, Stay or Extension Laws.
     Each of the Company and the Guarantor covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any usury, stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and each of the Company and the Guarantor (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.
     SECTION 5.16. Original Kodiak Indentures Events of Default.
     Notwithstanding anything to the contrary contained in Section 5.1(f), the Company shall not be deemed to be in default as a result of any payment default under that certain (a) Junior Subordinated Indenture, dated April 6, 2005 (as amended), by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee and (b) Junior Subordinated Indenture, dated June 2, 2006, by and among the Company, Arbor Realty Trust, Inc., as guarantor, and Wilmington Trust Company, as trustee (the indentures described in (a) and (b) hereof, together with any operative documents executed in connection therewith, collectively, the “ Original Kodiak Indentures ”); provided, however, that at such time as such Kodiak Indentures are terminated or all of the original preferred securities issued thereunder are exchanged by the holders thereof with the Company or any of its Affiliates for notes, debt, equity interests or other securities, this  Section 5.16  shall be void and of no further force and effect.
ARTICLE VI.
The Trustee
     SECTION 6.1. Corporate Trustee Required.
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     There shall at all times be a Trustee hereunder with respect to the Securities. The Trustee shall be a corporation or national banking association organized and doing business under the laws of the United States or of any state thereof, authorized to exercise corporate trust powers, having a combined capital and surplus of at least $50,000,000, subject to supervision or examination by Federal or state authority and having an office within the United States. If such entity publishes reports of condition at least annually, pursuant to law or to the requirements of such supervising or examining authority, then, for the purposes of this  Section 6.1 , the combined capital and surplus of such entity shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Trustee shall cease to be eligible in accordance with the provisions of this  Section 6.1 , it shall resign immediately in the manner and with the effect hereinafter specified in this  Article VI .
     SECTION 6.2. Certain Duties and Responsibilities.
     (a) Except during the continuance of an Event of Default:
     (i) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and
     (ii) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; provided, that in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine whether or not they substantially conform on their face to the requirements of this Indenture.
     (b) If an Event of Default known to the Trustee has occurred and is continuing, the Trustee shall, prior to the receipt of directions, if any, from the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
     (c) Notwithstanding the foregoing, no provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section 6.2 . To the extent that, at law or in equity, the Trustee has duties and liabilities relating to the Holders, the Trustee shall not be liable to any Holder for the Trustee’s good faith reliance on the provisions of this Indenture. The provisions of this Indenture, to the extent that they restrict the duties and liabilities of the Trustee otherwise existing at law or in equity, are agreed by the Company and the Holders to replace such other duties and liabilities of the Trustee.
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     (d) No provisions of this Indenture shall be construed to relieve the Trustee from liability with respect to matters that are within the authority of the Trustee under this Indenture for its own negligent action, negligent failure to act or willful misconduct, except that:
     (i) the Trustee shall not be liable for any error or judgment made in good faith by an authorized officer of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts;
     (ii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities;
     (iii) the Trustee shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company and money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law; and
     (iv) the Trustee shall not be liable for the failure to take any action with respect to any Event of Default described in (A) Section 5.1(j) or (B) Section 5.1(h), unless and until there has been given to the Trustee and the Company by the Holders of at least twenty-five percent (25%) in aggregate principal amount of the Outstanding Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a “Notice of Default” hereunder.
     SECTION 6.3. Notice of Defaults.
     Within thirty (30) days after the occurrence of any default actually known to the Trustee, the Trustee shall give the Holders notice of such default unless such default shall have been cured or waived; provided, that except in the case of a default in the payment of the principal of or any premium or interest on any Securities, the Trustee shall be fully protected in withholding the notice if and so long as the board of directors, the executive committee or a trust committee of directors and/or Responsible Officers of the Trustee in good faith determines that withholding the notice is in the interest of Holders of Securities. For the purpose of this  Section 6.3 , the term “default” means any event which is, or after notice or lapse of time or both would become, an Event of Default.
     SECTION 6.4. Certain Rights of Trustee.
     Subject to the provisions of Section 6.2:
     (a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting in good faith and in accordance with the terms hereof upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties;
     (b) if (i) in performing its duties under this Indenture the Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Indenture
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the Trustee finds ambiguous or inconsistent with any other provisions contained herein or (iii) the Trustee is unsure of the application of any provision of this Indenture, then, except as to any matter as to which the Holders are entitled to decide under the terms of this Indenture, the Trustee shall deliver a notice to the Company requesting the Company’s written instruction as to the course of action to be taken and the Trustee shall take such action, or refrain from taking such action, as the Trustee shall be instructed in writing to take, or to refrain from taking, by the Company; provided, that if the Trustee does not receive such instructions from the Company within ten Business Days after it has delivered such notice or such reasonably shorter period of time set forth in such notice the Trustee may, but shall be under no duty to, take such action, or refrain from taking such action, as the Trustee shall deem advisable and in the best interests of the Holders, in which event the Trustee shall have no liability except for its own negligence, bad faith or willful misconduct;
     (c) any request or direction of the Company shall be sufficiently evidenced by a Company Request or Company Order and any resolution of the Board of Directors may be sufficiently evidenced by a Board Resolution;
     (d) the Trustee may consult with counsel (which counsel may be counsel to the Trustee, the Company, the Guarantor or any of their Affiliates, and may include any of its employees) 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, suffered or omitted by it hereunder in good faith and in reliance thereon;
     (e) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders shall have offered to the Trustee security or indemnity reasonably satisfactory to it against the costs, expenses (including reasonable attorneys’ fees and expenses) and liabilities that might be incurred by it in compliance with such request or direction, including reasonable advances as may be requested by the Trustee;
     (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, indenture, note or other paper or document, but the Trustee in its discretion may make such inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company and the Guarantor, personally or by agent or attorney;
     (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, attorneys, custodians or nominees and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent, attorney, custodian or nominee appointed with due care by it hereunder;
     (h) whenever in the administration of this Indenture the Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action with respect to enforcing any remedy or right hereunder, the Trustee (i) may request instructions from the Holders (which instructions may only be given by the Holders of the same
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aggregate principal amount of Outstanding Securities as would be entitled to direct the Trustee under this Indenture in respect of such remedy, right or action), (ii) may refrain from enforcing such remedy or right or taking such action until such instructions are received and (iii) shall be protected in acting in accordance with such instructions;
     (i) except as otherwise expressly provided by this Indenture, the Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Indenture;
     (j) without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with any bankruptcy, insolvency or other proceeding referred to in clauses (d) or (e) of the definition of Event of Default, such expenses (including legal fees and expenses of its agents and counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy laws or law relating to creditors rights generally;
     (k) whenever in the administration of this Indenture the Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, conclusively rely upon an Officers’ Certificate addressing such matter, which, upon receipt of such request, shall be promptly delivered by the Company or the Guarantor;
     (l) the Trustee shall not be charged with knowledge of any Event of Default unless either (i) a Responsible Officer of the Trustee shall have actual knowledge or (ii) the Trustee shall have received written notice thereof from the Company, the Guarantor or a Holder; and
     (m) in the event that the Trustee is also acting as Paying Agent, Authenticating Agent, Securities Registrar or Calculation Agent hereunder, the rights and protections afforded to the Trustee pursuant to this  Article VI  shall also be afforded such Paying Agent, Authenticating Agent, Securities Registrar and/or Calculation Agent.
     SECTION 6.5. May Hold Securities.
     The Trustee, any Authenticating Agent, any Paying Agent, any Securities Registrar or any other agent of the Company, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company and the Guarantor with the same rights it would have if it were not Trustee, Authenticating Agent, Paying Agent, Securities Registrar or such other agent.
     SECTION 6.6. Compensation; Reimbursement; Indemnity.
     (a) The Company agrees:
     (i) to pay to the Trustee from time to time reasonable compensation for all services rendered by it hereunder in such amounts as the Company and the Trustee shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);
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     (ii) to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of this Indenture (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct; and
     (iii) to the fullest extent permitted by applicable law, to indemnify the Trustee and its Affiliates, and their officers, directors, shareholders, agents, representatives and employees for, and to hold them harmless against, any loss, damage, liability, tax (other than income, franchise or other taxes imposed on amounts paid pursuant to (i) or (ii) hereof), penalty, expense or claim of any kind or nature whatsoever incurred without negligence, bad faith or willful misconduct on its part arising out of or in connection with the acceptance or administration of this trust or the performance of the Trustee’s duties hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder.
     (b) To secure the Company’s payment obligations in this Section 6.6, the Company hereby grants and pledges to the Trustee and the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, other than money or property held in trust to pay principal and interest on particular Securities. Such lien shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee.
     (c) The obligations of the Company and the Guarantor under this Section 6.6 shall survive the satisfaction and discharge of this Indenture and the earlier resignation or removal of the Trustee.
     (d) In no event shall the Trustee be liable for any indirect, special, punitive or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of the form of action.
     (e) In no event shall the Trustee be liable for any failure or delay in the performance of its obligations hereunder because of circumstances beyond its control, including, but not limited to, acts of God, flood, war (whether declared or undeclared), terrorism, fire, riot, embargo, government action, including any laws, ordinances, regulations, governmental action or the like which delay, restrict or prohibit the providing of the services contemplated by this Indenture.
     SECTION 6.7. Resignation and Removal; Appointment of Successor.
     (a) No resignation or removal of the Trustee and no appointment of a successor Trustee pursuant to this Article VI shall become effective until the acceptance of appointment by the successor Trustee under  Section 6.8 .
     (b) The Trustee may resign at any time by giving written notice thereof to the Company.
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     (c) The Trustee may be removed by the Act of the Holders of at least a majority in aggregate principal amount of the Outstanding Securities, delivered to the Trustee and the Company and the Guarantor.
     (d) If the Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Trustee for any reason, the Holders of a majority in aggregate principal amount of the Outstanding Securities shall promptly appoint a successor Trustee, and such successor Trustee and the retiring Trustee shall comply with the applicable requirements of Section 6.8. If no successor Trustee shall have been so appointed by such Holders and accepted appointment within sixty (60) days after the giving of a notice of resignation by the Trustee or the removal of the Trustee in the manner required by Section 6.8, any Holder who has been a bona fide Holder of a Security for at least six months (or, if the Securities have been Outstanding for less than six (6) months, the entire period of such lesser time) may, on behalf of such Holder and all others similarly situated, and any resigning Trustee may, at the expense of the Company, petition any court of competent jurisdiction for the appointment of a successor Trustee.
     SECTION 6.8. Acceptance of Appointment by Successor.
     (a) In case of the appointment hereunder of a successor Trustee, each successor Trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor Trustee, such retiring Trustee shall, upon payment of its charges, execute and deliver an instrument transferring to such successor Trustee all the rights, powers and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee hereunder.
     (b) Upon request of any such successor Trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all rights, powers and trusts referred to in paragraph (a) of this Section 6.8 .
     (c) No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this  Article VI .
     SECTION 6.9. Merger, Conversion, Consolidation or Succession to Business.
     Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided, that such Person shall be otherwise qualified and eligible under this  Article VI . In case any Securities shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation or as otherwise provided above in this Section 6.9  to such authenticating Trustee may adopt such authentication and deliver the Securities so authenticated,
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and in case any Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor Trustee or in the name of such successor Trustee, and in all cases the certificate of authentication shall have the full force which it is provided anywhere in the Securities or in this Indenture that the certificate of the Trustee shall have.
     SECTION 6.10. Not Responsible for Recitals or Issuance of Securities.
     The recitals contained herein and in the Securities, except the Trustee’s certificates of authentication, shall be taken as the statements of the Company or the Guarantor, and neither the Trustee nor any Authenticating Agent assumes any responsibility for their correctness. The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Securities. Neither the Trustee nor any Authenticating Agent shall be accountable for the use or application by the Company of the Securities or the proceeds thereof.
     SECTION 6.11. Appointment of Authenticating Agent.
     (a) The Trustee may appoint an Authenticating Agent or Agents with respect to the Securities, which shall be authorized to act on behalf of the Trustee to authenticate Securities issued upon original issue and upon exchange, registration of transfer or partial redemption thereof or pursuant to  Section 3.6 , and Securities so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Securities by the Trustee or the Trustee’s certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a corporation or national banking association organized and doing business under the laws of the United States of America, or of any State or Territory thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $50,000,000 and subject to supervision or examination by Federal or state authority. If such Authenticating Agent publishes reports of condition at least annually pursuant to law or to the requirements of said supervising or examining authority, then for the purposes of this  Section 6.11  the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , such Authenticating Agent shall resign immediately in the manner and with the effect specified in this  Section 6.11 .
     (b) Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of an Authenticating Agent shall be the successor Authenticating Agent hereunder, provided such Person shall be otherwise eligible under this  Section 6.11 , without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent.
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     (c) An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this  Section 6.11 , the Trustee may appoint a successor Authenticating Agent eligible under the provisions of this  Section 6.11 , which shall be acceptable to the Company, and shall give notice of such appointment to all Holders. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with like effect as if originally named as an Authenticating Agent.
     (d) The Company or the Guarantor agrees to pay to each Authenticating Agent from time to time reasonable compensation for its services under this  Section 6.11  in such amounts as the Company and the Authenticating Agent shall agree from time to time.
     (e) If an appointment of an Authenticating Agent is made pursuant to this Section 6.11, the Securities may have endorsed thereon, in addition to the Trustee’s certificate of authentication, an alternative certificate of authentication in the following form:
     This is one of the Securities referred to in the within mentioned Indenture.
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Dated:	 	WILMINGTON TRUST COMPANY, not in	 	 	
 	 	its individual capacity, but solely as Trustee	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Authenticating Agent	 	 	
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Authorized Signatory	 	 	
ARTICLE VII.
Holder’s Lists and Reports by Company
     SECTION 7.1. Company to Furnish Trustee Names and Addresses of Holders.
     The Company will furnish or cause to be furnished to the Trustee:
     (a) semiannually, on or before June 30 and December 31 of each year, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of a date not more than fifteen (15) days prior to the delivery thereof, and
     (b) at such other times as the Trustee may request in writing, within thirty (30) days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than fifteen (15) days prior to the time such list is furnished,
     in each case to the extent such information is in the possession or control of the Company and has not otherwise been received by the Trustee in its capacity as Securities Registrar.
     SECTION 7.2. Preservation of Information, Communications to Holders.
     (a) The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in  Section 7.1  and the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar. The Trustee may destroy any list furnished to it as provided in  Section 7.1 upon receipt of a new list so furnished.
     (b) The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding rights and privileges of the Trustee, shall be as provided in the Trust Indenture Act.
     (c) Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act.
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     SECTION 7.3. Reports by Company.
     (a) The Company shall furnish to the Holders and to prospective purchasers of Securities, upon their request, the information required to be furnished pursuant to Rule 144A(d)(4) under the Securities Act. The delivery requirement set forth in the preceding sentence may be satisfied by compliance with  Section 7.3(b)  hereof.
     (b) The Company shall furnish to each of (i) the Trustee, (ii) the Holders and to subsequent holders of Securities, (iii) Kodiak CDO Management, LLC c/o EJF Capital LLC, 2107 Wilson Boulevard, Suite 400, Arlington, Virginia, Attn: Lindsay Kucera or such other address as designated by Kodiak CDO Management, LLC and (iv) any beneficial owner of the Securities reasonably identified to the Company (which identification may be made either by such beneficial owner or by Kodiak CDO Management, LLC), a duly completed and executed certificate substantially and substantively in the form attached hereto as  Exhibit A , including the financial statements referenced in such Exhibit, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
     (c) If the Company intends to file its annual and quarterly information with the Securities and Exchange Commission (the “ Commission ”) in electronic form pursuant to Regulation S-T of the Commission using the Commission’s Electronic Data Gathering, Analysis and Retrieval (“ EDGAR ”) system, the Company shall notify the Trustee in the manner prescribed herein of each such annual and quarterly filing. The Trustee is hereby authorized and directed to access the EDGAR system for purposes of retrieving the financial information so filed. Compliance with the foregoing shall constitute delivery by the Company of its financial statements to the Trustee in compliance with the provisions of Section 314(a) of the Trust Indenture Act, if applicable. The Trustee shall have no duty to search for or obtain any electronic or other filings that the Company makes with the Commission, regardless of whether such filings are periodic, supplemental or otherwise. Delivery of reports, information and documents to the Trustee pursuant to this  Section 7.3(c)  shall be solely for purposes of compliance with this  Section 7.3(c)  and, if applicable, with Section 314(a) of the Trust Indenture Act. The Trustee’s receipt of such reports, information and documents shall not constitute notice to it of the content thereof or any matter determinable from the content thereof, including the Company’s compliance with any of its covenants hereunder, as to which the Trustee is entitled to rely upon Officers’ Certificates.
ARTICLE VIII.
Consolidation, Merger, Conveyance, Transfer or Lease
     SECTION 8.1. Company and Guarantor May Consolidate, Etc., Only on Certain Terms.
     (a) The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and
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no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless:
     (i) if the Company shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Company is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Company substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Company to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
     (iii) the Company has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this  Article VIII  and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this  Section 8.1 .
     (b) The Guarantor shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Guarantor, unless:
     (i) if the Guarantor shall consolidate with or merge into another Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, the entity formed by such consolidation or into which the Guarantor is merged or the Person that acquires by conveyance or transfer, or that leases, the properties and assets of the Guarantor substantially as an entirety shall be an entity organized and existing under the laws of the United States of America or any State or Territory thereof or the District of Columbia and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form reasonably satisfactory to the Trustee, the due and punctual payment of the principal of and any premium and interest (including any Additional Interest) on all the Securities and the performance of every covenant of this Indenture on the part of the Guarantor to be performed or observed;
     (ii) immediately after giving effect to such transaction, no Event of Default, and no event that, after notice or lapse of time, or both, would constitute an Event of Default, shall have happened and be continuing; and
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     (iii) the Guarantor has delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, any such supplemental indenture comply with this Article VIII and that all conditions precedent herein provided for relating to such transaction have been complied with; and the Trustee may rely upon such Officers’ Certificate and Opinion of Counsel as conclusive evidence that such transaction complies with this Section 8.1.
     SECTION 8.2. Successor Company or Guarantor Substituted.
     (a) Upon any consolidation or merger by the Company or the Guarantor with or into any other Person, or any conveyance, transfer or lease by the Company or the Guarantor of its properties and assets substantially as an entirety to any Person in accordance with  Section 8.1  and the execution and delivery to the Trustee of the supplemental indenture described in Section 8.1(a) , the successor entity formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Guarantor under this Indenture with the same effect as if such successor Person had been named as the Company or the Guarantor herein; and in the event of any such conveyance or transfer, following the execution and delivery of such supplemental indenture, the Company or the Guarantor shall be discharged from all obligations and covenants under the Indenture and the Securities.
     (b) Such successor Person may cause to be executed, and may issue either in its own name or in the name of the Company, any or all of the Securities issuable hereunder that theretofore shall not have been signed by the Company and delivered to the Trustee; and, upon the order of such successor Person instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee shall authenticate and shall deliver any Securities that previously shall have been signed and delivered by the officers of the Company to the Trustee for authentication, and any Securities that such successor Person thereafter shall cause to be executed and delivered to the Trustee on its behalf. All the Securities so issued shall in all respects have the same legal rank and benefit under this Indenture as the Securities theretofore or thereafter issued in accordance with the terms of this Indenture.
     (c) In case of any such consolidation, merger, sale, conveyance or lease, such changes in phraseology and form may be made in the Securities thereafter to be issued as may be appropriate to reflect such occurrence.
ARTICLE IX.
Supplemental Indentures
     SECTION 9.1. Supplemental Indentures without Consent of Holders.
     Without the consent of any Holders, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental hereto, in form reasonably satisfactory to the Trustee, for any of the following purposes:
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     (a) to evidence the succession of another Person to the Company or the Guarantor, and the assumption by any such successor of the covenants of the Company or the Guarantor herein and in the Securities; or
     (b) to cure any ambiguity, to correct or supplement any provision herein that may be defective or inconsistent with any other provision herein, or to make or amend any other provisions with respect to matters or questions arising under this Indenture, which shall not be inconsistent with the other provisions of this Indenture, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (c) to add to the covenants, restrictions or obligations of the Company or the Guarantor or to add to the Events of Default, provided, that such action pursuant to this clause (c) shall not adversely affect in any material respect the interests of any Holders; or
     (d) to modify, eliminate or add to any provisions of the Indenture or the Securities to such extent as shall be necessary to ensure that the Securities are treated as indebtedness of the Company for United States Federal income tax purposes, provided, that such action pursuant to this clause (d) shall not adversely affect in any material respect the interests of any Holders.
     SECTION 9.2. Supplemental Indentures with Consent of Holders.
     (a) Subject to Section 9.1, with the consent of the Holders of not less than a majority in aggregate principal amount of the Outstanding Securities, by Act of said Holders delivered to the Company, the Guarantor and the Trustee, the Company and the Guarantor when authorized by a Board Resolution, and the Trustee may enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of modifying in any manner the rights of the Holders of Securities under this Indenture; provided, that no such supplemental indenture shall, without the consent of the Holder of each Outstanding Security,
     (i) change the Stated Maturity of the principal or any premium of any Security or change the date of payment of any installment of interest (including any Additional Interest) on any Security, or reduce the principal amount thereof or the rate of interest thereon or any premium payable upon the redemption thereof or change the place of payment where, or the coin or currency in which, any Security or interest thereon is payable, or restrict or impair the right to institute suit for the enforcement of any such payment on or after such date, or
     (ii) reduce the percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any such supplemental indenture, or the consent of whose Holders is required for any waiver of compliance with any provision of this Indenture or of defaults hereunder and their consequences provided for in this Indenture, or
     (iii) modify any of the provisions of this Section 9.2, Section 5.13 or Section 10.7, except to increase any percentage in aggregate principal amount of the Outstanding Securities, the consent of whose Holders is required for any reason, or to
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provide that certain other provisions of this Indenture cannot be modified or waived without the consent of the Holder of each Security.
     (b) It shall not be necessary for any Act of Holders under this Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof.
     SECTION 9.3. Execution of Supplemental Indentures.
     In executing or accepting the additional trusts created by any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in conclusively relying upon, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture, and that all conditions precedent herein provided for relating to such action have been complied with. The Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Trustee’s own rights, duties, indemnities or immunities under this Indenture or otherwise. Copies of the final form of each supplemental indenture shall be delivered by the Trustee at the expense of the Company to each Holder, promptly after the execution thereof.
     SECTION 9.4. Effect of Supplemental Indentures.
     Upon the execution of any supplemental indenture under this Article IX, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.
     SECTION 9.5. Reference in Securities to Supplemental Indentures.
     Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and shall if required by the Company, bear a notation in form approved by the Company as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Company, to any such supplemental indenture may be prepared and executed by the Company and the Guarantor and authenticated and delivered by the Trustee in exchange for Outstanding Securities.
ARTICLE X.
Covenants
     SECTION 10.1. Payment of Principal, Premium, if any, and Interest.
     The Company covenants and agrees for the benefit of the Holders of the Securities that it will duly and punctually pay the principal of and any premium and interest (including any Additional Interest) on the Securities in accordance with the terms of the Securities and this Indenture.
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     SECTION 10.2. Money for Security Payments to be Held in Trust.
     (a) Whenever the Company shall have one or more Paying Agents, it will, prior to 10:00 a.m., New York City time, on each due date of the principal of or any premium or interest (including any Additional Interest) on any Securities, deposit with a Paying Agent a sum sufficient to pay such amount, such sum to be held as provided in the Trust Indenture Act and (unless such Paying Agent is the Trustee) the Company will promptly notify the Trustee of its failure so to act.
     (b) The Company will cause each Paying Agent for the Securities other than the Trustee to execute and deliver to the Trustee an instrument in which such Paying Agent shall agree with the Trustee, subject to the provisions of this  Section 10.2 , that such Paying Agent will (i) comply with the provisions of this Indenture and the Trust Indenture Act applicable to it as a Paying Agent and (ii) during the continuance of any default by the Company (or any other obligor upon the Securities) in the making of any payment in respect of the Securities, upon the written request of the Trustee, forthwith pay to the Trustee all sums held in trust by such Paying Agent for payment in respect of the Securities.
     (c) The Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or by Company Order direct any Paying Agent to pay, to the Trustee all sums held in trust by the Company or such Paying Agent, such sums to be held by the Trustee upon the same trusts as those upon which such sums were held by the Company or such Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such Paying Agent shall be released from all further liability with respect to such money.
     (d) Any money deposited with the Trustee or any Paying Agent, for the payment of the principal of and any premium or interest (including any Additional Interest) on any Security and remaining unclaimed for two years after such principal and any premium or interest has become due and payable shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be paid on Company Request to the Company, or (if then held by the Company) shall (unless otherwise required by mandatory provision of applicable escheat or abandoned or unclaimed property law) be discharged from such trust; and the Holder of such Security shall thereafter, as an unsecured general creditor, look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, shall thereupon cease; provided, that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in the Borough of Manhattan, The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than thirty (30) days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Company.
     SECTION 10.3. Statement as to Compliance.
     The Company shall deliver to the Trustee, within one hundred and twenty (120) days after the end of each fiscal year of the Company ending after the date hereof, an Officers’
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Certificate (substantially in the form attached hereto as Exhibit B) covering the preceding fiscal year, stating whether or not to the knowledge of the signers thereof the Company is in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (without regard to any period of grace or requirement of notice provided hereunder), and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which they may have knowledge.
     SECTION 10.4. Calculation Agent.
     (a) The Company hereby agrees that for so long as any of the Securities remain Outstanding, there will at all times be an agent appointed to calculate LIBOR in respect of each Interest Payment Date in accordance with the terms of  Schedule A  (the “ Calculation Agent ”). The Trustee shall initially serve as Calculation Agent for purposes of determining LIBOR for each Interest Payment Date. The Calculation Agent may be removed by the Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities at any time. If the Calculation Agent is unable or unwilling to act as such or is removed, Trustee or the Holders of a majority in aggregate principal amount of the Outstanding Securities will promptly appoint as a replacement Calculation Agent the London office of a leading bank which is engaged in transactions in Eurodollar deposits in the international Eurodollar market and which does not control or is not controlled by or under common control with the Company or its Affiliates. The Calculation Agent may not resign its duties without a successor having been duly appointed.
     (b) The Calculation Agent shall be required to agree that, as soon as possible after 11:00 a.m. (London time) on each LIBOR Determination Date (as defined in  Schedule A ), but in no event later than 11:00 a.m. (London time) on the Business Day immediately following each LIBOR Determination Date, the Calculation Agent will calculate the interest rate (the Interest Payment shall be rounded to the nearest cent, with half a cent being rounded upwards) for the related Interest Payment Date, and will communicate such rate and amount to the Company, the Trustee, each Paying Agent and the Depositary. The Calculation Agent will also specify to the Company the quotations upon which the foregoing rates and amounts are based and, in any event, the Calculation Agent shall notify the Company before 5:00 p.m. (London time) on each LIBOR Determination Date that either: (i) it has determined or is in the process of determining the foregoing rates and amounts or (ii) it has not determined and is not in the process of determining the foregoing rates and amounts, together with its reasons therefor. The Calculation Agent’s determination of the foregoing rates and amounts for any Interest Payment Date will (in the absence of manifest error) be final and binding upon all parties. For the sole purpose of calculating the interest rate for the Securities, “Business Day” shall be defined as any day on which dealings in deposits in Dollars are transacted in the London interbank market.
     SECTION 10.5. Additional Indebtedness.
     (a) The Company shall be permitted to incur additional Debt (including convertible debt); provided, that, during the Modification Period any such additional Debt shall not be used, in whole or in part, to redeem, purchase or otherwise acquire, or make a liquidation payment on, any of the Company’s common or preferred stock or other Equity Interests. If the Company elects to use any or all proceeds of such Debt for purposes prohibited hereunder, then the Company shall give notice of such election to the Holders within ten (10) days after such
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election and shall be deemed to have elected to terminate the Modification Period effective as of the first Interest Payment Date occurring after nine (9) months have elapsed since the incurrence of such additional Debt. If the Company inadvertently violates the terms hereof, then if the Company has not cured such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities within seven (7) days after such breach or violation, the Company shall be deemed to have elected to terminate the Modification Period effective nine (9) months after the incurrence of such Debt and such election shall not be deemed to constitute an Event of Default. The foregoing restrictions shall not be deemed to prohibit the conversion of convertible debt to common or preferred stock or other Equity Interests.
     SECTION 10.6. Additional Covenants.
     (a) The Company covenants and agrees with each Holder of Securities that (i) during the Modification Period and (ii) if an Event of Default shall have occurred and be continuing, it shall not (i) declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests, (ii) vote in favor of or permit or otherwise allow any of its Subsidiaries to declare or pay any dividends or distributions on, or redeem, purchase, or otherwise acquire, or make a liquidation payment with respect to, any shares of any such Subsidiary’s common or preferred stock or other Equity Interests (for the avoidance of doubt, whether such Equity Interests are perpetual or otherwise) other than to the Company, or (iii) make any payment of principal of or any interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company that rank pari passu in all respects with or junior in interest to the Securities (other than (A) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of any one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into while the Modification Period is not in effect prior to an Event of Default, (B) as a result of an exchange or conversion of any class or series of the Company’s capital stock (or any capital stock of a Subsidiary of the Company) for any class or series of the Company’s capital stock or of any class or series of the Company’s indebtedness for any class or series of the Company’s capital stock upon substantially the same terms, (C) the purchase of fractional interests in shares of the Company’s capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (D) any declaration of a dividend in connection with any Rights Plan, the issuance of rights, stock or other property under any Rights Plan or the redemption or repurchase of rights pursuant thereto, (E) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock) (F) with respect to the Taberna Indenture I, the Taberna Indenture II, the Attentus Indenture I, the Attentus Indenture II, and the Original Kodiak Indentures or (G) any other dividends or distributions necessary in order for the Company to maintain its REIT status, provided that (x) such dividend or distributions shall be declared and paid in stock in an amount up to the maximum extent permitted by the Code or rules and regulations promulgated thereunder, with
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the balance payable in cash, and (y) the Company shall be permitted to increase its distribution from the minimum requirement under the Code to distribute ninety percent (90%) of its taxable income to one hundred percent (100%) of the taxable income and, with respect to this subsection (G), any violation of this subsection G shall not be an Event of Default unless the Company or the Guarantor fail to cure to the satisfaction of the Holders of a majority in aggregate principal amount of the of the Outstanding Securities any breach or default within seven (7) days after discovery thereof.
     (b) Intentionally omitted.
     (c) Notwithstanding the provisions of Section 10.6(a) the Company shall be permitted during the Modification Period to issue common or preferred shares of the Company’s stock (each, a “ New Stock Class ”) and to declare dividends upon such New Stock Class, provided that (i) such dividends are permitted to be declared without declaring or paying dividends upon or otherwise making payments upon any other Equity Interests (except to comply with the REIT status maintenance requirements described in  Section 10.6(a) ; (ii) the holders of such New Stock Class shall not receive dividends that exceed 15% per annum of the purchase price of such New Stock Class; and (iii) not more than 25% of the capital raised from the issuance of such New Stock Class is used to repurchase, redeem or otherwise acquire Equity Interests of the Company. If at any time the Company elects to issue a New Stock Class and more than 25% of the capital raised from the issuance of the New Stock Class is used for the repurchase or redemption of any common or preferred stock of the Company, then the Company may elect, and shall be deemed to have elected to, terminate the Modification Period effective nine (9) months after such repurchase or redemption. If the Company has otherwise violated or breached the terms hereinabove, then the Company shall notify the Holders and shall cure such violation or breach to the satisfaction of the Holders of a majority in aggregate principal amount of the Outstanding Securities within seven (7) days, the failure of which shall be deemed an election to terminate the Modification Period effective nine (9) months after such repurchase or redemption and such election shall not be deemed to constitute an Event of Default. So long as no Event of Default has occurred and is continuing, from and after the Modification Period Termination Date, there shall be no limitation on the Company’s rights to issue common or preferred shares of the Company’s stock, declare or pay any dividends or distributions on, or redeem, purchase or otherwise acquire, or make a liquidation payment with respect to, any of the Company’s common or preferred stock or other Equity Interests.
     (d) Intentionally Omitted.
     SECTION 10.7. Waiver of Covenants.
     The Company may omit in any particular instance to comply with any covenant or condition contained in Sections 10.5 and 10.6  if, before or after the time for such compliance, the Holders of at least a majority in aggregate principal amount of the Outstanding Securities shall, by Act of such Holders, either waive such compliance in such instance or generally waive compliance with such covenant or condition, but no such waiver shall extend to or affect such covenant or condition except to the extent so expressly waived, and, until such waiver shall become effective, the obligations of the Company in respect of any such covenant or condition shall remain in full force and effect.
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     SECTION 10.8. Treatment of Securities.
     The Company will treat the Securities as indebtedness of the Company, and the amounts, other than payments of principal, payable in respect of the principal amount of such Securities as interest, for all U.S. federal income tax purposes.
     SECTION 10.9. Inspection Rights.
     During the Modification Period, upon written notice from the Holders of a majority in aggregate principal amount of the Outstanding Securities at least five (5) Business Days in advance, the Company and Guarantor shall permit representatives appointed by the Holders the Holders of a majority in aggregate principal amount of the Outstanding Securities to examine the books and records of account of the Company and Guarantor and its subsidiaries (and to make copies thereof and extracts therefrom) and to discuss the affairs, finances and accounts of such Persons with, and to be advised as to the same by such management representatives of the Company and its subsidiaries as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, either in person at the Company’s offices or telephonically, all at such reasonable times and intervals during normal business hours as the Holders of a majority in aggregate principal amount of the Outstanding Securities may reasonably request, at the expense of the Company. Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing the inspections provided for herein shall be limited to once per calendar quarter. Except to the extent (i) required by law, (ii) required by any court order, or any directive of a Governmental Authority, or (iii) that any such information is available or accessible in the public domain, the Holders shall maintain all information disclosed and/or copied in the course of any such inspection confidential in all respects, except that it may share such information with the Trustee, any collateral manager for the Holders, any other Holder and any of their respective counsel provided that such Person agrees to maintain the confidentially of such information.
ARTICLE XI.
Redemption of Securities
     SECTION 11.1. Optional Redemption.
     The Company may, at its option, on any Interest Payment Date, on or after April 30, 2012, redeem the Securities in whole at any time or in part from time to time, at a Redemption Price equal to one hundred percent (100%) of the principal amount thereof (or of the redeemed portion thereof, as applicable), together, in the case of any such redemption, with accrued interest, including any Additional Interest, through but excluding the date fixed as the Redemption Date (the  “Optional Redemption Price” ).
     SECTION 11.2. Special Event Redemption.
     Prior to April 30, 2012, upon the occurrence and during the continuation of a Special Event, the Company may, at its option, redeem the Securities, in whole but not in part, at a Redemption Price equal to one hundred seven and one half percent (107.5%) of the principal amount thereof, together, in the case of any such redemption, with accrued interest, including
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any Additional Interest, through but excluding the date fixed as the Redemption Date (the “Special Redemption Price” ).
     SECTION 11.3. Election to Redeem; Notice to Trustee.
     The election of the Company to redeem any Securities, in whole or in part, shall be evidenced by or pursuant to a Board Resolution. In case of any redemption at the election of the Company, the Company shall, not less than forty-five (45) days and not more than seventy-five (75) days prior to the Redemption Date (unless a shorter notice shall be satisfactory to the Trustee), notify the Trustee in writing of such date and of the principal amount of the Securities to be redeemed and provide the additional information required to be included in the notice or notices contemplated by  Section 11.5 . In the case of any redemption of Securities, in whole or in part, (a) prior to the expiration of any restriction on such redemption provided in this Indenture or the Securities or (b) pursuant to an election of the Company which is subject to a condition specified in this Indenture or the Securities, the Company shall furnish the Trustee with an Officers’ Certificate and an Opinion of Counsel evidencing compliance with such restriction or condition.
     SECTION 11.4. Selection of Securities to be Redeemed.
     (a) If less than all the Securities are to be redeemed, the particular Securities to be redeemed shall be selected and redeemed on a pro rata basis not more than sixty (60) days prior to the Redemption Date by the Trustee from the Outstanding Securities not previously called for redemption, provided, that the unredeemed portion of the principal amount of any Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     (b) The Trustee shall promptly notify the Company in writing of the Securities selected for redemption and, in the case of any Securities selected for partial redemption, the principal amount thereof to be redeemed. For all purposes of this Indenture, unless the context otherwise requires, all provisions relating to the redemption of Securities shall relate, in the case of any Security redeemed or to be redeemed only in part, to the portion of the principal amount of such Security that has been or is to be redeemed.
     (c) The provisions of paragraphs (a) and (b) of this Section 11.4 shall not apply with respect to any redemption affecting only a single Security, whether such Security is to be redeemed in whole or in part. In the case of any such redemption in part, the unredeemed portion of the principal amount of the Security shall be in an authorized denomination (which shall not be less than the minimum authorized denomination) for such Security.
     SECTION 11.5. Notice of Redemption.
     (a) Notice of redemption shall be given not later than the thirtieth (30th) day, and not earlier than the sixtieth (60th) day, prior to the Redemption Date to the Trustee and each Holder of Securities to be redeemed, in whole or in part, (unless a shorter notice shall be satisfactory to the Trustee).
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     (b) With respect to Securities to be redeemed, in whole or in part, each notice of redemption shall state:
     (i) the Redemption Date;
     (ii) the Redemption Price or, if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price, as calculated by the Company, together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the fifth Business Day prior to the Redemption Date (and if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date that such Redemption Price is calculated);
     (iii) if less than all Outstanding Securities are to be redeemed, the identification (and, in the case of partial redemption, the respective principal amounts) of the particular Securities to be redeemed;
     (iv) that on the Redemption Date, the Redemption Price will become due and payable upon each such Security or portion thereof, and that any interest (including any Additional Interest) on such Security or such portion, as the case may be, shall cease to accrue on and after said date; and
     (v) the place or places where such Securities are to be surrendered for payment of the Redemption Price.
     (c) Notice of redemption of Securities to be redeemed, in whole or in part, at the election of the Company shall be given by the Company or, at the Company’s request, by the Trustee in the name and at the expense of the Company and shall be irrevocable. The notice if mailed in the manner provided above shall be conclusively presumed to have been duly given, whether or not the Holder receives such notice. In any case, a failure to give such notice by mail or any defect in the notice to the Holder of any Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Security.
     SECTION 11.6. Deposit of Redemption Price.
     Prior to 10:00 a.m., New York City time, on the Redemption Date specified in the notice of redemption given as provided in Section 11.5 , the Company will deposit with the Trustee or with one or more Paying Agents an amount of money sufficient to pay the Redemption Price of, and any accrued interest (including any Additional Interest) on, all the Securities (or portions thereof) that are to be redeemed on that date.
     SECTION 11.7. Payment of Securities Called for Redemption.
     (a) If any notice of redemption has been given as provided in Section 11.5, the Securities or portion of Securities with respect to which such notice has been given shall become due and payable on the date and at the place or places stated in such notice at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date. On presentation and surrender of such Securities at a Place of Payment specified in such notice, the Securities or the specified portions thereof shall be paid and
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redeemed by the Company at the applicable Redemption Price, together with accrued interest (including any Additional Interest) to the Redemption Date.
     (b) Upon presentation of any Security redeemed in part only, the Company shall execute and the Trustee upon receipt of a Company Order shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities, of authorized denominations, in aggregate principal amount equal to the unredeemed portion of the Security so presented and having the same Original Issue Date, Stated Maturity and terms.
     (c) If any Security called for redemption shall not be so paid upon surrender thereof for redemption, the principal of and any premium on such Security shall, until paid, bear interest from the Redemption Date at the rate prescribed therefor in the Security.
ARTICLE XII.
Subordination of Securities
     SECTION 12.1. Securities Subordinate to Senior Debt.
     The Company covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this  Article XII , the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt.
     SECTION 12.2. No Payment When Senior Debt in Default; Payment Over of Proceeds Upon Dissolution, Etc.
     (a) In the event and during the continuation of any default by the Company in the payment of any principal of or any premium or interest on any Senior Debt (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Company by the holders of such Senior Debt or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a bankruptcy, insolvency or other proceeding described in clause (d) or (e) of the definition of Event of Default (each such event, if any, herein sometimes referred to as a “ Proceeding ”), all Senior Debt (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the
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Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt in accordance with the priorities then existing among such holders until all Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt, the Holders of the Securities, together with the holders of any obligations of the Company ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Company the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any Equity Interests or any obligations of the Company ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Company or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt remaining unpaid, to the extent necessary to pay all such Senior Debt (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Company, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in aggregate principal amount of the Senior Debt at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 12.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Company in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Company, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
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     SECTION 12.3. Payment Permitted If No Default.
     Nothing contained in this Article XII or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Company, at any time, except during the pendency of the conditions described in paragraph (a) of  Section 12.2  or of any Proceeding referred to in  Section 12.2 , from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with  Section 12.8 ) that such payment would have been prohibited by the provisions of this  Article XII , except as provided in  Section 12.8 .
     SECTION 12.4. Subrogation to Rights of Holders of Senior Debt.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt pursuant to the provisions of this  Article XII  (equally and ratably with the holders of all indebtedness of the Company that by its express terms is subordinated to Senior Debt of the Company to substantially the same extent as the Securities are subordinated to the Senior Debt and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt) to the rights of the holders of such Senior Debt to receive payments and distributions of cash, property and securities applicable to the Senior Debt until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XII , and no payments made pursuant to the provisions of this  Article XII  to the holders of Senior Debt by Holders of the Securities or the Trustee, shall, as among the Company, its creditors other than holders of Senior Debt, and the Holders of the Securities, be deemed to be a payment or distribution by the Company to or on account of the Senior Debt.
     SECTION 12.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XII are and are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt on the other hand. Nothing contained in this  Article XII  or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Company and the Holders of the Securities, the obligations of the Company, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Company of the Holders of the Securities and creditors of the Company other than their rights in relation to the holders of Senior Debt or (c) prevent the Trustee or the Holder of any Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and
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voting claims in any Proceeding, subject to the rights, if any, under this Article XII of the holders of Senior Debt to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 12.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by his or her acceptance thereof authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this  Article XII  and appoints the Trustee his or her attorney-in-fact for any and all such purposes.
     SECTION 12.7. No Waiver of Subordination Provisions.
     No right of any present or future holder of any Senior Debt to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     SECTION 12.8. Notice to Trustee.
     (a) The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this  Article XII  or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder of Senior Debt or from any trustee, agent or representative therefor; provided, that if the Trustee shall not have received the notice provided for in this  Section 12.8  at least two (2) Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two (2) Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt to participate in any payment or distribution pursuant to this  Article XII , the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any
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other facts pertinent to the rights of such Person under this Article XII, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 12.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Company referred to in this Article XII, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this  Article XII .
     SECTION 12.10. Trustee Not Fiduciary for Holders of Senior Debt.
     The Trustee, in its capacity as trustee under this Indenture, shall not be deemed to owe any fiduciary duty to the holders of Senior Debt and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Company or to any other Person cash, property or securities to which any holders of Senior Debt shall be entitled by virtue of this  Article XII  or otherwise.
     SECTION 12.11. Rights of Trustee as Holder of Senior Debt; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XII with respect to any Senior Debt that may at any time be held by it, to the same extent as any other holder of Senior Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Company, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this  Article XII , and no implied covenant or obligations with respect to the holders of such Senior Debt of the Company shall be read into this Indenture as against the Trustee. Nothing in this  Article XII  shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 .
     SECTION 12.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Company and be then acting hereunder, the term “Trustee” as used in this  Article XII  shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this  Article XII  in addition to or in place of the Trustee. For the avoidance of doubt, the Company shall not be permitted to appoint itself or any Affiliate as a Paying Agent hereunder.
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ARTICLE XIII.
Guarantee
     SECTION 13.1. The Guarantee.
     The Guarantor hereby fully, unconditionally and irrevocably guarantees to each holder of a Security authenticated and delivered by the Trustee the due and punctual payment of the principal of and premium, if any, and interest (including Additional Interest) on such Security, when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, in accordance with the terms of such Security and this Indenture, as well as the due and punctual performance of all other obligations contained in the Securities and this Indenture. In case of the failure of the Company to punctually pay its obligations on any Security, the Guarantor hereby agrees to cause any such payment to be made punctually when and as the same shall become due and payable, whether at maturity, by acceleration, upon redemption or otherwise, and as if such payment were made by the Company.
     SECTION 13.2. Guarantee Unconditional, etc.
     To the extent provided herein, the Guarantor hereby agrees that it shall be liable as principal and as debtor hereunder with respect to its obligations under this Article. This Article creates a guarantee of payment and not of collection on the part of the Guarantor. The Guarantor’s obligations hereunder shall be absolute, irrevocable and unconditional, irrespective of, and shall be unaffected by, any invalidity, irregularity or unenforceability of any Security or this Indenture, any failure to enforce the provisions of any Security or this Indenture, or any waiver, modification, consent or indulgence granted with respect thereto by the holder of such Security or the Trustee, the recovery of any judgment against the Company or any action to enforce the same, or any other circumstances which may otherwise constitute a legal or equitable discharge of a surety or guarantor. The Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to any such Security or the indebtedness evidenced thereby and all demands whatsoever, and covenants that this Guarantee will not be discharged except by payment in full of the principal of and premium, if any, and interest (including Additional Interest) on the Securities and the complete performance of all other obligations contained in the Securities and this Indenture. The Guarantor further agrees, to the fullest extent that it lawfully may do so, that, as between the Guarantor, on the one hand, and the Holders and the Trustee, on the other hand, the maturity of the Securities shall or may, as the case may be, be accelerated as provided in this Indenture for purposes of the Guarantor’s obligations under this Guarantee, notwithstanding any stay, injunction or prohibition existing under any bankruptcy, insolvency, reorganization or other similar law of any jurisdiction preventing such acceleration in respect of the obligations guaranteed hereby.
     SECTION 13.3. Reinstatement.
     This Guarantee shall continue to be effective or be reinstated, as the case may be, if at any time a payment in respect of any Security, in whole or in part, is rescinded or must otherwise
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be restored to the Company or the Guarantor upon the bankruptcy, liquidation or reorganization of the Company or otherwise.
     SECTION 13.4. Subrogation.
     The Guarantor shall be subrogated to all rights of the Holder of any Security against the Company in respect of any amounts paid to such Holder by the Guarantor pursuant to the provisions of this Guarantee; provided, however, that the Guarantor shall not be entitled to enforce, or to receive any payments arising out of or based upon, such right of subrogation as a result of payment under this Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders (other than the Company or its Affiliates) and to pay such amount to the Holders (other than the Company or its Affiliates).
     SECTION 13.5. Pari Passu Guarantees.
     The obligations of the Guarantor under this Section 13 shall rank pari passu with the obligations of the Guarantor under any similar guarantees or guarantee agreements issued by the Guarantor with respect to Securities (if any) similar to the Securities or any preferred securities, of the Company or related to trusts established or to be established by the Company (if any), including, without limitation, the guarantee agreements issued by the Guarantor in connection with Attentus Indenture I, Attentus Indenture II, Taberna Indenture I and Taberna Indenture II.
ARTICLE XIV.
Subordination of Guarantee
     SECTION 14.1. Securities Subordinate to Senior Debt of the Guarantor.
     The Guarantor covenants and agrees, and each Holder of a Security, by its acceptance thereof, likewise covenants and agrees, that, to the extent and in the manner hereinafter set forth in this Article XIV, the payment of the principal of and any premium and interest (including any Additional Interest) on each and all of the Securities are hereby expressly made subordinate and subject in right of payment to the prior payment in full of all Senior Debt of the Guarantor.
     SECTION 14.2. No Payment When Senior Debt of the Guarantor in Default; Payment Over of Proceeds Upon Dissolution, Etc .
     (a) In the event and during the continuation of any default by the Guarantor in the payment of any principal of or any premium or interest on any Senior Debt of the Guarantor (following any grace period, if applicable) when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration of acceleration or otherwise, then, upon written notice of such default to the Guarantor by the holders of such Senior Debt of the Guarantor or any trustee therefor, unless and until such default shall have been cured or waived or shall have ceased to exist, no direct or indirect payment (in cash, property, securities, by set-off or otherwise) shall be made or agreed to be made on account of the principal of or any
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premium or interest (including any Additional Interest) on any of the Securities, or in respect of any redemption, repayment, retirement, purchase or other acquisition of any of the Securities.
     (b) In the event of a Proceeding, all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any such proceedings) shall first be paid in full before any payment or distribution, whether in cash, securities or other property, shall be made to any Holder of any of the Securities on account thereof. Any payment or distribution, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment), which would otherwise (but for these subordination provisions) be payable or deliverable in respect of the Securities shall be paid or delivered directly to the holders of Senior Debt of the Guarantor in accordance with the priorities then existing among such holders until all Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) shall have been paid in full.
     (c) In the event of any Proceeding, after payment in full of all sums owing with respect to Senior Debt of the Guarantor, the Holders of the Securities, together with the holders of any obligations of the Guarantor ranking on a parity with the Securities, shall be entitled to be paid from the remaining assets of the Guarantor the amounts at the time due and owing on account of unpaid principal of and any premium and interest (including any Additional Interest) on the Securities and such other obligations before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any obligations of the Guarantor ranking junior to the Securities and such other obligations. If, notwithstanding the foregoing, any payment or distribution of any character or any security, whether in cash, securities or other property (other than securities of the Guarantor or any other entity provided for by a plan of reorganization or readjustment the payment of which is subordinate, at least to the extent provided in these subordination provisions with respect to the indebtedness evidenced by the Securities, to the payment of all Senior Debt of the Guarantor at the time outstanding and to any securities issued in respect thereof under any such plan of reorganization or readjustment) shall be received by the Trustee or any Holder in contravention of any of the terms hereof and before all Senior Debt of the Guarantor shall have been paid in full, such payment or distribution or security shall be received in trust for the benefit of, and shall be paid over or delivered and transferred to, the holders of the Senior Debt of the Guarantor at the time outstanding in accordance with the priorities then existing among such holders for application to the payment of all Senior Debt of the Guarantor remaining unpaid, to the extent necessary to pay all such Senior Debt of the Guarantor (including any interest thereon accruing after the commencement of any Proceeding) in full. In the event of the failure of the Trustee or any Holder to endorse or assign any such payment, distribution or security, each holder of Senior Debt of the Guarantor is hereby irrevocably authorized to endorse or assign the same.
     (d) The Trustee and the Holders, at the expense of the Guarantor, shall take such reasonable action (including the delivery of this Indenture to an agent for any holders of Senior Debt of the Guarantor or consent to the filing of a financing statement with respect hereto) as may, in the opinion of counsel designated by the holders of a majority in principal amount of the
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Senior Debt of the Guarantor at the time outstanding, be necessary or appropriate to assure the effectiveness of the subordination effected by these provisions.
     (e) The provisions of this Section 14.2 shall not impair any rights, interests, remedies or powers of any secured creditor of the Guarantor in respect of any security interest the creation of which is not prohibited by the provisions of this Indenture.
     (f) The securing of any obligations of the Guarantor, otherwise ranking on a parity with the Securities or ranking junior to the Securities, shall not be deemed to prevent such obligations from constituting, respectively, obligations ranking on a parity with the Securities or ranking junior to the Securities.
     SECTION 14.3. Payment Permitted If No Default.
     Nothing contained in this Article XIV or elsewhere in this Indenture or in any of the Securities shall prevent (a) the Guarantor, at any time, except during the pendency of the conditions described in paragraph (a) of Section 14.2 or of any Proceeding referred to in Section 14.2, from making payments at any time of principal of and any premium or interest (including any Additional Interest) on the Securities or (b) the application by the Trustee of any moneys deposited with it hereunder to the payment of or on account of the principal of and any premium or interest (including any Additional Interest) on the Securities or the retention of such payment by the Holders, if, at the time of such application by the Trustee, it did not have knowledge (in accordance with Section 14.8) that such payment would have been prohibited by the provisions of this Article XIV, except as provided in Section 14.8.
     SECTION 14.4. Subrogation to Rights of Holders of Senior Debt of the Guarantor.
     Subject to the payment in full of all amounts due or to become due on all Senior Debt of the Guarantor, or the provision for such payment in cash or cash equivalents or otherwise in a manner satisfactory to the holders of Senior Debt of the Guarantor, the Holders of the Securities shall be subrogated to the extent of the payments or distributions made to the holders of such Senior Debt of the Guarantor pursuant to the provisions of this Article XIV (equally and ratably with the holders of all indebtedness of the Guarantor that by its express terms is subordinated to Senior Debt of the Guarantor to substantially the same extent as the Securities are subordinated to the Senior Debt of the Guarantor and is entitled to like rights of subrogation by reason of any payments or distributions made to holders of such Senior Debt of the Guarantor) to the rights of the holders of such Senior Debt of the Guarantor to receive payments and distributions of cash, property and securities applicable to the Senior Debt of the Guarantor until the principal of and any premium and interest (including any Additional Interest) on the Securities shall be paid in full. For purposes of such subrogation, no payments or distributions to the holders of the Senior Debt of the Guarantor of any cash, property or securities to which the Holders of the Securities or the Trustee would be entitled except for the provisions of this Article XIV, and no payments made pursuant to the provisions of this Article XIV to the holders of Senior Debt of the Guarantor by Holders of the Securities or the Trustee, shall, as among the Guarantor, its creditors other than holders of Senior Debt of the Guarantor, and the Holders of the Securities, be deemed to be a payment or distribution by the Guarantor to or on account of the Senior Debt of the Guarantor.
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     SECTION 14.5. Provisions Solely to Define Relative Rights.
     The provisions of this Article XIV are intended solely for the purpose of defining the relative rights of the Holders of the Securities on the one hand and the holders of Senior Debt of the Guarantor on the other hand. Nothing contained in this Article XIV or elsewhere in this Indenture or in the Securities is intended to or shall (a) impair, as between the Guarantor and the Holders of the Securities, the obligations of the Guarantor, which are absolute and unconditional, to pay to the Holders of the Securities the principal of and any premium and interest (including any Additional Interest) on the Securities as and when the same shall become due and payable in accordance with their terms, (b) affect the relative rights against the Guarantor of the Holders of the Securities and creditors of the Guarantor other than their rights in relation to the holders of Senior Debt of the Guarantor or (c) prevent the Trustee or the Holder of any Security (other than the Company and its Affiliates) from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, including filing and voting claims in any Proceeding, subject to the rights, if any, under this Article XIV of the holders of Senior Debt of the Guarantor to receive cash, property and securities otherwise payable or deliverable to the Trustee or such Holder.
     SECTION 14.6. Trustee to Effectuate Subordination.
     Each Holder of a Security by such Holder’s acceptance thereof authorizes and directs the Trustee on such Holder’s behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination provided in this Article XIV and appoints the Trustee such Holder’s attorney-in-fact for any and all such purposes.
     SECTION 14.7. No Waiver of Subordination Provisions.
     (a) No right of any present or future holder of any Senior Debt of the Guarantor to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Guarantor or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Guarantor with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or be otherwise charged with.
     (b) Without in any way limiting the generality of paragraph (a) of this Section 14.7, the holders of Senior Debt of the Guarantor may, at any time and from to time, without the consent of or notice to the Trustee or the Holders of the Securities, without incurring responsibility to such Holders of the Securities and without impairing or releasing the subordination provided in this Article XIV or the obligations hereunder of such Holders of the Securities to the holders of Senior Debt of the Guarantor, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, Senior Debt of the Guarantor, or otherwise amend or supplement in any manner Senior Debt of the Guarantor or any instrument evidencing the same or any agreement under which Senior Debt of the Guarantor is outstanding, (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing Senior Debt of the Guarantor, (iii) release any Person liable in any manner for the payment of Senior Debt of the Guarantor and (iv) exercise or refrain from exercising any rights against the Guarantor and any other Person.
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     SECTION 14.8. Notice to Trustee.
     (a) The Guarantor shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Guarantor that would prohibit the making of any payment to or by the Trustee in respect of the Securities. Notwithstanding the provisions of this Article XIV or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment to or by the Trustee in respect of the Securities, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Guarantor or a holder of Senior Debt of the Guarantor or from any trustee, agent or representative therefor;  provided , that if the Trustee shall not have received the notice provided for in this Section 14.8 at least two Business Days prior to the date upon which by the terms hereof any monies may become payable for any purpose (including, the payment of the principal of and any premium on or interest (including any Additional Interest) on any Security), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such monies and to apply the same to the purpose for which they were received and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date.
     (b) The Trustee shall be entitled to rely on the delivery to it of a written notice by a Person representing himself or herself to be a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor) to establish that such notice has been given by a holder of Senior Debt of the Guarantor (or a trustee, agent, representative or attorney-in-fact therefor). In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of Senior Debt of the Guarantor to participate in any payment or distribution pursuant to this Article XIV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Debt of the Guarantor held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XIV, and if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment.
     SECTION 14.9. Reliance on Judicial Order or Certificate of Liquidating Agent.
     Upon any payment or distribution of assets of the Guarantor referred to in this Article XIV, the Trustee and the Holders of the Securities shall be entitled to conclusively rely upon any order or decree entered by any court of competent jurisdiction in which such Proceeding is pending, or a certificate of the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit of creditors, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of Securities, for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Debt of the Guarantor and other indebtedness of the Guarantor, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV.
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     SECTION 14.10. Trustee Not Fiduciary for Holders of Senior Debt of the Guarantor.
     The Trustee, in its capacity as trustee under this Indenture, shall not owe or be deemed to owe any fiduciary duty to the holders of Senior Debt of the Guarantor and shall not be liable to any such holders if it shall in good faith mistakenly pay over or distribute to Holders of Securities or to the Guarantor or to any other Person cash, property or securities to which any holders of Senior Debt of the Guarantor shall be entitled by virtue of this Article XIV or otherwise.
     SECTION 14.11. Rights of Trustee as Holder of Senior Debt of the Guarantor; Preservation of Trustee’s Rights.
     The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XIV with respect to any Senior Debt of the Guarantor that may at any time be held by it, to the same extent as any other holder of Senior Debt of the Guarantor, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior Debt of the Guarantor, the Trustee undertakes to perform only such of its obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to the holders of such Senior Debt of the Guarantor shall be read into this Indenture against the Trustee. Nothing in this Article XIV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.
     SECTION 14.12. Article Applicable to Paying Agents.
     If at any time any Paying Agent other than the Trustee shall have been appointed by the Trustee and be then acting hereunder, the term “ Trustee ” as used in this Article XIV shall in such case (unless the context otherwise requires) be construed as extending to and including such Paying Agent within its meaning as fully for all intents and purposes as if such Paying Agent were named in this Article XIV in addition to or in place of the Trustee.
* * * *
     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.
* * * *
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     IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written.
 	 	 	 	 	 	 	 	 	
 	 	Arbor Realty SR, Inc.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ Guy R. Milone, Jr.	 	 	
 	 	 	 	Title:	 	Vice President	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Arbor Realty Trust, Inc.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ Paul Elenio	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	
 	 	 	 	 	 	 	 	 	
 	 	Wilmington Trust Company, as Trustee	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	 	 	
 	 	 	 	Name:	 	/s/ W. Thomas Morris, II	 	 	
 	 	 	 	Title:	 	Vice President	 	 	

 
EXHIBIT A
DETERMINATION OF LIBOR
     With respect to the Securities, the London interbank offered rate (“LIBOR”) shall be determined by the Calculation Agent in accordance with the following provisions (in each case rounded to the nearest .000001%):
     (1) On the second LIBOR Business Day (as defined below) prior to an Interest Payment Date (each such day, a “LIBOR Determination Date”), LIBOR for any given security shall for the following interest payment period equal the rate, as obtained by the Calculation Agent from Bloomberg Financial Markets Commodities News, for three-month Eurodollar deposits that appears on Dow Jones Telerate Page 3750 (as defined in the International Swaps and Derivatives Association, Inc. 1991 Interest Rate and Currency Exchange Definitions), or such other page as may replace such Page 3750, as of 11:00 a.m. (London time) on such LIBOR Determination Date.
     (2) If, on any LIBOR Determination Date, such rate does not appear on Dow Jones Telerate Page 3750 or such other page as may replace such Page 3750, the Calculation Agent shall determine the arithmetic mean of the offered quotations of the Reference Banks (as defined below) to leading banks in the London interbank market for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to requests for quotations as of approximately 11:00 a.m. (London time) on the LIBOR Determination Date made by the Calculation Agent to the Reference Banks. If, on any LIBOR Determination Date, at least two of the Reference Banks provide such quotations, LIBOR shall equal such arithmetic mean of such quotations. If, on any LIBOR Determination Date, only one or none of the Reference Banks provide such quotations, LIBOR shall be deemed to be the arithmetic mean of the offered quotations that leading banks in the City of New York selected by the Calculation Agent are quoting on the relevant LIBOR Determination Date for three-month Eurodollar deposits in an amount determined by the Calculation Agent by reference to the principal London offices of leading banks in the London interbank market;  provided  that, if the Calculation Agent is required but is unable to determine a rate in accordance with at least one of the procedures provided above, LIBOR shall be LIBOR as determined on the previous LIBOR Determination Date.
     (3) As used herein: “Reference Banks” means four major banks in the London interbank market selected by the Calculation Agent; and “LIBOR Business Day” means a day on which commercial banks are open for business (including dealings in foreign exchange and foreign currency deposits) in London.
Exh. A-1

 
EXHIBIT B
FORM OF OFFICERS’ CERTIFICATE UNDER SECTION 10.3
     Pursuant to Section 10.3 of the Indenture, dated as of May ___, 2009 (as amended or supplemented from time to time, the “Indenture”), between Arbor Realty SR, Inc., as issuer (the “Company”) and Wilmington Trust Company, as trustee, each of the undersigned hereby certifies that, to the knowledge of the undersigned, the Company is not in default in the performance or observance of any of the terms, provisions or conditions contained in the Indenture (without regard to any period of grace or requirement of notice provided under the Indenture), for the  [fiscal/calendar]  year ending on                      , 20___  [, except as follows: specify each such default and the nature and status thereof ].
     Capitalized terms used herein, and not otherwise defined herein, have the respective meanings assigned thereto in the Indenture.
     IN WITNESS WHEREOF, the undersigned have executed this Officers’ Certificate as of                     , 20___.

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

 	 	  Name:	 	 	
 	 	Title: [Must be the Chief Financial Officer, the Treasurer, an Assistant Treasurer, the Secretary or an Assistant Secretary of Arbor Realty SR, Inc.]	 	 	
Exh. B-1

 
Schedule A
Form of Officer’s Financial Certificate
     The undersigned, the [Chief Financial Officer/Treasurer/Assistant Treasurer/ Secretary/ Assistant Secretary, Chairman/Vice Chairman/Chief Executive Officer/President/Vice President] hereby certifies, pursuant to Section 7.3(b) of the Junior Subordinated Indenture, dated as of May 6, 2009 (the  “Indenture” ), among Arbor Realty SR, Inc. (the “Company” ), Arbor Realty Trust, Inc. (the  “Guarantor” ) and Wilmington Trust Company, as trustee, that, as of [date], [20___]:
     [FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Guarantor and its consolidated subsidiaries for the three years ending [date], 20___.]
     [FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Guarantor and its consolidated subsidiaries for the fiscal quarter ending [date], 20___.]
     The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles ( “GAAP” ), the financial position of the Guarantor and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the [quarter] [annual] period ended [date], 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
     There has been no monetary default with respect to any indebtedness owed by the Guarantor and/or its subsidiaries (other than those defaults cured within 30 days of the occurrence of the same) [, except as set forth below:].
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this ___day of                      , 200[___].
 	 	 	 	 	 	 	
 	 	By:	 	 	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	 	 	 	
 	 	 	 	  Arbor Realty SR, Inc.	 	 	
 	 	 	 	333 Earle Ovington Blvd., Suite 900	 	 	
 	 	 	 	Uniondale, NY 11553	 	 	
 	 	 	 	(516) 832-7408	 	 	
Sch. A-1

Exhibit 10.35
EXECUTION VERSION
 
EXCHANGE AGREEMENT
among
ARBOR REALTY TRUST, INC.,
ARBOR REALTY SR, INC.
and
KODIAK CDO II, LTD.,
ATTENTUS CDO I, LTD.,
and
ATTENTUS CDO III, LTD.
Dated as of May 6, 2009

 
EXCHANGE AGREEMENT
     THIS EXCHANGE AGREEMENT, dated as of May 6, 2009 (this “Agreement”), is entered into by and among ARBOR REALTY SR, INC., a Maryland corporation (the “ Company ”), ARBOR REALTY TRUST, INC., a Maryland corporation (the “ Guarantor ”), and KODIAK CDO II, LTD. (“ Kodiak II ”), ATTENTUS CDO I, LTD. (“ Attentus I ”) and ATTENTUS CDO III, LTD. (“ Attentus III, ” together with Kodiak II and Attentus I, “ Kodiak ”).
RECITAL
     A. Reference is made to (i) that certain Junior Subordinated Indenture dated as of April 6, 2005 (the “Indenture I ”); (ii) that certain Junior Subordinated Indenture dated as of June 2, 2006 (the “ Indenture II ”); (iii) that certain Junior Subordinated Indenture dated as of April 11, 2007 (the “ Indenture III ”); and (iv) that certain Junior Subordinated Indenture dated as of April 13, 2007 (the “ Indenture IV, ” together with Indenture I, Indenture II and Indenture III, “ Existing Indentures ”) each by and between the Company, the Guarantor and Wilmington Trust Company (“ Wilmington ”), as trustee (the “ Existing Indenture Trustee ”).
     B. Reference is made to (i) that certain Amended and Restated Trust Agreement dated as of April 6, 2005 (the “Trust Agreement I ”); (ii) that certain Amended and Restated Trust Agreement dated as of June 2, 2006 (the “ Trust Agreement II ”); (iii) that certain Amended and Restated Trust Agreement dated as of April 11, 2007 (the “ Trust Agreement III ”); and iv) that certain Amended and Restated Trust Agreement dated as of April 13, 2007 (the “ Trust Agreement IV ,” together with Trust Agreement I, Trust Agreement II and Trust Agreement III, the “ Trust Agreements ”); each by and among the Company, as depositor, the Guarantor, as guarantor, Wilmington, as property trustee (the “ Property Trustee ”), Wilmington, as Delaware trustee (the “ Delaware Trustee ”), and the respective administrative trustees named therein.
     C. Arbor Realty Trust III (“Trust III”) is the holder of the Junior Subordinated Note due 2035 in the original principal amount of $25,774,000 issued by the Company pursuant to Indenture I (“ Subordinated Note I  ”).
     D. Arbor Capital Trust VII (“Trust VII”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $15,464,000 issued by the Company pursuant to Indenture II (“ Subordinated Note II ”).
     E. Arbor Capital Trust VIII (“Trust VIII”) is the holder of the Junior Subordinated Note due 2037 in the original principal amount of $14,433,000 issued by the Company pursuant to Indenture III (“ Subordinated Note III ”).
     F. Arbor Capital Trust IX (“Trust IX”) is the holder of the Junior Subordinated Note due 2037 in the original principal amount of $38,660,000 issued by the Company pursuant to Indenture IV (“ Subordinated Note IV, ” together with Subordinated Note I, Subordinated Note II, Subordinated Note III, the “ Existing Subordinated Notes ”).

 
     G. Pursuant to Trust Agreement I, Trust III issued a certain Preferred Security Certificate (as such term is defined in Trust Agreement I) in the amount of Twenty Five Million Dollars ($25,000,000) (the “ Original Security I ”), which Original Security I is a global security.
     H. Pursuant to Trust Agreement II, Trust VII issued a certain Preferred Security Certificate (as such term is defined in Trust Agreement II) in the amount of Fifteen Million Dollars ($15,000,000) (the “ Original Security II ”), which Original Security II is a global security.
     I. Pursuant to Trust Agreement III, Trust VIII issued a certain Preferred Security Certificate (as such term is defined in Trust Agreement III) in the amount of Fourteen Million Dollars ($14,000,000) (the “ Original Security III ”), which Original Security III is a global security.
     J. Pursuant to Trust Agreement IV, Trust IX issued a certain Preferred Security Certificate (as such term is defined in Trust Agreement IV) in the amount of Thirty Seven Million Five Hundred Thousand Dollars ($37,500,000) (the “ Original Security IV ,” together with Original Security I, Original Security II and Original Security III, the “ Original Securities ”), which Original Security IV is a global security.
     K. Attentus I is the holder of $18,950,000 in principal amount of a beneficial interest in Original Security I (the “ Holding I ”).
     L. Attentus III is the holder of $2,350,000 in principal amount of a beneficial interest in Original Security II (the “ Holding II ”).
     M. Attentus III is the holder of $14,000,000 in principal amount of a beneficial interest in Original Security III (the “ Holding III ”).
     N. Kodiak II is the holder of $28,125,000 in principal amount of a beneficial interest in Original Security IV (the “ Holding IV, ” together with the Holding I, Holding II and Holding II, the “ Kodiak Holdings ”).
     O. Simultaneously herewith, the Company, the Guarantor and Wilmington, as trustee (the “New Indenture Trustee ”) have entered into (a) that certain Junior Subordinated Indenture I (the “ New Indenture I ”) pursuant to which Company proposes to issue Twenty One Million Two Hundred Twenty Four Thousand Dollars ($21,224,000) in original aggregate principal amount of the Junior Subordinated Notes due 2035; (b) that certain Junior Subordinated Indenture II (the “ New Indenture II ”) pursuant to which Company proposes to issue Two Million Six Hundred Thirty Two Thousand Dollars ($2,632,000) in original aggregate principal amount of the Junior Subordinated Notes due 2036; and (c) that certain Junior Subordinated Indenture III (the “ New Indenture III ,” together with New Indenture I and New Indenture II, the  “New Indentures" ) pursuant to which Company proposes to issue Forty Seven Million One Hundred Eighty Thousand Dollars ($47,180,000) in original aggregate principal amount of the Junior Subordinated Notes due 2037. Pursuant to the New Indentures, such Junior Subordinated Notes will be issued by the Company as follows (collectively, the “ Securities ”):
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 	(i)	 	Junior Subordinated Note due 2035 in the original principal amount of $21,224,000 issued by the Company to Attentus I pursuant to New Indenture I, a copy of which is attached hereto as Exhibit A-1 (“ Note 1 ”);	
 	 	 	 	
 	(ii)	 	Junior Subordinated Note due 2036 in the original principal amount of $2,632,000 issued by the Company to Attentus III pursuant to New Indenture II, a copy of which is attached hereto as Exhibit A-2 (“ Note 2 ”);	
 	 	 	 	
 	(iii)	 	Junior Subordinated Note due 2037 in the original principal amount of $15,680,000 issued by the Company to Attentus III pursuant to New Indenture III, a copy of which is attached hereto as Exhibit A-3 (“ Note 3 ”); and	
 	 	 	 	
 	(iv)	 	Junior Subordinated Note due 2037 in the original principal amount of $31,500,000 issued by the Company to Kodiak II pursuant to New Indenture III, a copy of which is attached hereto as Exhibit A-4 (“ Note 4 ”).	
     P. On the terms and subject to the conditions set forth in this Agreement, the Company and Kodiak have agreed to exchange the Kodiak Holdings for the Securities.
     NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:
     Definitions. This Agreement, the New Indentures, the Parent Guarantees and the Securities are collectively referred to herein as the “ Operative Documents .” All other capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in the New Indentures.
     “Attentus I” has the meaning set forth in the introductory paragraph hereof.
     “Attentus III” has the meaning set forth in the introductory paragraph hereof.
     “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.
     “Benefit Plan” means an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose assets include (for purposes of U.S. Department of Labor Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
     “CDO Trustee” has the meaning set forth in Section 2(b)(i).
     “Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated under it.
     “Closing Date” has the meaning set forth in Section 2(b).
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     “Closing Room” has the meaning set forth in Section 2(b).
     “Company” has the meaning set forth in the introductory paragraph hereof.
     “Company Counsel” has the meaning set forth in Section 3(b).
     “Commission” has the meaning set forth in Section 4(v)
     “Delaware Trustee” has the meaning set forth in the Recitals.
     “Environmental Law” has the meaning set forth in Section 4(jj).
     “Environmental Laws” shall have the correlative meaning.
     “Equity Interests” means with respect to any Person (a) if such a Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stick interests (both common stock and preferred stock) in a corporation.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated under it.
     “Exchange” has the meaning set forth in Section 2(b).
     “Exchange Act” has the meaning set forth in Section 4(j).
     “Existing Indentures” has the meaning set forth in the Recitals.
     “Existing Subordinated Notes” has the meaning set forth in the Recitals.
     “Financial Statements” has the meaning set forth in Section 4(w).
     “GAAP” has the meaning set forth in Section 4(w).
     “Governmental Entities” has the meaning set forth in Section 4(o).
     “Governmental Licenses” has the meaning set forth in Section 4(r).
     “Hazardous Materials” has the meaning set forth in Section 4(jj).
     “Holder” has the meaning set forth in the New Indentures.
     “Holding I” has the meaning set forth in the Recitals.
     “Holding II” has the meaning set forth in the Recitals.
     “Holding III” has the meaning set forth in the Recitals.
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     “Holding IV” has the meaning set forth in the Recitals.
     “Impairment” means any claim, counterclaim, setoff, defense, action, demand, litigation (including administrative proceedings or derivative actions), encumbrance, right (including expungement, avoidance, reduction, contractual or equitable subordination, or otherwise) or defect.
     “Indemnified Party” has the meaning set forth in Section 8(a). “Indemnified Parties” shall have the correlative meaning.
     “Indenture I” has the meaning set forth in the Recitals.
     “Indenture II” has the meaning set forth in the Recitals.
     “Indenture III” has the meaning set forth in the Recitals.
     “Indenture IV” has the meaning set forth in the Recitals.
     “Investment Company Act” has the meaning set forth in Section 4(j).
     “Kodiak” has the meaning set forth in the introductory paragraph hereof.
     “Kodiak CDO Management, LLC” means Kodiak CDO Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “Kodiak Holdings” has the meaning set forth in the Recitals.
     “Kodiak Transferred Rights” means any and all of each Kodiak entity’s right, title, and interest in, to and under the Original Securities, together with the following:
          (i) the applicable Existing Indentures and the Trust Agreements;
          (ii) all amounts payable to such Kodiak entity under the applicable Original Securities, the applicable Kodiak Holdings, the applicable Existing Indentures and/or the applicable Trust Agreements;
          (iii) all claims (including “claims” as defined in Bankruptcy Code §101(5)), suits, causes of action, and any other right of such Kodiak entity, whether known or unknown, against the Company or any of its affiliates (including the applicable Trusts), agents, representatives, contractors, advisors, or any other entity that in any way is based upon, arises out of or is related to any of the foregoing, including all claims (including contract claims, tort claims, malpractice claims, and claims under any law governing the exchange of, purchase and sale of, or indentures for, securities), suits, causes of action, and any other right of Kodiak against any attorney, accountant, financial advisor, or other entity arising under or in connection with the applicable Original Securities, the applicable Kodiak Holdings, the applicable Existing Indentures, the applicable Trust Agreements, or the transactions related thereto;
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          (iv) all guarantees and all collateral and security of any kind for or in respect of the foregoing;
          (v) all cash, securities, or other property, and all setoffs and recoupments, to be received, applied, or effected by or for the account of such Kodiak entity under the applicable Original Securities and Kodiak Holdings, other than fees, costs and expenses payable to such Kodiak entity hereunder and all cash, securities, interest, dividends, and other property that may be exchanged for, or distributed or collected with respect to, any of the foregoing; and
          (vi) all proceeds of the foregoing.
     “Kodiak II” has the meaning set forth in the introductory paragraph hereof.
     “Lien” has the meaning set forth in Section 4(o).
     “Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets of the Company and its Significant Subsidiaries taken as a whole.
     “Material Adverse Change” has the meaning set forth in Section 3(e)(ii).
     “New Indenture I” has the meaning set forth in the Recitals.
     “New Indenture II” has the meaning set forth in the Recitals.
     “New Indenture III” has the meaning set forth in the Recitals.
     “New Indentures” has the meaning set forth in the Recitals.
     “New Indenture Trustee” has the meaning set forth in the Recitals..
     “Note 1” has the meaning set forth in the Recitals.
     “Note 2” has the meaning set forth in the Recitals.
     “Note 3” has the meaning set forth in the Recitals.
     “Note 4” has the meaning set forth in the Recitals.
     “Original Kodiak Indentures” has the meaning set forth in the New Indentures.
     “Original Securities” has the meaning set forth in the Recitals.
     “Original Security I” has the meaning set forth in the Recitals.
     “Original Security II” has the meaning set forth in the Recitals.
     “Original Security III” has the meaning set forth in the Recitals.
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     “Original Security IV” has the meaning set forth in the Recitals.
     “Properties” has the meaning set forth in Section 4(kk).
     “Property Trustees” means, collectively, the Wilmington Property Trustee and the Wells Property Trustee.
     “Regulation D” has the meaning set forth in Section 4(h).
     “Repayment Event” has the meaning set forth in Section 4(o).
     “Rule 144A(d)(3)” has the meaning set forth in Section 4(j).
     “Securities” has the meaning set forth in the Recitals.
     “Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a etseq., as amended, and the rules and regulations promulgated under it.
     “Significant Subsidiary” has the meaning set forth in Section 4(q).
     “Subordinated Note I” has the meaning set forth in the Recitals.
     “Subordinated Note II” has the meaning set forth in the Recitals.
     “Subordinated Note III” has the meaning set forth in the Recitals.
     “Subordinated Note IV” has the meaning set forth in the Recitals.
     “Taberna Exchange Agreement” means that certain Exchange Agreement, dated the date hereof by and among Arbor Realty Trust, Inc., Arbor Realty SR, Inc. and Taberna Preferred Funding I, Ltd., Taberna Preferred Funding II, Ltd., Taberna Preferred Funding III, Ltd., Taberna Preferred Funding IV, Ltd., Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VII, Ltd. and Taberna Preferred Funding VIII,. Ltd.
     “Trust III” has the meaning set forth in the Recitals.
     “Trust VII” has the meaning set forth in the Recitals.
     “Trust VIII” has the meaning set forth in the Recitals.
     “Trust IX” has the meaning set forth in the Recitals.
     “Trust Agreement I” has the meaning set forth in the Recitals.
     “Trust Agreement II” has the meaning set forth in the Recitals.
     “Trust Agreement III” has the meaning set forth in the Recitals.
     “Trust Agreement IV” has the meaning set forth in the Recitals.
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     “Trust Agreements” has the meaning set forth in the Recitals.
     “Wilmington” has the meaning set forth in the Recitals.
     2. Exchange of Original Preferred Securities for Securities.
          (a) The Company agrees to issue the Securities in accordance with the New Indentures and has requested that the Kodiak entities accept such Securities in exchange for the applicable Kodiak Holdings, and each of the Kodiak entities hereby accepts the applicable Securities in exchange for the Kodiak Holdings upon the terms and conditions set forth herein.
          (b) The closing of the exchange contemplated herein shall occur at the offices of Nixon Peabody, LLP in New York, New York (the “Closing Room”), or such other place as the parties hereto and Wilmington shall agree, at 11:00 a.m. New York time, on May 6, 2009 or such later date as the parties may agree (such date and time of delivery the “Closing Date”). The Company and Kodiak hereby agree that the exchange (the “Exchange”) will occur in accordance with the following requirements:
          (i) Kodiak CDO Management, LLC (as collateral manager for each of the Kodiak entities) shall have delivered an issuer order instructing each trustee (in each such capacity, a “CDO Trustee”) under the applicable indenture pursuant to which such CDO Trustee serves as trustee for the holders of the Kodiak Holdings to: (A) as to Attentus I, exchange Holding I for Note I, and transfer Attentus I’s interest in Holding I to the Company; (B) as to Attentus III, exchange Holding II for Note 2, and transfer Attentus III’s interest in Holding II to the Company; (C) as to Attentus III, exchange Holding III for Note 3, and transfer Attentus III’s interest in Holding III to the Company, , and (D) as to Kodiak II, exchange Holding IV for Note 4, and transfer Kodiak II’s interest in Holding IV to the Company.
          (ii) The Securities shall have been delivered to the Closing Room, copies of which shall have previously been made available for inspection, if so requested.
          (iii) Company shall have directed the New Indenture Trustee to authenticate the Securities and deliver them to the applicable CDO Trustee, as follows: (i) Note 1 to Attentus I, (ii) Note 2 to Attentus III, (iii) Note 3 to Attentus III, and (iv) Note 4 to Kodiak II.
          (iv) New Indenture Trustee shall have authenticated the applicable Securities in accordance with the terms of the applicable New Indenture and delivered them as provided above.
          (v) Simultaneously with the occurrence of the events described in subsections (iii) and (iv) hereof, (A) each Kodiak entity holding the applicable Kodiak Holdings irrevocably transfers, assigns, grants and conveys the related Kodiak Transferred Rights to the Company and the Company assumes all rights and obligations of Kodiak with respect to the Original Securities, the Kodiak Holdings and the Kodiak Transferred Rights and (B) each Holder shall be entitled to all of the rights, title and
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interest of a Holder of the Securities under the terms of the applicable Securities, the applicable New Indenture and any related Operative Documents.
          (vi) The Company shall have paid to Wilmington all of such party’s legal fees, costs and other expenses in connection with the Exchange, as well as all other accrued and unpaid fees, costs and expenses under the Existing Indentures, the Trust Agreements and the New Indentures, if any.
     3. Conditions Precedent. The obligations of the parties under this Agreement are subject to the following conditions precedent:
          (a) The representations and warranties contained herein shall be accurate as of the date of delivery of the Securities.
          (b) Cooley, Godward, Kronish LLP, counsel for the Company and the Guarantor (the “Company Counsel”), shall have delivered opinions with respect to each New Indenture and the related Operative Documents, dated the Closing Date, addressed to each Holder and its successors and assigns and to the New Indenture Trustee, in substantially the form set out in Annex A-1  hereto; the Company shall have delivered opinions of the Company’s and Guarantor’s General Counsel addressed to each Holder and its successors and assigns and to the New Indenture Trustee, in substantially the form set out in Annex A-2 , hereto and if required by Kodiak CDO Management, LLC the Company shall have furnished to the Kodiak Holders a certificate signed by the Company’s Chief Executive Officer, President, an Executive Vice President, Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to the Kodiak Holders, in substantially the form set out in  Annex D  hereto. In rendering its opinion, the Company Counsel may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of the Company and by government officials;  provided ,  however , that copies of any such certificates or documents are delivered to the Holders) and by and upon such other documents as such counsel may, in its reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion. The Company Counsel may specify the jurisdictions in which it is admitted to practice and that it is not admitted to practice in any other jurisdiction and is not an expert in the law of any other jurisdiction. Such Company Counsel Opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
          (c) Kodiak shall have been furnished opinions of the Company Counsel, dated as of the Closing Date, addressed to the Kodiak Holders and their respective successors and assigns and the applicable New Indenture Trustee, in substantially the form set out in  Annex B  hereto.
          (d) The Kodiak Holders shall have received, with respect to each New Indenture and the related Operative Documents, the opinion of special counsel for New Indenture Trustee, dated as of the Closing Date, addressed to the Kodiak Holders and their successors and assigns, in substantially the form set out in  Annex C  hereto.
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          (e) Each of the Guarantor and the Company shall have furnished to the Kodiak Holders under each of the New Indentures a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, dated as of the Closing Date, as to (i) and (ii) below:
          (i) the representations and warranties in this Agreement and the New Indentures are true and correct on and as of the Closing Date, and Company and the Guarantor have complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and
          (ii) since the date of the latest Financial Statements, there has been no material adverse change in the condition (financial or other), earnings, business or assets of the Company, the Guarantor and their respective Significant Subsidiaries, taken as a whole, whether or not arising from transactions occurring in the ordinary course of business (a “ Material Adverse Change ”).
          (f) The Company shall pay on or prior to the Closing Date, to the applicable Kodiak entities a fee as set forth on Schedule 2 , calculated as the amount of interest accrued upon the Kodiak Holdings, based upon (i) a principal balance equal to one hundred twelve percent (112%) of the outstanding principal balance of the Kodiak Holdings, (ii) an interest rate of one half of one percent (0.5%) per annum, and (iii) a period commencing on and including the most recent Interest Payment Date under the Existing Indenture for which interest was actually paid under the Kodiak Holdings, as applicable, and continuing through and including the Closing Date, plus any additional interest as set forth on Schedule 2.
          (g) Prior to the Closing Date, the Company and the Guarantor shall have furnished to the Kodiak Holders and their counsel such further information, certificates and documents as the Kodiak Holders or such counsel may reasonably request.
     If any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Kodiak Holders or their counsel, this Agreement and any obligations of Kodiak hereunder, whether as holders of the Kodiak Holdings, as applicable, or as prospective Kodiak Holders, may be canceled at, or at any time prior to, the Closing Date by Kodiak. Notice of such cancellation shall be given to the Company or the Guarantor in writing or by telephone and confirmed in writing, or by e-mail or facsimile.
     Each certificate signed by any officer of the Company and the Guarantor and delivered to the Kodiak Holders or the Holders’ counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Company and the Guarantor, as applicable, and not by such officer in any individual capacity.
     4. Representations and Warranties of the Company and the Guarantor. The Company and the Guarantor jointly and severally represent and warrant to, and agree with
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Kodiak, as holders of the Original Preferred Securities and the Kodiak V Holding and with the Kodiak Holders, as follows:
          (a) Each of the Company and the Guarantor (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, (ii) is in good standing under such laws and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement and the other Operative Documents.
          (b) Each of the Company and the Guarantor is an “accredited investor” as defined in Rule 501 under the Securities Act. Without characterizing the Kodiak holdings or any of the Kodiak Transferred Rights as a “security” within the meaning of applicable securities laws, the Company is not acquiring the Kodiak Holdings or the Kodiak Transferred Rights with a view towards the sale or distribution thereof in violation of the Securities Act.
          (c) The Company has offered in writing to the collateral manager for all of the Holders under the Original Kodiak Indentures (as defined in the New Indentures) the opportunity to exchange all securities, certificates, notes and/or beneficial interests held by such parties upon substantially similar terms and conditions to those set forth in this Agreement.
          (d) None of the Securities, the New Indentures, or the Exchange, is or may be (i) void or voidable as an actual or constructive fraudulent transfer or as a preferential transfer or (ii) subject to any Impairment.
          (e) Each of the Company and the Guarantor (i) is a sophisticated entity with respect to the Exchange and the transactions contemplated thereby, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and the transactions contemplated thereby and (iii) has independently and without reliance upon any Kodiak entity, any Holder of the Securities, Kodiak CDO Management, LLC, Wilmington, or any of their affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon each Kodiak entity’s express representations, warranties, covenants and agreements in this Agreement. The Company and the Guarantor acknowledge that none of Kodiak, any Kodiak Holders, Kodiak CDO Management, LLC, Wilmington, or any of their affiliates has given them any investment advice, credit information or opinion on whether the Exchange is prudent.
          (f) Neither the Company nor the Guarantor has engaged any broker, finder or other entity acting under the authority of it or any of its affiliates that is entitled to any broker’s commission or other fee in connection with the transaction for which Kodiak, any Holder, Trustee or any of their affiliates could be responsible.
          (g) No interest in the Kodiak Transferred Rights is being acquired by or on behalf of an entity that is, or at any time while the Kodiak Transferred Rights are held thereby will be, one or more Benefit Plans.
          (h) Neither the Company, the Guarantor nor any of their respective “Affiliates” (as defined in Rule 501(b) of Regulation D (“ Regulation D ”) under the Securities Act (as defined below)), nor any person acting on its or their behalf, has, directly or indirectly,
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made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.
          (i) Neither the Company the Guarantor nor any of their respective Affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.
          (j) The Securities (i) are not and have not been listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under Section 8 of the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and the Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“ Rule 144A(d)(3) ”).
          (k) Neither the Company, the Guarantor nor any of their respective Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.
          (l) Neither the Company nor the Guarantor is, and immediately following consummation of the transactions contemplated hereby, will be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act.
          (m) Each of this Agreement, the New Indentures and the other Operative Documents and the consummation of the transactions contemplated herein and therein have been duly authorized by the Company and the Guarantor and, on the Closing Date, will have been duly executed and delivered by the Company and the Guarantor and, assuming due authorization, execution and delivery by Kodiak and/or the Trustee, as applicable, will be a legal, valid and binding obligations of the Company and the Guarantor enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (n) The Securities have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Trustee for authentication in accordance with the New Indentures and, when authenticated in the manner provided for in the New Indentures and delivered to the Holders, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the New Indentures, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (o) Neither the issue of the Securities and exchange of the Securities for the Kodiak Holdings, as applicable, nor the execution and delivery of and compliance with the Operative Documents by the Company or the Guarantor, nor the consummation of the
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transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of (x) the charter or bylaws or similar organizational documents of the Company, the Guarantor or any subsidiary of the Company or the Guarantor or (y) any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental entity, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Company, the Guarantor or any of their respective subsidiaries or their respective properties or assets (collectively, the “ Governmental Entities ”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any pledge, security interest, claim, lien or other encumbrance of any kind (each, a “ Lien ”) upon any property or assets of the Company, the Guarantor or any if their respective subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Company, the Guarantor or any of their respective subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, or any judgment, order or decree of any court, Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a Material Adverse Effect or (iii) will require the consent, approval, authorization or order of any court or Governmental Entity. As used herein, a “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company, the Guarantor or any of its subsidiaries prior to its scheduled maturity.
          (p) Each of the Company and the Guarantor has all requisite power and authority to own, lease and operate its properties and assets and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company or the Guarantor to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
          (q) Neither the Company nor the Guarantor has subsidiaries that are material to its business, financial condition or earnings, other than those listed in  Schedule 1  attached hereto (the “ Significant Subsidiaries ”). Each Significant Subsidiary is a corporation, partnership or limited liability company duly and properly incorporated or organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized or formed, with all requisite power and authority to own, lease and operate its properties and conduct the business it transacts. Each Significant Subsidiary is duly qualified to transact business as a foreign corporation, partnership or limited liability company, as applicable, and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
          (r) The Company, the Guarantor and each of their respective Significant Subsidiaries hold all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the “ Governmental Licenses ”) of and from
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Governmental Entities necessary to conduct their respective businesses as now being conducted, and neither the Company, the Guarantor nor any of their respective subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company, the Guarantor and their respective subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.
          (s) All of the issued and outstanding Equity Interests of the Company and the Guarantor and each of their respective subsidiaries are validly issued, fully paid and non-assessable; all of the issued and outstanding Equity Interests each subsidiary of the Company and the Guarantor is owned by the Company, or the Guarantor, as the case may be, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and outstanding Equity Interests of the Company, the Guarantor or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company, the Guarantor or any of their respective subsidiaries is a party.
          (t) Neither the Company, the Guarantor nor any of their subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company, the Guarantor or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.
          (u) There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Guarantor after due inquiry, threatened against or affecting the Company, the Guarantor or any of their respective subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Company, the Guarantor or any of their respective subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.
          (v) The accountants of the Company and the Guarantor who certified the Financial Statements (defined below) are independent public accountants of the Company, the Guarantor and their respective subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “ Commission ”) thereunder.
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          (w) The audited consolidated financial statements (including the notes thereto) and schedules of the Company, the Guarantor and each of their respective consolidated subsidiaries for the fiscal year ending December 31, 2008, (the “ Financial Statements ”) provided to Kodiak are the most recent available audited and unaudited consolidated financial statements of the Company, the Guarantor and each of their respective consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“ GAAP ”), the financial position of the Company, the Guarantor and each of their respective consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified. Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein).
          (x) Neither the Company, the Guarantor nor any of their respective subsidiaries has any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company, the Guarantor or any of their respective subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Company, the Guarantor and all of their respective subsidiaries since the date of the most recent balance sheet included in such Financial Statements.
          (y) Since the respective dates of the Financial Statements, there has not been (A) any Material Adverse Change or (B) any dividend or distribution of any kind declared, paid or made by the Company or the Guarantor on any class of their respective Equity Interests.
          (z) The documents of the Company and the Guarantor, as applicable, filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company’s and the Guarantor’s, as applicable, most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Guarantor with the Commission (collectively, the “ 1934 Act Reports ”), complied and will comply with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder (the “ 1934 Act Regulations ”) ,  and, at the date of this Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to such Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the Commission to which the Company, the Guarantor or any of their respective subsidiaries is a party. The Company and the Guarantor are in compliance in with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.
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          (aa) No labor dispute with the employees of the Company, the Guarantor or any of their respective subsidiaries exists or, to the knowledge of the Company or the Guarantor, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.
          (bb) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Company, the Guarantor of their respective obligations under the Operative Documents, as applicable, or the consummation by the Company or the Guarantor of the transactions contemplated by the Operative Documents.
          (cc) Each of the Company, the Guarantor and each of their respective subsidiaries has good and marketable title to all of its respective real and personal property, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Company, the Guarantor or any of their respective subsidiaries holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of the Company, the Guarantor or any subsidiary of the Company or the Guarantor has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company, the Guarantor or any Significant Subsidiary of the Company or the Guarantor under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.
          (dd) Other than with respect to Holding IV, the Company is the holder of all of the beneficial interests in Original Security IV.
          (ee) The Company, the Guarantor and each of their respective Significant Subsidiaries have timely and duly filed (or filed extensions thereof (and which extensions are presently in effect)) all Tax Returns (as defined below) required to be filed by them, and all such Tax Returns are true, correct and complete in all material respects. The Company, the Guarantor and each of their respective Significant Subsidiaries have timely and duly paid in full all material Taxes (as defined below) required to be paid by them (whether or not such amounts are shown as due on any Tax Return). Neither the Company nor the Guarantor has received notice of, and to the Company’s and Guarantor’s knowledge, there are no material federal, state, or other Tax audits or deficiency assessments proposed (to the Company’s knowledge) or pending with respect to the Company, the Guarantor or any of their respective Significant Subsidiary, and no such audits or assessments are threatened. As used herein, the terms “ Tax ” or “ Taxes ” mean (i) all federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract. As used herein, the term “ Tax Returns ” means all federal, state, local, and foreign Tax returns, declarations, statements,
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reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.
          (ff) Interest payable by the Company on the Securities is deductible by the Company for United Stated Federal income Tax purposes and, to the Company’s knowledge, there are no rulemaking or similar proceedings before the U.S. Internal Revenue Service or comparable federal, state, local or foreign government bodies which involve or affect the Company, the Guarantor or any of their subsidiaries, which, if the action is decided unfavorably to the Company, the Guarantor or any of their subsidiaries, could result in a Material Adverse Effect.
          (gg) The books, records and accounts of the Company, the Guarantor and their respective Significant Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company, the Guarantor and their respective Significant Subsidiaries. The Company, the Guarantor and each of their respective subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
          (hh) The Company, the Guarantor and their respective Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby. All policies of insurance and fidelity or surety bonds insuring the Company, the Guarantor or any of their respective Significant Subsidiaries or the Company’s, the Guarantor’s or their respective Significant Subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect. The Company, the Guarantor and each of their respective Significant Subsidiaries are in compliance with the terms of such policies and instruments in all material respects. Neither the Company nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Within the past twelve months, neither the Company nor any Significant Subsidiary has been denied any insurance coverage it has sought or for which it has applied.
          (ii) Neither the Company, the Guarantor, nor their respective Significant Subsidiaries, nor, to the knowledge of the senior executive officers of Company or the Guarantor, any person acting on behalf of the Company, the Guarantor and/or their respective Significant Subsidiaries including, without limitation, any director, officer, manager, agent or employee of the Company, the Guarantor or their respective Significant Subsidiaries has, directly or indirectly, while acting on behalf of the Company and/or its Significant Subsidiaries (i) used any corporate, partnership or company funds for unlawful contributions, gifts, entertainment or
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other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate, partnership or company funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment.
          (jj) The information provided by the Company and the Guarantor pursuant to the Operative Documents does not, as of the date hereof, and will not as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (kk) Except as would not, individually or in the aggregate, result in a Material Adverse Change, (i) the Company, the Guarantor and their respective subsidiaries have been and are in compliance with applicable Environmental Laws (as defined below), (ii) none of the Company, Guarantor or their respective subsidiaries, or, to the best of the Company’s knowledge, (a) any other owners of any of the real properties currently or previously owned, leased or operated by the Company, the Guarantor and their respective Significant Subsidiaries (collectively, the “ Properties ”) at any time or any other party, has at any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of Hazardous Materials (as defined below) on, to, in, under or from the Properties other than in compliance with all applicable Environmental Laws, (iii) neither the Company, the Guarantor, nor any of their respective subsidiaries has used nor intends to use the Properties or any subsequently acquired properties, other than in compliance with applicable Environmental Laws, (iv) neither the Company, the Guarantor, nor any of their respective subsidiaries has received any notice of, or have any knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to a claim under or pursuant to any Environmental Law with respect to the Properties, or their respective assets or arising out of the conduct of the Company, the Guarantor and their respective subsidiaries, (v) none of the Properties are included or, to the best knowledge of the Company, proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or, to the best of the Company’s knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) none of the Company, the Guarantor, their respective subsidiaries or agents or, to the best of the Company’s knowledge, any other person or entity for whose conduct any of them is or may be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, and has not transported or arranged for the transport of any Hazardous Material from the Properties to another property, except in compliance with all applicable Environmental Laws, (vii) no lien has been imposed on the Properties by any Governmental Entity in connection with the presence on or off such Property of any Hazardous Material or with respect to an Environmental Law, and (viii) none of the Company, the Guarantor, or their respective Significant Subsidiaries or, to the best knowledge of the Company, any other person or entity for whose conduct any of them is or may be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order in connection with an Environmental Law with respect to the Properties or any facilities or improvements or any operations or activities thereon.
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          (ll) As used herein, “Hazardous Materials” shall include, without limitation, any flammable materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“ CERCLA ”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental statutes and laws not specifically defined herein) (individually, an “ Environmental Law ” and collectively, the “ Environmental Laws ”) or by any Governmental Entity.
     5. Representations and Warranties of Kodiak Entities. Each Kodiak entity, for itself, represents and warrants to, and agrees with, the Company as follows:
          (a) It is a company duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite power and authority to execute, deliver and perform under Operative Documents to which it is a party, to make the representations and warranties specified herein and therein and to consummate the transactions contemplated in the Operative Documents.
          (b) This Agreement and the consummation of the transactions contemplated herein has been duly authorized by it and, on the Closing Date, will have been duly executed and delivered by it and, assuming due authorization, execution and delivery by the Company and Trustee of the Operative Documents to which each is a party, will be a legal, valid and binding obligation of such Kodiak, enforceable against such Kodiak in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (c) No filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any Governmental Entity or any other Person, other than those that have been made or obtained, is necessary or required for the performance by such Kodiak of its obligations under this Agreement or to consummate the transactions contemplated herein.
          (d) It is a “Qualified Holder” as such term is defined in Section 2(a)(51) of the Investment Company Act.
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          (e) Attentus I is the legal and beneficial owner of Holding I and the related Kodiak Transferred Rights and shall deliver Holding I free and clear of any Lien created by such Kodiak entity.
          (f) Attentus III is the legal and beneficial owner of Holding II and the related Kodiak Transferred Rights and shall deliver Holding II free and clear of any Lien created by such Kodiak entity.
          (g) Attentus III is the legal and beneficial owner of Holding III and the related Kodiak Transferred Rights and shall deliver Holding III free and clear of any Lien created by such Kodiak entity.
          (h) Kodiak II is the legal and beneficial owner of Holding IV and the related Kodiak Transferred Rights and shall deliver Holding IV free and clear of any Lien created by such Kodiak entity.
          (i) Intentionally omitted.
          (j) There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to its knowledge, threatened against or affecting it, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents.
          (k) The outstanding principal amount of its respective Kodiak Holding is as described in the Recitals hereto.
          (l) It is aware that the Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.
          (m) It is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act. Without characterizing the Kodiak Holdings or the Kodiak Transferred Rights as a “security” within the meaning of applicable securities laws, it has not made any offers to sell, or solicitations of any offers to buy, all or any portion of the Kodiak Holdings or Kodiak Transferred Rights in violation of any applicable securities laws.
          (n) Neither it nor any of its Affiliates, nor any person acting on its or its Affiliate’s behalf has engaged, or will engage, any form of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Securities.
          (o) It understands and acknowledges that (i) no public market exists for any of the Securities and that it is unlikely that a public market will ever exist for the Securities, (ii) such Holder is acquiring the Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities
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Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and it agrees to the legends and transfer restrictions applicable to the Securities contained in the New Indentures, and (iii) it has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be required to bear the economic risk of an investment in the Securities.
          (p) It has not engaged any broker, finder or other entity acting under its authority that is entitled to any broker’s commission or other fee in connection with this Agreement and the consummation of transactions contemplated in this Agreement and the New Indentures for which the Company could be responsible.
          (q) It (i) is a sophisticated entity with respect to the Exchange, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and (iii) has independently and without reliance upon the Company or any of their affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon the Company’s express representations, warranties, covenants and agreements in the Operative Documents and the other documents delivered by the Company in connection therewith.
     Except as expressly stated in this Agreement, Kodiak make no representations or warranties, express or implied, with respect to the Exchange, the Kodiak Transferred Rights, the Kodiak Holdings, the Existing Indentures, or any other matter.
     6. Covenants and Agreements of the Company. The Company and the Guarantor jointly and severally agree with Kodiak and the Holders as follows:
          (a) The Company has taken all action reasonably necessary or appropriate to cause its representations and warranties contained in  Section 4  hereof to be true as of the Closing Date and after giving effect to the Exchange.
          (b) Intentionally omitted.
          (c) Intentionally omitted.
          (d) Neither the Company nor the Guarantor will, or will permit any of their respective Affiliates or any person acting on its or their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.
          (e) Neither the Company nor the Guarantor will, or will not permit any of their respective Affiliates or any person acting on its or their behalf to, engage in (i) any form of “general solicitation or general advertising” (within the meaning of Regulation D), or (ii) any “directed selling efforts” within the meaning of Regulation S under the Securities Act, in connection with any offer or sale of the any of the Securities.
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          (f) So long as any of the Securities are outstanding, (i) the Securities shall not be listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and (ii) the Company shall not be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under Section 8 of the Investment Company Act, and, the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).
          (g) The Company shall furnish to (i) the Kodiak Holders, (ii) Kodiak CDO Management, LLC and (iii) any beneficial owner of the Securities reasonably identified to the Company, a duly completed and executed certificate in the form attached hereto as Annex D , including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
          (h) The Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each Holder of the Securities, upon the request of such Holder, any information required to be provided by Rule 144A(d)(4) under the Securities Act. If the Company is required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to be for the benefit of the Kodiak Holders.
          (i) Neither the Company nor the Guarantor will, until one hundred eighty (180) days following the Closing Date, without the Holders’ or their assignees’ prior written consent in their sole discretion, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Securities or other securities substantially similar to the Securities other than (x) as expressly contemplated by the New Indentures, if at all, the Original Kodiak Indentures and the Taberna Exchange Agreement or (ii) any other securities convertible into, or exercisable or exchangeable for, any of the Securities or other securities substantially similar to the Securities or (ii) any preferred securities.
          (j) Neither the Company nor the Guarantor will identify any of the Indemnified Parties (as defined below) in a press release or any other public statement without the prior written consent of such Indemnified Party.
          (k) The Kodiak Holders are granted the right under the New Indentures to request the substitution of new notes for all or a portion of the Securities (the “ Replacement Securities ”). The Replacement Securities shall bear terms identical to the Securities with the sole exception of interest payment dates (and corresponding redemption date and maturity date), which will be specified by the Kodiak Holders. In no event will the interest payment dates (and corresponding redemption date and maturity date) on the Replacement Securities vary by more than sixty (60) calendar days from the original interest payment dates (and corresponding redemption date and maturity date) under the Securities. The Company agrees to cooperate with all reasonable requests of the Kodiak Holders, as applicable in connection with any of the foregoing, provided that no action requested of the Company in connection with such
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cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to such documents.
     7. Payment of Expenses. In addition to the obligations agreed to by the Company under Section 2(b)(vii) herein, the Company agrees to pay all costs and expenses incident to the performance of the obligations of the Company under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated, including all costs and expenses incident to (i) the authorization, issuance, sale and delivery of the Securities and any taxes payable in connection therewith; (ii) the fees and expenses of counsel, accountants and any other experts or advisors retained by the Company and the Guarantor; and (iv) the fees and all reasonable expenses of the New Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such trustees. The fees of the New Indenture Trustee (excluding fees and disbursements of counsel) shall not exceed the amounts set forth in that certain Fee Agreement dated as of the date hereof between the Company and Wilmington, executed in connection with this Agreement and New Indenture I, New Indenture II and New Indenture III.
     8. Indemnification. (a) The Company and the Guarantor jointly and severally agree to indemnify and hold harmless Wilmington, the Holders, Kodiak, Kodiak CDO Management, LLC, and their respective affiliates and each person, if any, who controls any of the Indemnified Parties within the meaning of the Securities Act or the Exchange Act, and the Indemnified Parties’ respective directors, officers, employees and agents (collectively, the “ Indemnified Parties ”) against any and all losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available by or on behalf of the Company or the Guarantor, (ii) any omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein, not misleading, or (iii) the breach or alleged breach of any representation, warranty, or agreement of the Company or the Guarantor contained herein, or (iv) the execution and delivery by the Company and/or the Guarantor of the Operative Documents and the consummation by the Company and/r the Guarantor, as applicable, of the transactions contemplated herein and therein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability that the Company and the Guarantor may otherwise have.
          (b) Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in
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paragraph (a) above. The Indemnified Parties shall be entitled to appoint counsel to represent the Indemnified Parties in any action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action;  provided , that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless an Indemnified Party elects to engage separate counsel because such Indemnified Party believes that its interests are not aligned with the interests of another Indemnified Party or that a conflict of interest might result. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.
     9. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company, the Guarantor and/or their respective officers and of Kodiak set forth in or made pursuant to this Agreement will remain in full force and effect and will survive the Exchange. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Agreement.
     10. Recourse to Kodiak. Recourse hereunder solely with respect to Kodiak shall be limited solely to the assets of the applicable Kodiak entity. No recourse will be available to the assets of any collateral manager to Kodiak including without limitation, Kodiak CDO Management, LLC for any reason or purpose whatsoever. To the extent the assets of any Kodiak entity or the proceeds of such assets, when applied in accordance with the applicable priority of payment to which such assets or proceeds are subject, are insufficient to meet the obligations of such Kodiak entity hereunder in full, no Kodiak entity shall have further liability in respect of such outstanding obligations and such outstanding obligations shall be extinguished. The company hereby agrees not to institute against, or join any other person in instituting against, any Kodiak entity, any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under U.S. federal or state bankruptcy or similar laws until at least one year and one day or the then applicable preference period under the United States Bankruptcy Code, Title 11 of the United States Code, as amended, or, where the context requires, the applicable insolvency provisions of the laws of the Cayman Islands plus ten (10) days after the payment in full of all the Securities; provided, that nothing in this Section 10 shall preclude the Company from taking any action against any applicable Kodiak entity prior to the expiration of the aforementioned period in (x) any case or proceeding voluntarily filed or commenced by such Kodiak entity, or (y) any involuntary insolvency proceeding filed or commenced against the Company, by a person other than the Company.
     11. Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto.
- 24 -

 
     12. Notices. All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed or by any other reasonable means of communication, including by electronic mail, to the relevant party at its address specified in  Exhibit D .
     13. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or obligations of the Company under this Agreement may be assigned, whether by operation of law or otherwise, without Kodiak’s prior written consent. The rights and obligations of the Holders under this Agreement may be assigned by the Holders without the Company’s consent; provided that the assignee assumes the obligations of any such Holders under this Agreement.
     14. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
     15. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
     16. Counterparts and Facsimile. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by any one or more of the parties hereto by facsimile.
     17. Entire Agreement. This Agreement constitutes the entire agreement of the parties to this Agreement and supercedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
[Signature Page Follows]
- 25 -

 
     IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above.
 	 	 	 	 	 	 	 	 	 	 	
 	 	ARBOR REALTY SR, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Guy R. Milone, Jr.	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Guy R. Milone, Jr.	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Vice President	 	 	

 	 	ARBOR REALTY TRUST, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Paul Elenio	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Paul Elenio	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	
 	 	 	 	 	 	 	 	 	 	 	
(signatures continue on the next page)
- 26 -

 
 	 	 	 	 	 	 	 	 	 	 	
 	 	KODIAK CDO II, LTD..	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Robert M. Hurley	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Robert M. Hurley	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	

 	 	ATTENTUS CDO I, LTD.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Robert M. Hurley	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Robert M. Hurley	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	

 	 	ATTENTUS CDO III, LTD.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Robert M. Hurley	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Robert M. Hurley	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	
 	 	 	 	 	 	 	 	 	 	 	
- 27 -

 
EXHIBIT A-1
Copy of Note 1
A-1

 
EXHIBIT A-2
Copy of Note 2
A-2

 
EXHIBIT A-3
Copy of Note 3
A-3

 
EXHIBIT A-4
Copy of Note 4
A-4

 
EXHIBIT B
Notice Information
Kodiak:
Kodiak CDO Management LLC
c/o Kodiak Funding LP
2107 Wilson Blvd Suite 400
Arlington, VA 22201
Attention: Robert Hurley, CFO
Telephone: 703-875-7622
Facsimile: 703-351-7901
e-mail: rhurley@ejfcap.com
Attentus Management Group LLC
c/o Kodiak Funding LP
2107 Wilson Blvd Suite 400
Arlington, VA 22201
Attention: Robert Hurley, CFO
Telephone: 703-875-7622
Facsimile: 703-351-7901
e-mail: rhurley@ejfcap.com
Company:
Arbor Realty SR, Inc.
333 Earle Ovington Blvd Suite 900
Uniondale, New York 11553
Attention: Paul Elenio
Facsimile: (516) 832-6422
e-mail:  pelenio@arbor.com
Attention: Guy Milone
Facsimile: (516) 832-6431
e-mail:  gmilone@arbor.com
B-1

 
SCHEDULE 1
List of Significant Subsidiaries
1.	 	Arbor Realty SR, Inc., a Maryland corporation	
 	 	 	
2.	 	Arbor Realty Mortgage Securities Series 2004-1, Ltd., a Cayman Islands entity	
 	 	 	
3.	 	Arbor Realty Mortgage Securities Series 2005-1, Ltd., a Cayman Islands entity	
 	 	 	
4.	 	Arbor Realty Mortgage Securities Series 2006-1, Ltd., a Cayman Islands entity	
 	 	 	
5.	 	Arbor Realty Funding, LLC, a Delaware limited liability company	
 	 	 	
6.	 	Arbor Realty Participation, LLC, a Delaware limited liability company	
Sch. 1-1

 
SCHEDULE 2
[Fees payable to Kodiak Entities per Section 3(f)]
Sch. 2-1

 
ANNEX A
     Pursuant to Section 3(b) of the Agreement, Cooley, Godward Kronish LLP counsel for the Company and the Guarantor, shall deliver opinions with respect to each of the New Indentures and the related Operative Documents to the effect that:
[INSERT ACTUAL]
Annex A-1

 
ANNEX B
     Pursuant to Section 3(d) of the Agreement, Company Counsel shall deliver opinions with respect to each of the New Indentures and the related Operative Documents to the effect that for U.S. federal income tax purposes, the Securities should constitute indebtedness of the Company.
     In rendering such opinion, such counsel may (A) state that its opinion is limited to the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.
Annex B-1

 
ANNEX C
     Pursuant to Section 3(d) of the Agreement, each special counsel for the applicable Trustee, shall deliver an opinion with respect to each of the applicable New Indentures to the effect that:
[INSERT ACTUAL]
          Wilmington
Annex C-1

 
ANNEX D
Officer’s Financial Certificate
     The undersigned, the Chief Financial Officer, hereby certifies, pursuant to Section 6(h) of the Exchange Agreement, dated as of May 6, 2009, among the Company (the “Company”), Arbor Realty Trust, Inc, (the “ Guarantor ”) and Kodiak CDO II, Ltd., Attentus CDO I, Ltd. and Attentus CDO II, Ltd., that, as of [                      ], 2009, [the Company]/[the Guarantor], if applicable, and its subsidiaries had the following ratios and balances:
As of [Quarterly/Annual Financial Date], 20___
 	 	 	 	 	
Senior secured indebtedness for borrowed money (“Debt”)	 	$	 	 	
Senior unsecured Debt	 	$	 	 	
Subordinated Debt	 	$	 	 	
Total Debt	 	$	 	 	
Ratio of (x) senior secured and unsecured Debt to (y) total Debt	 	 	        	%	
 	 	 	 	
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended  [ date ] , 20___and all required Financial Statements (as defined in the Agreement) for the year ended  [ date ] , 20___ ]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and all required Financial Statements (as defined in the Agreement) for the year ended  [ date ] , 20___ ]  for the fiscal quarter ended  [ date ] , 20___. ]
The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the  [ ___quarter interim ] [ annual ]  period ended  [ date ] , 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
I, the undersigned, the Chief Financial Officer, hereby certifies that I have reviewed the terms of the New Indenture and I have made, or have caused to be made by persons under my supervision, a detailed review of (i) the covenants of the Company set forth therein, and (ii) the transactions and conditions of the Company and its subsidiaries during the accounting period ended as of  [                      ]  (the “Accounting Period”), which Accounting Period is covered by the financial statements attached hereto. The examinations described in the preceding sentence did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or an Event of Default (each as defined in the New Indenture) during or at the end of the Accounting Period or as of the date of this certificate [ , except as set forth below: ] .
Annex D-1

 
[Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event. ]
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this                      day of                                           , 20___.
[COMPANY]
[company address]
Annex D-2

Exhibit 10.36
EXECUTION VERSION
 
EXCHANGE AGREEMENT
among
ARBOR REALTY TRUST, INC.,
ARBOR REALTY SR, INC.
and
TABERNA PREFERRED FUNDING I, LTD.,
TABERNA PREFERRED FUNDING II, LTD.,
TABERNA PREFERRED FUNDING III, LTD.,
TABERNA PREFERRED FUNDING IV, LTD.,
TABERNA PREFERRED FUNDING V, LTD.,
TABERNA PREFERRED FUNDING VII, LTD.,
and
TABERNA PREFERRED FUNDING VIII, LTD.
Dated as of May 6, 2009

 
EXECUTION COPY
EXCHANGE AGREEMENT
     THIS EXCHANGE AGREEMENT, dated as of May 6, 2009 (this “Agreement”), is entered into by and among ARBOR REALTY SR, INC., a Maryland corporation (the “ Company ”), ARBOR REALTY TRUST, INC., a Maryland corporation (the “ Guarantor ”), and TABERNA PREFERRED FUNDING I, LTD. (“ Taberna I ”), TABERNA PREFERRED FUNDING II, LTD. (“ Taberna II ”), TABERNA PREFERRED FUNDING III, LTD. (“ Taberna III ”), TABERNA PREFERRED FUNDING IV, LTD. (“ Taberna IV ”), TABERNA PREFERRED FUNDING V, LTD. (“ Taberna V ”), TABERNA PREFERRED FUNDING VII, LTD. (“ Taberna VII ”) and TABERNA PREFERRED FUNDING VIII, LTD. (“ Taberna VIII ”, together with Taberna I, Taberna II, Taberna III, Taberna IV, Taberna V and Taberna VII, collectively, “ Taberna ”)
RECITAL:
     A. Reference is made to (i) that certain Junior Subordinated Indenture dated as of March 15, 2005 (the “March Indenture ”); (ii) that certain Junior Subordinated Indenture dated as of April 1, 2005 (as amended, the “ April Indenture ”); (iii) that certain Junior Subordinated Indenture dated as of December 8, 2005 (the “ December Indenture ”); (iv) that certain Junior Subordinated Indenture dated as of May 16, 2006 (the “ May Indenture ”); each by and between the Company and The Bank of New York Mellon Trust Company, National Association (“ BNYM ”) (as successor to JPMorgan Chase Bank, National Association,) as trustee and (v) that certain Junior Subordinated Indenture dated as of June 30, 2005 (the “ June Indenture ”) by and between the Company and Wells Fargo Bank, National Association, as trustee (“ Wells ”); together with BNYM, the “ Existing Indenture Trustee ”).
     B. Reference is made to (i) that certain Amended and Restated Trust Agreement dated as of March 15, 2005 (the “ March Trust Agreement ”); (ii) that certain Amended and Restated Trust Agreement dated as of April 1, 2005 (the “ April Trust Agreement ”); (iii) that certain Amended and Restated Trust Agreement dated as of December 8, 2005 (the “ December Trust Agreement ”); (iv) that certain Amended and Restated Trust Agreement dated as of May 16, 2006 (the “ May Trust Agreement ”); each by and among the Company, as depositor, BNYM (successor to JPMorgan Chase Bank, National Association, as property trustee) (the “ BNYM Property Trustee ”), BNY Mellon Trust of Delaware (as successor to Chase Bank USA, National Association, as Delaware trustee) (the “ BNYM Delaware Trustee ”), and the respective administrative trustees named therein; and (v) that certain Amended and Restated Trust Agreement dated as of June 30, 2005 (the “ June Trust Agreement ”) by and among the Company, as depositor, Wells Fargo Delaware Trust Company, as Delaware trustee (the “ Wells Property Trustee, ” together with the BNYM Property Trustee, the “ Property Trustees ”), Wells and the respective administrative trustees named therein.
     C. Arbor Capital Trust I (“Trust I”) is the holder of the Junior Subordinated Note due 2034 in the original principal amount of $27,070,000 issued by the Company pursuant to the March Indenture (“ Subordinated Note I ”).

 
     D. Arbor Capital Trust II (“Trust II”) is the holder of the Junior Subordinated Note due 2034 in the original principal amount of $25,780,000 issued by the Company pursuant to the April Indenture (“ Subordinated Note II ”).
     E. Arbor Capital Trust IV (“Trust IV”) is the holder of the Junior Subordinated Note due 2035 in the original principal amount of $25,774,000 issued by the Company pursuant to the June Indenture (“ Subordinated Note IV ”).
     F. Arbor Capital Trust V (“Trust V”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $51,550,000 issued by the Company pursuant to the December Indenture (“ Subordinated Note V ”).
     G. Arbor Capital Trust VI (“Trust VI”) is the holder of the Junior Subordinated Note due 2036 in the original principal amount of $51,550,000 issued by the Company pursuant to the January Indenture (“ Subordinated Note VI, ” together with Subordinated Note I, Subordinated Note II, Subordinated Note IV, and Subordinated Note V, the “ Existing Subordinated Notes ”).
     F. Taberna I is the holder of Preferred Securities in the original aggregate principal amount of $26,250,000 issued by Trust I pursuant to the March Trust Agreement, copies of which are attached hereto as  Exhibit A-1  (the “ Trust I Preferred Securities ”).
     G. Taberna II is the holder of Preferred Securities in the original aggregate principal amount of $25,000,000 issued by Trust II pursuant to the April Trust Agreement, copies of which are attached hereto as  Exhibit A-2  (the “ Trust II Preferred Securities ”).
     H. Taberna III, Taberna IV and Taberna VIII are the holders of Preferred Securities in the original aggregate principal amount of $50,000,000 issued by Trust V pursuant to the December Trust Agreement, copies of which are attached hereto as Exhibit A-4  (the “ Trust V Preferred Securities ;” together with the Trust I Preferred Securities and Trust II Preferred Securities, the “ Original Preferred Securities ”).
     I. Pursuant to the June Trust Agreement, Trust IV issued a certain Preferred Security Certificate (as such term is defined in the June Trust Agreement) in the amount of $25,000,000 (the “ Original Security IV ”), which Original Security IV is a global security.
     J. Taberna V is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security IV (the “ Taberna V Holding ”).
     K. Pursuant to the May Trust Agreement, Trust VI issued a certain Preferred Security Certificate (as such term is defined in the May Trust Agreement) in the amount of $50,000,000 (the “ Original Security VI ”), which Original Security VI is a global security.
     L. Taberna VII is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security VI (the “ Taberna VII Holding ”), and Taberna VIII is the holder of $25,000,000 in principal amount of a beneficial interest in Original Security VI (the “ Taberna VIII Holding; ” together with the Taberna V Holding and the Taberna VII Holding, the “ Taberna Holdings ”).
- 2 -

 
     M. Simultaneously herewith, the Company and BNYM, as trustee (the “New Indenture Trustee”) have entered into (a) that certain Junior Subordinated Indenture I (“ New Indenture I ”) pursuant to which Company proposes to issue Twenty-Nine Million Four Hundred Thousand Dollars ($29,400,000) in original aggregate principal amount of the Junior Subordinated Notes; and (b) that certain Junior Subordinated Indenture II (“ New Indenture II ”, and together with New Indenture I, the  “New Indentures" ) pursuant to which Company proposes to issue One Hundred Sixty-Eight Million Dollars ($168,000,000) in original aggregate principal amount of the Junior Subordinated Notes. Pursuant to the New Indentures, the Company proposes to issue such Junior Subordinated Notes as follows (collectively, the “ Securities ”):
 	(i)	 	Junior Subordinated Note due 2034 in the original principal amount of $29,400,000 issued by the Company to Taberna I, a copy of which is attached hereto as Exhibit B-1 (“ Note 1 ”), pursuant to New Indenture I;	
 	 	 	 	
 	(ii)	 	Junior Subordinated Note due 2034 in the original principal amount of $28,000,000 issued by the Company to Taberna II, a copy of which is attached hereto as Exhibit B-2 (“ Note 2 ”), pursuant to New Indenture II;	
 	 	 	 	
 	(iii)	 	Junior Subordinated Note due 2034 in the original principal amount of $28,000,000 issued by the Company to Taberna III, a copy of which is attached hereto as Exhibit B-3 (“ Note 3 ”), pursuant to New Indenture II;	
 	 	 	 	
 	(iv)	 	Junior Subordinated Note due 2034 in the original principal amount of $27,300,000 issued by the Company to Taberna IV, a copy of which is attached hereto as Exhibit B-4 (“ Note 4 ”), pursuant to New Indenture II;	
 	 	 	 	
 	(v)	 	Junior Subordinated Note due 2034 in the original principal amount of $28,000,000 issued by the Company to Taberna VII, a copy of which is attached hereto as Exhibit B-5 (“ Note 5 ”), pursuant to New Indenture II;	
 	 	 	 	
 	(vi)	 	Junior Subordinated Note due 2034 in the original principal amount of $28,700,000 issued by the Company to Taberna VIII, a copy of which is attached hereto as Exhibit B-6 (“ Note 6 ”), pursuant to New Indenture II; and	
 	 	 	 	
 	(vii)	 	Junior Subordinated Note due 2034 in the original principal amount of $28,000,000 issued by the Company to Taberna V, a copy of which is attached hereto as Exhibit B-7 (“ Note 7 ”), pursuant to New Indenture II.	
     N. The Securities will be guaranteed by the Guarantor, as to the payment of the Parent Guarantee Payments, as defined in and in accordance with those certain Parent Guarantee Agreements, dated as of the date hereof, each by and between the Guarantor and the BNYM Indenture Trustee, with respect to New Indenture I (the “ Parent Guarantee I ”) and New Indenture II (the “ Parent Guarantee II ”, and together with Parent Guarantee I, the “ Parent Guarantees ”)
- 3 -

 
     N. On the terms and subject to the conditions set forth in this Agreement, the Company and Taberna have agreed to exchange the Original Preferred Securities and the Taberna Holdings for the Securities.
     NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:
     1. Definitions. This Agreement, the New Indentures, the Parent Guarantees and the Securities are collectively referred to herein as the “ Operative Documents .” All other capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed thereto in the New Indentures.
     “April Trust Agreement” has the meaning set forth in the Recitals.
     “April Indenture” has the meaning set forth in the Recitals.
     “Bankruptcy Code” means the Bankruptcy Reform Act of 1978, 11 U.S.C. §§101 et seq., as amended.
     “Benefit Plan” means an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, a “plan” as defined in Section 4975 of the Code or any entity whose assets include (for purposes of U.S. Department of Labor Regulations Section 2510.3-101 or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan.”
     “BNYM” has the meaning set forth in the Recitals.
     “CDO Trustee” has the meaning set forth in Section 2(b)(i).
     “Code” means the Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated under it.
     “Closing Date” has the meaning set forth in Section 2(b).
     “Closing Room” has the meaning set forth in Section 2(b).
     “Company” has the meaning set forth in the introductory paragraph hereof.
     “Company Counsel” has the meaning set forth in Section 3(b).
     “Commission” has the meaning set forth in Section 4(v)
     “December Trust Agreement” has the meaning set forth in the Recitals.
     “December Indenture” has the meaning set forth in the Recitals.
     “Delaware Trustee” has the meaning set forth in the Recitals.
     “Environmental Law” has the meaning set forth in Section 4(jj).
- 4 -

 
     “Environmental Laws” shall have the correlative meaning.
     “Equity Interests” means with respect to any Person (a) if such a Person is a partnership, the partnership interests (general or limited) in a partnership, (b) if such Person is a limited liability company, the membership interests in a limited liability company and (c) if such Person is a corporation, the shares or stick interests (both common stock and preferred stock) in a corporation.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the rules and regulations promulgated under it.
     “Exchange” has the meaning set forth in Section 2(b).
     “Exchange Act” has the meaning set forth in Section 4(j).
     “Existing Indentures” has the meaning set forth in the Recitals.
     “Existing Subordinated Notes” has the meaning set forth in the Recitals.
     “Financial Statements” has the meaning set forth in Section 4(w).
     “GAAP” has the meaning set forth in Section 4(w).
     “Governmental Entities” has the meaning set forth in Section 4(o).
     “Governmental Licenses” has the meaning set forth in Section 4(r).
     “Hazardous Materials” has the meaning set forth in Section 4(jj).
     “Holder” has the meaning set forth in the New Indentures.
     “Impairment” means any claim, counterclaim, setoff, defense, action, demand, litigation (including administrative proceedings or derivative actions), encumbrance, right (including expungement, avoidance, reduction, contractual or equitable subordination, or otherwise) or defect.
     “Indemnified Party” has the meaning set forth in Section 8(a). “Indemnified Parties” shall have the correlative meaning.
     “Investment Company Act” has the meaning set forth in Section 4(j).
     “June Indenture” has the meaning set forth in the Recitals.
     “June Trust Agreement” has the meaning set forth in the Recitals.
     “Kodiak Exchange Agreement” means that certain Exchange Agreement, dated the date hereof by and among Arbor Realty Trust, Inc., Arbor Realty SR, Inc. and Kodiak CDO II, Ltd., Attentus CDO I, Ltd. and Attentus CDO III, Ltd.
- 5 -

 
     “Lien” has the meaning set forth in Section 4(o).
     “March Indenture” has the meaning set forth in the Recitals.
     “March Trust Agreement” has the meaning set forth in the Recitals.
     “Material Adverse Effect” means a material adverse effect on the condition (financial or otherwise), earnings, business, liabilities or assets of the Company and its Significant Subsidiaries taken as a whole.
     “Material Adverse Change” has the meaning set forth in Section 3(e)(ii).
     “May Indenture” has the meaning set forth in the Recitals.
     “May Trust Agreement” has the meaning set forth in the Recitals.
     “New Indenture I” has the meaning set forth in the Recitals.
     “New Indenture II” has the meaning set forth in the Recitals.
     “New Indentures” has the meaning set forth in the Recitals.
     “New Indenture Trustee” has the meaning set forth in the Recitals..
     “Note 1” has the meaning set forth in the Recitals.
     “Note 2” has the meaning set forth in the Recitals.
     “Note 3” has the meaning set forth in the Recitals.
     “Note 4” has the meaning set forth in the Recitals.
     “Note 5” has the meaning set forth in the Recitals.
     “Note 6” has the meaning set forth in the Recitals.
     “Note 7” has the meaning set forth in the Recitals.
     “Original Kodiak Indentures” has the meaning set forth in the New Indentures.
     “Original Parent Guarantees” means (i) that certain Parent Guarantee Agreement, dated March 15, 2005; (ii) that certain Parent Guarantee Agreement, dated April 1, 2005; (iii) that certain Parent Guarantee Agreement, dated December 8, 2005; (iv) that certain Parent Guarantee Agreement, dated May 16, 2006; each by and between Arbor Realty Trust, Inc., as Parent Guarantor, and JPMorgan Chase Bank, National Association, as Guarantee Trustee and (v) that certain Parent Guarantee Agreement, dated June 30, 2005, between Arbor Realty Trust, Inc., as Parent Guarantor, and Wells Fargo Bank, National Association, as Guarantee Trustee, in each case as the same may be amended from time to time.
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     “Original Preferred Securities” has the meaning set forth in the Recitals.
     “Original Security IV” has the meaning set forth in the Recitals.
     “Original Security VI” has the meaning set forth in the Recitals.
     “Parent Guarantee I” has the meaning set forth in the Recitals.
     “Parent Guarantee II” has the meaning set forth in the Recitals.
     “Parent Guarantees” means, collectively, Parent Guarantee I and Parent Guarantee II.
     “Properties” has the meaning set forth in Section 4(kk).
     “Property Trustees” means, collectively, the BNYM Property Trustee and the Wells Property Trustee.
     “Regulation D” has the meaning set forth in Section 4(h).
     “Repayment Event” has the meaning set forth in Section 4(o).
     “Rule 144A(d)(3)” has the meaning set forth in Section 4(j).
     “Securities” has the meaning set forth in the Recitals.
     “Securities Act” means the Securities Act of 1933, 15 U.S.C. §§77a etseq., as amended, and the rules and regulations promulgated under it.
     “Significant Subsidiary” has the meaning set forth in Section 4(q).
     “Subordinated Note I” has the meaning set forth in the Recitals.
     “Subordinated Note II” has the meaning set forth in the Recitals.
     “Subordinated Note IV” has the meaning set forth in the Recitals.
     “Subordinated Note V” has the meaning set forth in the Recitals.
     “Subordinated Note VI” has the meaning set forth in the Recitals.
     “Taberna” has the meaning set forth in the introductory paragraph hereof.
     “Taberna Holdings” shall mean the Taberna V Holding, the Taberna VII Holding, and the Taberna VIII Holding.
     “Taberna I” has the meaning set forth in the introductory paragraph hereof.
     “Taberna II” has the meaning set forth in the introductory paragraph hereof.
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     “Taberna III” has the meaning set forth in the introductory paragraph hereof.
     “Taberna IV” has the meaning set forth in the introductory paragraph hereof.
     “Taberna V” has the meaning set forth in the introductory paragraph hereof.
     “Taberna VII” has the meaning set forth in the introductory paragraph hereof.
     “Taberna VIII” has the meaning set forth in the introductory paragraph hereof.
     “Taberna V Holding” has the meaning set forth in the Recitals.
     “Taberna VII Holding” has the meaning set forth in the Recitals.
     “Taberna VIII Holding” has the meaning set forth in the Recitals.
     “Taberna Capital Management, LLC” means Taberna Capital Management, LLC and its successors and/or assigns as collateral manager of the Holders, as applicable.
     “Taberna Transferred Rights” means any and all of each Taberna entity’s right, title, and interest in, to and under the Original Preferred Securities, Original Security IV and Original Security VI, together with its rights with respect to the following:
          (i) the applicable Existing Indentures, Trust Agreements, and the Original Parent Guarantees;
          (ii) all amounts payable to such Taberna entity under the applicable Original Preferred Securities, Original Security IV, Original Security VI, the applicable Existing Indentures and/or the applicable Trust Agreements;
          (iii) all claims (including “claims” as defined in Bankruptcy Code §101(5)), suits, causes of action, and any other right of such Taberna entity, whether known or unknown, against the Company or any of its affiliates (including the applicable Trusts), agents, representatives, contractors, advisors, or any other entity that in any way is based upon, arises out of or is related to any of the foregoing, including all claims (including contract claims, tort claims, malpractice claims, and claims under any law governing the exchange of, purchase and sale of, or indentures for, securities), suits, causes of action, and any other right of Taberna against any attorney, accountant, financial advisor, or other entity arising under or in connection with the applicable Original Preferred Securities, the applicable Existing Indentures, the applicable Trust Agreements, the applicable Original Parent Guarantees or the transactions related thereto;
          (iv) all guarantees and all collateral and security of any kind for or in respect of the foregoing;
          (v) all cash, securities, or other property, and all setoffs and recoupments, to be received, applied, or effected by or for the account of such Taberna entity under the applicable Original Preferred Securities, Original Security IV, and
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Original Security VI other than fees, costs and expenses payable to such Taberna entity hereunder and all cash, securities, interest, dividends, and other property that may be exchanged for, or distributed or collected with respect to, any of the foregoing; and
          (vi) all proceeds of the foregoing.
     “Trust I” has the meaning set forth in the Recitals.
     “Trust II” has the meaning set forth in the Recitals.
     “Trust IV” has the meaning set forth in the Recitals.
     “Trust V” has the meaning set forth in the Recitals.
     “Trust VI” has the meaning set forth in the Recitals.
     “Trust I Preferred Securities” has the meaning set forth in the Recitals.
     “Trust II Preferred Securities” has the meaning set forth in the Recitals.
     “Trust V Preferred Securities” has the meaning set forth in the Recitals.
     “Trust Agreements” has the meaning set forth in the Recitals.
     “Wells” has the meaning set forth in the Recitals.
     “Wells Property Trustee” has the meaning set forth in the Recitals.
     2. Exchange of Original Preferred Securities for Securities.
          (a) The Company agrees to issue the Securities in accordance with the New Indentures and has requested that the Taberna entities accept such Securities in exchange for the applicable Original Preferred Securities and the applicable Taberna Holdings, and each of the Taberna entities hereby accepts the applicable Securities in exchange for the applicable Original Preferred Securities and the applicable Taberna Holdings upon the terms and conditions set forth herein.
          (b) The closing of the exchange contemplated herein shall occur at the offices of Nixon Peabody, LLP in New York, New York (the “ Closing Room ”), or such other place as the parties hereto and BNYM shall agree, at 11:00 a.m. New York time, on May 6, 2009 or such later date as the parties may agree (such date and time of delivery the “ Closing Date ”). The Company and Taberna hereby agree that the exchange (the “ Exchange ”) will occur in accordance with the following requirements:
          (i) Taberna Capital Management, LLC (as collateral manager for each of the Taberna entities) shall have delivered an issuer order instructing each trustee (in each such capacity, a “ CDO Trustee ”) under the applicable indenture pursuant to which such CDO Trustee serves as trustee for the holders of the Original Preferred Securities, Original Security IV and Original Security VI to (A) exchange the Original Preferred
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Securities for the Securities and to deliver the Original Preferred Securities to the applicable Property Trustee for cancellation and reissuance in the name of the Company, and (B) as to Taberna V, Taberna VII and Taberna VIII, exchange the Taberna V Holding for Note 7, the Taberna VII Holding for Note 5 and the Taberna VIII Holding for Note 6, and transfer Taberna V’s interest in Original Security IV, Taberna VII’s interest in Original Security VI and Taberna VIII’s interest in Original Security VI, to the Company.
          (ii) The Original Preferred Securities and the Securities shall have been delivered to the Closing Room, copies of which Original Preferred Securities and Securities shall have previously been made available for inspection, if so requested.
          (iii) Company shall have directed the New Indenture Trustee to authenticate the Securities and deliver them to the applicable CDO Trustee, as follows: (i) Note 1 to Taberna I, (ii) Note 2 to Taberna II, (iii) Note 3 to Taberna III, (iv) Note 4 to Taberna IV; (v) Note 5 to Taberna VII; (iv) Note 6 to Taberna VIII; and (vii) Note 7 to Taberna V.
          (iv) New Indenture Trustee shall have authenticated the applicable Securities in accordance with the terms of the applicable New Indenture and delivered them as provided above.
          (v) Each Property Trustee, on behalf of the applicable Trusts, shall have obtained the applicable Original Preferred Securities and shall promptly thereafter, as requested by the Company, cancel and reissue them in the name of the Company or cancel them entirely.
          (vi) Simultaneously with the occurrence of the events described in subsections (iv) and (v) hereof and satisfaction of all other requirements herein, (A) each Taberna entity holding the applicable Original Preferred Securities or the applicable Taberna Holdings irrevocably transfers, assigns, grants and conveys the related Taberna Transferred Rights to the Company and the Company assumes all rights and obligations of Taberna with respect to the Original Preferred Securities, the Taberna Holdings and the Taberna Transferred Rights and (B) each Holder shall be entitled to all of the rights, title and interest of a Holder of the Securities under the terms of the applicable Securities, the applicable New Indenture and any related Operative Documents.
          (vii) Company shall have paid to BNYM all of such party’s legal fees, costs and other expenses in connection with the Exchange, as well as all other accrued and unpaid fees, costs and expenses under the Existing Indentures, the Trust Agreements and the New Indentures, if any.
     3. Conditions Precedent. The obligations of the parties under this Agreement are subject to the following conditions precedent:
          (a) The representations and warranties contained herein shall be accurate as of the date of delivery of the Securities.
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          (b) Cooley, Godward, Kronish LLP, counsel for the Company and the Guarantor (the “Company Counsel”), shall have delivered opinions with respect to each New Indenture and the related Operative Documents, dated the Closing Date, addressed to each Holder and its successors and assigns and to the New Indenture Trustee, in substantially the form set out in Annex A-1  hereto; the Company shall have delivered opinions of the Company’s and Guarantor’s General Counsel addressed to each Holder and its successors and assigns and to the New Indenture Trustee, in substantially the form set out in Annex A-2  hereto, and if required by Taberna Capital Management, LLC, the Company shall have furnished to the Holders of the Securities a certificate signed by the Company’s Chief Executive Officer, President, an Executive Vice President, Chief Financial Officer, Treasurer or Assistant Treasurer, dated the Closing Date, addressed to the Holders of the Securities, in substantially the form set out in  Annex D  hereto. In rendering its opinion, the Company Counsel may rely as to factual matters upon certificates or other documents furnished by officers, directors and trustees of the Company and by government officials; provided ,  however , that copies of any such certificates or documents are delivered to the Holders) and by and upon such other documents as such counsel may, in its reasonable opinion, deem appropriate as a basis for the Company Counsel’s opinion. The Company Counsel may specify the jurisdictions in which it is admitted to practice and that it is not admitted to practice in any other jurisdiction and is not an expert in the law of any other jurisdiction. Such Company Counsel Opinion shall not state that it is to be governed or qualified by, or that it is otherwise subject to, any treatise, written policy or other document relating to legal opinions, including, without limitation, the Legal Opinion Accord of the ABA Section of Business Law (1991).
          (c) Taberna shall have been furnished opinions of the Company Counsel, dated as of the Closing Date, addressed to the Holders of the Securities and their respective successors and assigns and the applicable New Indenture Trustee, in substantially the form set out in  Annex B  hereto.
          (d) The Holders of the Securities shall have received, with respect to each New Indenture and the related Operative Documents, the opinion of special counsel for New Indenture Trustee, dated as of the Closing Date, addressed to the Holders of the Securities and their successors and assigns, in substantially the form set out in  Annex C  hereto.
          (e) Each of the Guarantor and the Company shall have furnished to the Holders of the Securities under each of the New Indentures a certificate of the Company, signed by the Chief Executive Officer, President or an Executive Vice President, and Chief Financial Officer, Treasurer or Assistant Treasurer of the Company, dated as of the Closing Date, as to (i) and (ii) below:
          (i) the representations and warranties in this Agreement and the New Indentures are true and correct on and as of the Closing Date, and Company and the Guarantor have complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and
          (ii) since the date of the latest Financial Statements, there has been no material adverse change in the condition (financial or other), earnings, business or assets of the Company, the Guarantor and their respective Significant Subsidiaries, taken as a
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whole, whether or not arising from transactions occurring in the ordinary course of business (a “Material Adverse Change ”).
          (f) The Company shall pay on or prior to the Closing Date, to the applicable Taberna entities a fee as set forth on Schedule 2, calculated as the amount of interest accrued upon the Original Preferred Securities and the Taberna Holdings, based upon (i) a principal balance equal to one hundred twelve percent (112%) of the outstanding principle balance of the Original Preferred Securities and the Taberna Holdings, (ii) an interest rate of one half of one percent (0.5%) per annum, and (iii) a period commencing on and including the most recent Interest Payment Date under the Existing Indenture for which interest was actually paid under the Original Preferred Securities and the Taberna Holdings, as applicable, and continuing through and including the Closing Date.
          (g) Prior to the Closing Date, the Company and the Guarantor shall have furnished to the Holders of the Securities and their counsel such further information, certificates and documents as the Holders of the Securities or such counsel may reasonably request.
     If any of the conditions specified in this Section 3 shall not have been fulfilled when and as provided in this Agreement, or if any of the opinions, certificates and documents mentioned above or elsewhere in this Agreement shall not be reasonably satisfactory in form and substance to the Holders of the Securities or their counsel, this Agreement and any obligations of Taberna hereunder, whether as holders of the Original Preferred Securities or the Taberna Holdings, as applicable, or as prospective Holders of the Securities, may be canceled at, or at any time prior to, the Closing Date by Taberna. Notice of such cancellation shall be given to the Company or the Guarantor in writing or by telephone and confirmed in writing, or by e-mail or facsimile.
     Each certificate signed by any officer of the Company and the Guarantor and delivered to the Holders of the Securities or the Holders’ counsel in connection with the Operative Documents and the transactions contemplated hereby and thereby shall be deemed to be a representation and warranty of the Company and the Guarantor, as applicable, and not by such officer in any individual capacity.
     4. Representations and Warranties of the Company and the Guarantor. The Company and the Guarantor jointly and severally represent and warrant to, and agree with Taberna, as holders of the Original Preferred Securities and the Taberna Holdings and with the Holders of the Securities, as follows:
          (a) Each of the Company and the Guarantor (i) is duly organized and validly existing under the laws of its jurisdiction of organization or incorporation, (ii) is in good standing under such laws and (iii) has full power and authority to execute, deliver and perform its obligations under this Agreement and the other Operative Documents.
          (b) Each of the Company and the Guarantor is an “accredited investor” as defined in Rule 501 under the Securities Act. Without characterizing the Original Preferred Securities, Original Security IV, Original Security VI or any of the Taberna Transferred Rights as a “security” within the meaning of applicable securities laws, the Company is not acquiring the Original Preferred Securities, Original Security IV, Original Security VI or the Taberna
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Transferred Rights with a view towards the sale or distribution thereof in violation of the Securities Act.
          (c) Intentionally omitted.
          (d) None of the Securities, the New Indentures, or the Exchange, is or may be (i) void or voidable as an actual or constructive fraudulent transfer or as a preferential transfer or (ii) subject to any Impairment.
          (e) Each of the Company and the Guarantor (i) is a sophisticated entity with respect to the Exchange and the transactions contemplated thereby, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and the transactions contemplated thereby and (iii) has independently and without reliance upon any Taberna entity, any Holder of the Securities, Taberna Capital Management, LLC, BNYM, or any of their affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon each Taberna entity’s express representations, warranties, covenants and agreements in this Agreement. The Company and the Guarantor acknowledge that none of Taberna, any Holders of the Securities, Taberna Capital Management, LLC, BNYM, or any of their affiliates has given them any investment advice, credit information or opinion on whether the Exchange is prudent.
          (f) Neither the Company nor the Guarantor has engaged any broker, finder or other entity acting under the authority of it or any of its affiliates that is entitled to any broker’s commission or other fee in connection with the transaction for which Taberna, any Holder, Trustee or any of their affiliates could be responsible.
          (g) No interest in the Taberna Transferred Rights is being acquired by or on behalf of an entity that is, or at any time while the Taberna Transferred Rights are held thereby will be, one or more Benefit Plans.
          (h) Neither the Company, the Guarantor nor any of their respective “Affiliates” (as defined in Rule 501(b) of Regulation D (“ Regulation D ”) under the Securities Act (as defined below)), nor any person acting on its or their behalf, has, directly or indirectly, made offers or sales of any security, or solicited offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.
          (i) Neither the Company the Guarantor nor any of their respective Affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with any offer or sale of any of the Securities.
          (j) The Securities (i) are not and have not been listed on a national securities exchange registered under Section 6 of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), or quoted on a U.S. automated inter-dealer quotation system and (ii) are not of an open-end investment company, unit investment trust or face-amount certificate company that are, or are required to be, registered under Section 8 of the Investment Company Act of 1940, as amended (the “ Investment Company Act ”), and the Securities otherwise satisfy the eligibility
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requirements of Rule 144A(d)(3) promulgated pursuant to the Securities Act (“Rule 144A(d)(3)”).
          (k) Neither the Company, the Guarantor nor any of their respective Affiliates, nor any person acting on its or their behalf, has engaged, or will engage, in any “directed selling efforts” within the meaning of Regulation S under the Securities Act with respect to the Securities.
          (l) Neither the Company nor the Guarantor is, and immediately following consummation of the transactions contemplated hereby, will be, an “investment company” or an entity “controlled” by an “investment company,” in each case within the meaning of Section 3(a) of the Investment Company Act.
          (m) Each of this Agreement, the New Indentures and the other Operative Documents and the consummation of the transactions contemplated herein and therein have been duly authorized by the Company and the Guarantor and, on the Closing Date, will have been duly executed and delivered by the Company and the Guarantor and, assuming due authorization, execution and delivery by Taberna and/or the Trustee, as applicable, will be a legal, valid and binding obligations of the Company and the Guarantor enforceable against them in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (n) The Securities have been duly authorized by the Company and, on the Closing Date, will have been duly executed and delivered to the Trustee for authentication in accordance with the New Indentures and, when authenticated in the manner provided for in the New Indentures and delivered to the Holders, will constitute legal, valid and binding obligations of the Company entitled to the benefits of the New Indentures, enforceable against the Company in accordance with their terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (o) Neither the issue of the Securities and exchange of the Securities for the Original Preferred Securities or the Taberna Holdings, as applicable, nor the execution and delivery of and compliance with the Operative Documents by the Company or the Guarantor, nor the consummation of the transactions contemplated herein or therein, (i) will conflict with or constitute a violation or breach of (x) the charter or bylaws or similar organizational documents of the Company, the Guarantor or any subsidiary of the Company or the Guarantor or (y) any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, governmental authority, agency or instrumentality or court, domestic or foreign, having jurisdiction over the Company, the Guarantor or any of their respective subsidiaries or their respective properties or assets (collectively, the “ Governmental Entities ”), (ii) will conflict with or constitute a violation or breach of, or a default or Repayment Event (as defined below) under, or result in the creation or imposition of any pledge, security interest, claim, lien or other encumbrance of any kind (each, a “ Lien ”) upon any property or assets of the Company, the Guarantor or any if their respective subsidiaries pursuant to any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which (A) the Company, the Guarantor or any of their respective subsidiaries is a party or by which it or any of them may be bound, or (B) to which any of the property or assets of any of them is subject, or any judgment,
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order or decree of any court, Governmental Entity or arbitrator, except, in the case of clause (i)(y) or this clause (ii), for such conflicts, breaches, violations, defaults, Repayment Events (as defined below) or Liens which (X) would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents and (Y) would not, singly or in the aggregate, have a Material Adverse Effect or (iii) will require the consent, approval, authorization or order of any court or Governmental Entity. As used herein, a “ Repayment Event ” means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company, the Guarantor or any of its subsidiaries prior to its scheduled maturity.
          (p) Each of the Company and the Guarantor has all requisite power and authority to own, lease and operate its properties and assets and conduct the business it transacts and proposes to transact, and is duly qualified to transact business and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure of the Company or the Guarantor to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
          (q) Neither the Company nor the Guarantor has subsidiaries that are material to its business, financial condition or earnings, other than those listed in  Schedule 1  attached hereto (the “ Significant Subsidiaries ”). Each Significant Subsidiary is a corporation, partnership or limited liability company duly and properly incorporated or organized or formed, as the case may be, validly existing and in good standing under the laws of the jurisdiction in which it is chartered or organized or formed, with all requisite power and authority to own, lease and operate its properties and conduct the business it transacts. Each Significant Subsidiary is duly qualified to transact business as a foreign corporation, partnership or limited liability company, as applicable, and is in good standing in each jurisdiction where the nature of its activities requires such qualification, except where the failure to be so qualified would not, singly or in the aggregate, have a Material Adverse Effect.
          (r) The Company, the Guarantor and each of their respective Significant Subsidiaries hold all necessary approvals, authorizations, orders, licenses, consents, registrations, qualifications, certificates and permits (collectively, the “ Governmental Licenses ”) of and from Governmental Entities necessary to conduct their respective businesses as now being conducted, and neither the Company, the Guarantor nor any of their respective subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Government License, except where the failure to be so licensed or approved or the receipt of an unfavorable decision, ruling or finding, would not, singly or in the aggregate, have a Material Adverse Effect; all of the Governmental Licenses are valid and in full force and effect, except where the invalidity or the failure of such Governmental Licenses to be in full force and effect, would not, singly or in the aggregate, have a Material Adverse Effect; and the Company, the Guarantor and their respective subsidiaries are in compliance with all applicable laws, rules, regulations, judgments, orders, decrees and consents, except where the failure to be in compliance would not, singly or in the aggregate, have a Material Adverse Effect.
          (s) All of the issued and outstanding Equity Interests of the Company and the Guarantor and each of their respective subsidiaries are validly issued, fully paid and non-
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assessable; all of the issued and outstanding Equity Interests each subsidiary of the Company and the Guarantor is owned by the Company, or the Guarantor, as the case may be, directly or through subsidiaries, free and clear of any Lien, claim or equitable right; and none of the issued and outstanding Equity Interests of the Company, the Guarantor or any subsidiary was issued in violation of any preemptive or similar rights arising by operation of law, under the charter or by-laws of such entity or under any agreement to which the Company, the Guarantor or any of their respective subsidiaries is a party.
          (t) Neither the Company, the Guarantor nor any of their subsidiaries is (i) in violation of its respective charter or by-laws or similar organizational documents or (ii) in default in the performance or observance of any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, loan agreement, note, lease or other agreement or instrument to which the Company, the Guarantor or any such subsidiary is a party or by which it or any of them may be bound or to which any of the property or assets of any of them is subject, except, in the case of clause (ii), where such violation or default would not, singly or in the aggregate, have a Material Adverse Effect.
          (u) There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to the knowledge of the Company or the Guarantor after due inquiry, threatened against or affecting the Company, the Guarantor or any of their respective subsidiaries, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents or have a Material Adverse Effect; and the aggregate of all pending legal or governmental proceedings to which the Company, the Guarantor or any of their respective subsidiaries is a party or of which any of their respective properties or assets is subject, including ordinary routine litigation incidental to the business, are not expected to result in a Material Adverse Effect.
          (v) The accountants of the Company and the Guarantor who certified the Financial Statements (defined below) are independent public accountants of the Company, the Guarantor and their respective subsidiaries within the meaning of the Securities Act, and the rules and regulations of the Securities and Exchange Commission (the “ Commission ”) thereunder.
          (w) The audited consolidated financial statements (including the notes thereto) and schedules of the Company, the Guarantor and each of their respective consolidated subsidiaries for the fiscal year ending December 31, 2008, (the “ Financial Statements ”) provided to Taberna are the most recent available audited and unaudited consolidated financial statements of the Company, the Guarantor and each of their respective consolidated subsidiaries, respectively, and fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“ GAAP ”), the financial position of the Company, the Guarantor and each of their respective consolidated subsidiaries, and the results of operations and changes in financial condition as of the dates and for the periods therein specified. Such consolidated financial statements and schedules have been prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein).
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          (x) Neither the Company, the Guarantor nor any of their respective subsidiaries has any material liability, whether known or unknown, whether asserted or unasserted, whether absolute or contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability for taxes (and there is no past or present fact, situation, circumstance, condition or other basis for any present or future action, suit, proceeding, hearing, charge, complaint, claim or demand against the Company, the Guarantor or any of their respective subsidiaries that could give rise to any such liability), except for (i) liabilities set forth in the Financial Statements and (ii) normal fluctuations in the amount of the liabilities referred to in clause (i) above occurring in the ordinary course of business of the Company, the Guarantor and all of their respective subsidiaries since the date of the most recent balance sheet included in such Financial Statements.
          (y) Since the respective dates of the Financial Statements, there has not been (A) any Material Adverse Change or (B) any dividend or distribution of any kind declared, paid or made by the Company or the Guarantor on any class of their respective Equity Interests.
          (z) The documents of the Company and the Guarantor, as applicable, filed with the Commission in accordance with the Exchange Act, from and including the commencement of the fiscal year covered by the Company’s and the Guarantor’s, as applicable, most recent Annual Report on Form 10-K, at the time they were or hereafter are filed by the Guarantor with the Commission (collectively, the “ 1934 Act Reports ”), complied and will comply with the requirements of the Exchange Act and the rules and regulations of the Commission thereunder (the “ 1934 Act Regulations ”) ,  and, at the date of this Agreement and on the Closing Date, do not and will not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and other than such instruments, agreements, contracts and other documents as are filed as exhibits to such Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, there are no instruments, agreements, contracts or documents of a character described in Item 601 of Regulation S-K promulgated by the Commission to which the Company, the Guarantor or any of their respective subsidiaries is a party. The Company and the Guarantor are in compliance in with all currently applicable requirements of the Exchange Act that were added by the Sarbanes-Oxley Act of 2002.
          (aa) No labor dispute with the employees of the Company, the Guarantor or any of their respective subsidiaries exists or, to the knowledge of the Company or the Guarantor, is imminent, except those which would not, singly or in the aggregate, have a Material Adverse Effect.
          (bb) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any Governmental Entity, other than those that have been made or obtained, is necessary or required for the performance by the Company, the Guarantor of their respective obligations under the Operative Documents, as applicable, or the consummation by the Company or the Guarantor of the transactions contemplated by the Operative Documents.
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          (cc) Each of the Company, the Guarantor and each of their respective subsidiaries has good and marketable title to all of its respective real and personal property, in each case free and clear of all Liens and defects, except for those that would not, singly or in the aggregate, have a Material Adverse Effect; and all of the leases and subleases under which the Company, the Guarantor or any of their respective subsidiaries holds properties are in full force and effect, except where the failure of such leases and subleases to be in full force and effect would not, singly or in the aggregate, have a Material Adverse Effect, and none of the Company, the Guarantor or any subsidiary of the Company or the Guarantor has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company, the Guarantor or any Significant Subsidiary of the Company or the Guarantor under any such leases or subleases, or affecting or questioning the rights of such entity to the continued possession of the leased or subleased premises under any such lease or sublease, except for such claims that would not, singly or in the aggregate, have a Material Adverse Effect.
          (dd) Intentionally omitted.
          (ee) The Company, the Guarantor and each of their respective Significant Subsidiaries have timely and duly filed (or filed extensions thereof (and which extensions are presently in effect)) all Tax Returns (as defined below) required to be filed by them, and all such Tax Returns are true, correct and complete in all material respects. The Company, the Guarantor and each of their respective Significant Subsidiaries have timely and duly paid in full all material Taxes (as defined below) required to be paid by them (whether or not such amounts are shown as due on any Tax Return). Neither the Company nor the Guarantor has received notice of, and to the Company’s and Guarantor’s knowledge, there are no material federal, state, or other Tax audits or deficiency assessments proposed (to the Company’s knowledge) or pending with respect to the Company, the Guarantor or any of their respective Significant Subsidiary, and no such audits or assessments are threatened. As used herein, the terms “ Tax ” or “ Taxes ” mean (i) all federal, state, local, and foreign taxes, and other assessments of a similar nature (whether imposed directly or through withholding), including any interest, additions to tax, or penalties applicable thereto, imposed by any Governmental Entity, and (ii) all liabilities in respect of such amounts arising as a result of being a member of any affiliated, consolidated, combined, unitary or similar group, as a successor to another person or by contract. As used herein, the term “ Tax Returns ” means all federal, state, local, and foreign Tax returns, declarations, statements, reports, schedules, forms, and information returns and any amendments thereto filed or required to be filed with any Governmental Entity.
          (ff) Interest payable by the Company on the Securities is deductible by the Company for United Stated Federal income Tax purposes and, to the Company’s knowledge, there are no rulemaking or similar proceedings before the U.S. Internal Revenue Service or comparable federal, state, local or foreign government bodies which involve or affect the Company, the Guarantor or any of their subsidiaries, which, if the action is decided unfavorably to the Company, the Guarantor or any of their subsidiaries, could result in a Material Adverse Effect.
          (gg) The books, records and accounts of the Company, the Guarantor and their respective Significant Subsidiaries accurately and fairly reflect, in reasonable detail, the transactions in, and dispositions of, the assets of, and the results of operations of, the Company,
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the Guarantor and their respective Significant Subsidiaries. The Company, the Guarantor and each of their respective subsidiaries maintains a system of internal accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
          (hh) The Company, the Guarantor and their respective Significant Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts in all material respects as are customary in the businesses in which they are engaged or propose to engage after giving effect to the transactions contemplated hereby. All policies of insurance and fidelity or surety bonds insuring the Company, the Guarantor or any of their respective Significant Subsidiaries or the Company’s, the Guarantor’s or their respective Significant Subsidiaries’ respective businesses, assets, employees, officers and directors are in full force and effect. The Company, the Guarantor and each of their respective Significant Subsidiaries are in compliance with the terms of such policies and instruments in all material respects. Neither the Company nor any Significant Subsidiary has reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Within the past twelve months, neither the Company nor any Significant Subsidiary has been denied any insurance coverage it has sought or for which it has applied.
          (ii) Neither the Company, the Guarantor, nor their respective Significant Subsidiaries, nor, to the knowledge of the senior executive officers of Company or the Guarantor, any person acting on behalf of the Company, the Guarantor and/or their respective Significant Subsidiaries including, without limitation, any director, officer, manager, agent or employee of the Company, the Guarantor or their respective Significant Subsidiaries has, directly or indirectly, while acting on behalf of the Company and/or its Significant Subsidiaries (i) used any corporate, partnership or company funds for unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to foreign or domestic political parties or campaigns from corporate, partnership or company funds; (iii) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made any other unlawful payment.
          (jj) The information provided by the Company and the Guarantor pursuant to the Operative Documents does not, as of the date hereof, and will not as of the Closing Date, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
          (kk) Except as would not, individually or in the aggregate, result in a Material Adverse Change, (i) the Company, the Guarantor and their respective subsidiaries have been and are in compliance with applicable Environmental Laws (as defined below), (ii) none of the
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Company, Guarantor or their respective subsidiaries, or, to the best of the Company’s knowledge, (a) any other owners of any of the real properties currently or previously owned, leased or operated by the Company, the Guarantor and their respective Significant Subsidiaries (collectively, the “ Properties ”) at any time or any other party, has at any time released (as such term is defined in CERCLA (as defined below)) or otherwise disposed of Hazardous Materials (as defined below) on, to, in, under or from the Properties other than in compliance with all applicable Environmental Laws, (iii) neither the Company, the Guarantor, nor any of their respective subsidiaries has used nor intends to use the Properties or any subsequently acquired properties, other than in compliance with applicable Environmental Laws, (iv) neither the Company, the Guarantor, nor any of their respective subsidiaries has received any notice of, or have any knowledge of any occurrence or circumstance which, with notice or passage of time or both, would give rise to a claim under or pursuant to any Environmental Law with respect to the Properties, or their respective assets or arising out of the conduct of the Company, the Guarantor and their respective subsidiaries, (v) none of the Properties are included or, to the best knowledge of the Company, proposed for inclusion on the National Priorities List issued pursuant to CERCLA by the United States Environmental Protection Agency or, to the best of the Company’s knowledge, proposed for inclusion on any similar list or inventory issued pursuant to any other Environmental Law or issued by any other Governmental Entity, (vi) none of the Company, the Guarantor, their respective subsidiaries or agents or, to the best of the Company’s knowledge, any other person or entity for whose conduct any of them is or may be held responsible, has generated, manufactured, refined, transported, treated, stored, handled, disposed, transferred, produced or processed any Hazardous Material at any of the Properties, except in compliance with all applicable Environmental Laws, and has not transported or arranged for the transport of any Hazardous Material from the Properties to another property, except in compliance with all applicable Environmental Laws, (vii) no lien has been imposed on the Properties by any Governmental Entity in connection with the presence on or off such Property of any Hazardous Material or with respect to an Environmental Law, and (viii) none of the Company, the Guarantor, or their respective Significant Subsidiaries or, to the best knowledge of the Company, any other person or entity for whose conduct any of them is or may be held responsible, has entered into or been subject to any consent decree, compliance order, or administrative order in connection with an Environmental Law with respect to the Properties or any facilities or improvements or any operations or activities thereon.
          (ll) As used herein, “Hazardous Materials” shall include, without limitation, any flammable materials, explosives, radioactive materials, hazardous materials, hazardous substances, hazardous wastes, toxic substances or related materials, asbestos, petroleum, petroleum products and any hazardous material as defined by any federal, state or local environmental law, statute, ordinance, rule or regulation, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. §§ 9601-9675 (“ CERCLA ”), the Hazardous Materials Transportation Act, as amended, 49 U.S.C. §§ 5101-5127, the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §§ 6901-6992k, the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001-11050, the Toxic Substances Control Act, 15 U.S.C. §§ 2601-2692, the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. §§ 136-136y, the Clean Air Act, 42 U.S.C. §§ 7401-7642, the Clean Water Act (Federal Water Pollution Control Act), 33 U.S.C. §§ 1251-1387, the Safe Drinking Water Act, 42 U.S.C. §§ 300f-300j-26, and the Occupational Safety and Health Act, 29 U.S.C. §§ 651-678, and any analogous state laws, as any of the above may be
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amended from time to time and in the regulations promulgated pursuant to each of the foregoing (including environmental statutes and laws not specifically defined herein) (individually, an “ Environmental Law ” and collectively, the “ Environmental Laws ”) or by any Governmental Entity.
     5. Representations and Warranties of Taberna. Each Taberna entity, for itself, represents and warrants to, and agrees with, the Company as follows:
          (a) It is a company duly formed, validly existing and in good standing under the laws of the jurisdiction in which it is organized with all requisite power and authority to execute, deliver and perform under Operative Documents to which it is a party, to make the representations and warranties specified herein and therein and to consummate the transactions contemplated in the Operative Documents.
          (b) This Agreement and the consummation of the transactions contemplated herein has been duly authorized by it and, on the Closing Date, will have been duly executed and delivered by it and, assuming due authorization, execution and delivery by the Company and Trustee of the Operative Documents to which each is a party, will be a legal, valid and binding obligation of such Taberna, enforceable against such Taberna in accordance with its terms, subject to applicable bankruptcy, insolvency and similar laws affecting creditors’ rights generally and to general principles of equity.
          (c) No filing with, or authorization, approval, consent, license, order registration, qualification or decree of, any Governmental Entity or any other Person, other than those that have been made or obtained, is necessary or required for the performance by such Taberna of its obligations under this Agreement or to consummate the transactions contemplated herein.
          (d) It is a “Qualified Holder” as such term is defined in Section 2(a)(51) of the Investment Company Act.
          (e) Taberna I is the legal and beneficial owner of the Trust I Preferred Securities and the related Taberna Transferred Rights and shall deliver the Trust I Preferred Securities free and clear of any Lien created by such Taberna entities.
          (f) Taberna II is the legal and beneficial owner of the Trust II Preferred Securities and the related Taberna Transferred Rights and shall deliver the Trust II Preferred Securities free and clear of any Lien created by such Taberna entities.
          (g) Taberna V is the legal and beneficial owner of the Taberna V Holding and the related Taberna Transferred Rights and shall deliver the Taberna V Holding free and clear of any Lien created by such Taberna entities.
          (h) Taberna III, Taberna IV and Taberna VIII are the legal and beneficial owners of the Trust V Preferred Securities and the related Taberna Transferred Rights and shall deliver the Trust V Preferred Securities free and clear of any Lien created by such Taberna entities.
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          (i) Taberna VII and Taberna VIII are the legal and beneficial owners of the Taberna VII Holding and the Taberna VIII Holding, respectively, and the related Taberna Transferred Rights and shall deliver the Taberna VII Holding and the Taberna VIII Holding free and clear of any Lien created by such Taberna entities.
          (j) There is no action, suit or proceeding before or by any Governmental Entity, arbitrator or court, domestic or foreign, now pending or, to its knowledge, threatened against or affecting it, except for such actions, suits or proceedings that, if adversely determined, would not, singly or in the aggregate, adversely affect the consummation of the transactions contemplated by the Operative Documents.
          (k) The outstanding principal amount of its respective Original Preferred Securities, Original Security IV and Original Security VI is the face amount as set forth in such Original Preferred Securities, such Original Security IV and such Original Security VI.
          (l) It is aware that the Securities have not been and will not be registered under the Securities Act and may not be offered or sold within the United States or to “U.S. persons” (as defined in Regulation S under the Securities Act) except in accordance with Rule 903 of Regulation S under the Securities Act or pursuant to an exemption from the registration requirements of the Securities Act.
          (m) It is an “accredited investor,” as such term is defined in Rule 501(a) of Regulation D under the Securities Act. Without characterizing the Original Preferred Securities, Original Security IV, Original Security VI or the Taberna Transferred Rights as a “security” within the meaning of applicable securities laws, it has not made any offers to sell, or solicitations of any offers to buy, all or any portion of the Original Preferred Securities, Original Security IV, Original Security VI or Taberna Transferred Rights in violation of any applicable securities laws.
          (n) Neither it nor any of its Affiliates, nor any person acting on its or its Affiliate’s behalf has engaged, or will engage, any form of “general solicitation or general advertising” (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Securities.
          (o) It understands and acknowledges that (i) no public market exists for any of the Securities and that it is unlikely that a public market will ever exist for the Securities, (ii) such Holder is acquiring the Securities for its own account, for investment and not with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act or other applicable securities laws, subject to any requirement of law that the disposition of its property be at all times within its control and subject to its ability to resell such Securities pursuant to an effective registration statement under the Securities Act or pursuant to an exemption therefrom or in a transaction not subject thereto, and it agrees to the legends and transfer restrictions applicable to the Securities contained in the New Indentures, and (iii) it has had the opportunity to ask questions of, and receive answers and request additional information from, the Company and is aware that it may be required to bear the economic risk of an investment in the Securities.
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          (p) It has not engaged any broker, finder or other entity acting under its authority that is entitled to any broker’s commission or other fee in connection with this Agreement and the consummation of transactions contemplated in this Agreement and the New Indentures for which the Company could be responsible.
          (q) It (i) is a sophisticated entity with respect to the Exchange, (ii) has such knowledge and experience, and has made investments of a similar nature, so as to be aware of the risks and uncertainties inherent in the Exchange and (iii) has independently and without reliance upon the Company or any of their affiliates, and based on such information as it has deemed appropriate, made its own analysis and decision to enter into this Agreement, except that it has relied upon the Company’s express representations, warranties, covenants and agreements in the Operative Documents and the other documents delivered by the Company in connection therewith.
     Except as expressly stated in this Agreement, Taberna make no representations or warranties, express or implied, with respect to the Exchange, the Taberna Transferred Rights, the Original Preferred Securities, Original Security IV, Original Security VI, the Existing Indentures, or any other matter.
     6. Covenants and Agreements of the Company. The Company and the Guarantor jointly and severally agree with Taberna and the Holders as follows:
          (a) The Company has taken all action reasonably necessary or appropriate to cause its representations and warranties contained in  Section 4  hereof to be true as of the Closing Date and after giving effect to the Exchange.
          (b) Intentionally omitted.
          (c) Intentionally omitted.
          (d) Neither the Company nor the Guarantor will, or will permit any of their respective Affiliates or any person acting on its or their behalf to, directly or indirectly, make offers or sales of any security, or solicit offers to buy any security, under circumstances that would require the registration of any of the Securities under the Securities Act.
          (e) Neither the Company nor the Guarantor will, or will not permit any of their respective Affiliates or any person acting on its or their behalf to, engage in (i) any form of “general solicitation or general advertising” (within the meaning of Regulation D), or (ii) any “directed selling efforts” within the meaning of Regulation S under the Securities Act, in connection with any offer or sale of the any of the Securities.
          (f) So long as any of the Securities are outstanding, (i) the Securities shall not be listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer quotation system and (ii) the Company shall not be an open-end investment company, unit investment trust or face-amount certificate company that is, or is required to be, registered under Section 8 of the Investment Company Act, and, the Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).
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          (g) The Company shall furnish to (i) the Holders of the Securities, (ii) Taberna Capital Management, LLC and (iii) any beneficial owner of the Securities reasonably identified to the Company, a duly completed and executed certificate in the form attached hereto as  Annex D , including the financial statements referenced in such Annex, which certificate and financial statements shall be so furnished by the Company not later than forty-five (45) days after the end of each of the first three fiscal quarters of each fiscal year of the Company and not later than ninety (90) days after the end of each fiscal year of the Company.
          (h) The Company will, during any period in which it is not subject to and in compliance with Section 13 or 15(d) of the Exchange Act, or it is not exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under the Exchange Act, provide to each Holder of the Securities, upon the request of such Holder, any information required to be provided by Rule 144A(d)(4) under the Securities Act. If the Company is required to register under the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall be sufficient information as required above. This covenant is intended to be for the benefit of the Holders of the Securities.
          (i) Neither the Company nor the Guarantor will, until one hundred eighty (180) days following the Closing Date, without the Holders’ or their assignees’ prior written consent in their sole discretion, offer, sell, contract to sell, grant any option to purchase or otherwise dispose of, directly or indirectly, (i) any Securities or other securities substantially similar to the Securities other than (x) as expressly contemplated by the New Indentures, if at all, the Original Kodiak Indentures and the Kodiak Exchange Agreement or (ii) any other securities convertible into, or exercisable or exchangeable for, any of the Securities or other securities substantially similar to the Securities or (ii) any preferred securities.
          (j) Neither the Company nor the Guarantor will identify any of the Indemnified Parties (as defined below) in a press release or any other public statement without the prior written consent of such Indemnified Party.
          (k) The Holders of the Securities are granted the right under the New Indentures to request the substitution of new notes for all or a portion of the Securities (the “ Replacement Securities ”). The Replacement Securities shall bear terms identical to the Securities with the sole exception of interest payment dates (and corresponding redemption date and maturity date), which will be specified by the Holders of the Securities. In no event will the interest payment dates (and corresponding redemption date and maturity date) on the Replacement Securities vary by more than sixty (60) calendar days from the original interest payment dates (and corresponding redemption date and maturity date) under the Securities. The Company agrees to cooperate with all reasonable requests of the Holders of the Securities, as applicable in connection with any of the foregoing, provided that no action requested of the Company in connection with such cooperation shall materially increase the obligations or materially decrease the rights of the Company pursuant to such documents.
     7. Payment of Expenses. In addition to the obligations agreed to by the Company under Section 2(b)(vii) herein, the Company agrees to pay all costs and expenses incident to the performance of the obligations of the Company under this Agreement, whether or not the transactions contemplated herein are consummated or this Agreement is terminated, including all
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costs and expenses incident to (i) the authorization, issuance, sale and delivery of the Securities and any taxes payable in connection therewith; (ii) the fees and expenses of counsel, accountants and any other experts or advisors retained by the Company and the Guarantor; and (iv) the fees and all reasonable expenses of the New Indenture Trustee and any other trustee or paying agent appointed under the Operative Documents, including the fees and disbursements of counsel for such trustees. The fees of the New Indenture Trustee (excluding fees and disbursements of counsel) shall not exceed the amounts set forth in that certain Fee Agreement dated as of the date hereof between the Company and The Bank of New York Mellon Trust Company, National Association, executed in connection with this Agreement and New Indenture I and New Indenture II.
     8. Indemnification. (a) The Company and the Guarantor jointly and severally agree to indemnify and hold harmless BNYM, Wells, the Holders, Taberna, Taberna Capital Management, LLC, Taberna Securities, LLC, and their respective affiliates and each person, if any, who controls any of the Indemnified Parties within the meaning of the Securities Act or the Exchange Act, and the Indemnified Parties’ respective directors, officers, employees and agents (collectively, the “ Indemnified Parties ”) against any and all losses, claims, damages or liabilities, joint or several, to which the Indemnified Parties may become subject, under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on (i) any untrue statement or alleged untrue statement of a material fact contained in any information or documents furnished or made available by or on behalf of the Company or the Guarantor, (ii) any omission or alleged omission to state therein a material fact required to be stated or necessary to make the statements therein, not misleading, or (iii) the breach or alleged breach of any representation, warranty, or agreement of the Company or the Guarantor contained herein, or (iv) the execution and delivery by the Company and/or the Guarantor of the Operative Documents and the consummation by the Company and/r the Guarantor, as applicable, of the transactions contemplated herein and therein, and agrees to reimburse each such Indemnified Party, as incurred, for any legal or other expenses reasonably incurred by the Indemnified Parties in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability that the Company and the Guarantor may otherwise have.
          (b) Promptly after receipt by an Indemnified Party under this Section 8 of notice of the commencement of any action, such Indemnified Party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, promptly notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve the indemnifying party from liability under paragraph (a) above unless and to the extent that such failure results in the forfeiture by the indemnifying party of material rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any Indemnified Party other than the indemnification obligation provided in paragraph (a) above. The Indemnified Parties shall be entitled to appoint counsel to represent the Indemnified Parties in any action for which indemnification is sought. An indemnifying party may participate at its own expense in the defense of any such action;  provided , that counsel to the indemnifying party shall not (except with the consent of the Indemnified Party) also be counsel to the Indemnified Party. In no event shall the indemnifying parties be liable for fees and expenses of more than one counsel (in addition to any local counsel) separate from their own
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counsel for all Indemnified Parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, unless an Indemnified Party elects to engage separate counsel because such Indemnified Party believes that its interests are not aligned with the interests of another Indemnified Party or that a conflict of interest might result. An indemnifying party will not, without the prior written consent of the Indemnified Parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification may be sought hereunder (whether or not the Indemnified Parties are actual or potential parties to such claim, action, suit or proceeding) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Party from all liability arising out of such claim, action, suit or proceeding.
     9. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company, the Guarantor and/or their respective officers and of Taberna set forth in or made pursuant to this Agreement will remain in full force and effect and will survive the Exchange. The provisions of Sections 7 and 8 shall survive the termination or cancellation of this Agreement.
     10. Recourse to Taberna. Recourse hereunder solely with respect to Taberna shall be limited solely to the assets of the applicable Taberna entity. No recourse will be available to the assets of any collateral manager to Taberna including without limitation, Taberna Capital Management, LLC for any reason or purpose whatsoever. To the extent the assets of any Taberna entity or the proceeds of such assets, when applied in accordance with the applicable priority of payment to which such assets or proceeds are subject, are insufficient to meet the obligations of such Taberna entity hereunder in full, no Taberna entity shall have further liability in respect of such outstanding obligations and such outstanding obligations shall be extinguished. The company hereby agrees not to institute against, or join any other person in instituting against, any Taberna entity, any bankruptcy, reorganization, arrangement, insolvency, moratorium or liquidation proceedings or other proceedings under U.S. federal or state bankruptcy or similar laws until at least one year and one day or the then applicable preference period under the United States Bankruptcy Code, Title 11 of the United States Code, as amended, or, where the context requires, the applicable insolvency provisions of the laws of the Cayman Islands plus ten (10) days after the payment in full of all the Securities; provided, that nothing in this Section 10 shall preclude the Company from taking any action against any applicable Taberna entity prior to the expiration of the aforementioned period in (x) any case or proceeding voluntarily filed or commenced by such Taberna entity, or (y) any involuntary insolvency proceeding filed or commenced against the Company, by a person other than the Company.
     11. Amendments. This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by each of the parties hereto.
     12. Notices. All communications hereunder will be in writing and effective only on receipt, and will be mailed, delivered by hand or courier or sent by facsimile and confirmed or by any other reasonable means of communication, including by electronic mail, to the relevant party at its address specified in  Exhibit D .
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     13. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and the affiliates, directors, officers, employees, agents and controlling persons referred to in Section 8 hereof and their successors, assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or obligations of the Company under this Agreement may be assigned, whether by operation of law or otherwise, without Taberna’s prior written consent. The rights and obligations of the Holders under this Agreement may be assigned by the Holders without the Company’s consent; provided that the assignee assumes the obligations of any such Holders under this Agreement.
     14. Applicable Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).
     15. Submission to Jurisdiction. ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
     16. Counterparts and Facsimile. This Agreement may be executed by any one or more of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. This Agreement may be executed by any one or more of the parties hereto by facsimile.
     17. Entire Agreement. This Agreement constitutes the entire agreement of the parties to this Agreement and supercedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.
[Signature Page Follows]
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     IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above.
 	 	 	 	 	 	 	 	 	 	 	
 	 	ARBOR REALTY SR, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Guy R. Milone, Jr.	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Guy R. Milone, Jr.	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Vice President	 	 	

 	 	ARBOR REALTY TRUST, INC.	 	 	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Paul Elenio	 	 	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Paul Elenio	 	 	
 	 	 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Chief Financial Officer	 	 	
 	 	 	 	 	 	 	 	 	 	 	
(Signatures continue on the next page)
- 28 -

 
TABERNA, AS HOLDERS OF THE ORIGINAL PREFERRED SECURITIES, THE
TABERNA HOLDINGS AND AS HOLDERS (AS DEFINED IN THE NEW INDENTURE):
 	 	 	 	 	 	 	 	 	
 	 	TABERNA PREFERRED FUNDING I LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

 	 	TABERNA PREFERRED FUNDING II, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

 	 	TABERNA PREFERRED FUNDING III, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

 	 	TABERNA PREFERRED FUNDING IV, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

 	 	TABERNA PREFERRED FUNDING V, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

 	 	TABERNA PREFERRED FUNDING VII, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

- 29 -

 
 	 	 	 	 	 	 	 	 	
 	 	TABERNA PREFERRED FUNDING VIII, LTD.	 	 	
 	 	 	 	 	 	 	 	 	
 	 	By:	 	/s/ Alasdair Foster	 	
 	 	 	 	 	 	 	
 	 	 	 	Name:	 	Alasdair Foster	 	 	
 	 	 	 	 	 	 	 	 	
 	 	 	 	Title:	 	Director	 	 	

- 30 -

 
EXHIBIT A-1
Copy of Trust I Preferred Securities
A-1

 
EXHIBIT A-2
Copies of Trust II Preferred Securities
A-2

 
EXHIBIT A-3

Reserved
A-3

 
EXHIBIT A-4
Copy of Trust V Preferred Securities
A-4

 
EXHIBIT B-1
Copy of Note 1
B-1

 
EXHIBIT B-2
Copy of Note 2
B-2

 
EXHIBIT B-3
Copy of Note 3
B-3

 
EXHIBIT B-4
Copy of Note 4
B-4

 
EXHIBIT B-5
Copy of Note 5
B-5

 
EXHIBIT B-6
Copy of Note 6
B-6

 
EXHIBIT B-7
Copy of Note 7
B-7

 
EXHIBIT C
Notice Information
Taberna:
c/o Taberna Capital Management, LLC
450 Park Avenue, 11th Floor
New York, NY 10022
Attention: Mr. Raphael Licht
Facsimile: (212) 243-9039
e-mail: rlicht@raitft.com
Company:
Arbor Realty SR, Inc.
333 Earle Ovington Blvd Suite 900
Uniondale, New York 11553
Attention: Paul Elenio
Facsimile: (516) 832-6422
e-mail:  pelenio@arbor.com
Attention: Guy Milone, Jr.
Facsimile: (516) 832-6431
e-mail:  gmilone@arbor.com
D-1

 
SCHEDULE 1
List of Significant Subsidiaries
1.	 	Arbor Realty SR, Inc., a Maryland corporation	
 	 	 	
2.	 	Arbor Realty Mortgage Securities Series 2004-1, Ltd., a Cayman Islands entity	
 	 	 	
3.	 	Arbor Realty Mortgage Securities Series 2005-1, Ltd., a Cayman Islands entity	
 	 	 	
4.	 	Arbor Realty Mortgage Securities Series 2006-1, Ltd., a Cayman Islands entity	
 	 	 	
5.	 	Arbor Realty Funding, LLC, a Delaware limited liability company	
 	 	 	
6.	 	Arbor Realty Participation, LLC, a Delaware limited liability company	
Sch. 1-1

 
ANNEX A-1
     Pursuant to Section 3(b) of the Agreement, Cooley, Godward Kronish LLP counsel for the Company and the Guarantor, shall deliver opinions with respect to each of the New Indentures and the related Operative Documents to the effect that:
[INSERT ACTUAL]
Annex A-1-1

 
ANNEX A-2
     Pursuant to Section 3(b) of the Agreement, the General Counsel of Company and the Guarantor shall deliver opinions with respect to each of the New Indentures and the related Operative Documents to the effect that:
[INSERT ACTUAL]
Annex A-2-1

 
ANNEX B
     Pursuant to Section 3(d) of the Agreement, Company Counsel shall deliver opinions with respect to each of the New Indentures and the related Operative Documents to the effect that for U.S. federal income tax purposes, the Securities should constitute indebtedness of the Company.
     In rendering such opinion, such counsel may (A) state that its opinion is limited to the federal laws of the United States and (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Company and public officials.
Annex B-1

 
ANNEX C
     Pursuant to Section 3(d) of the Agreement, special counsel for the Trustee, shall deliver an opinion with respect to each of the applicable New Indentures to the effect that:
          (i) The Bank of New York Mellon Trust, National Association (the “Bank”) 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 the New Indenture and to authenticate and deliver the Securities, and is duly eligible and qualified to act as Trustee under the New Indenture pursuant to Section 6.1 thereof.
          (ii) The New Indenture has been duly authorized, executed and delivered by the Bank and constitutes the valid and binding obligation of the Bank, enforceable against it in accordance with its terms except (A) as may be limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency, reorganization, liquidation, receivership, moratorium or other similar laws now or hereafter in effect relating to creditors’ rights generally, and by general equitable principles, regardless of whether considered in a proceeding in equity or at law and (B) 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.
          (iii) Neither the execution or delivery by the Bank of the New Indenture, the authentication and delivery of the Securities pursuant to the terms of the New Indenture, nor the performance by the Bank of its obligations under the New Indenture (A) 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 Bank or (B) violates or conflicts with the Articles of Association or By-laws of the Bank or any law or regulation of the State of New York or the United States of America governing the banking or trust powers of the Bank.
          (iv) The Securities have been authenticated and delivered by a duly authorized officer of the Bank.
     In rendering such opinion, such counsel may (A) state that its opinion is limited to the laws of the State of New York and the laws of the United States of America, (B) rely as to matters of fact, to the extent deemed proper, on certificates of responsible officers of the Bank, the Company and public officials, and (C) make customary assumptions and exceptions as to enforceability and other matters.
Annex C-1

 
ANNEX D
Officer’s Financial Certificate
     The undersigned, the Chief Financial Officer, hereby certifies, pursuant to Section 6(h) of the Exchange Agreement, dated as of May 6, 2009, among the Company (the “Company”), Arbor Realty Trust, Inc, (the “ Guarantor ”) and Taberna Preferred Funding I, Ltd., Taberna Preferred Funding II, Ltd., Taberna Preferred Funding III, Ltd., Taberna Preferred Funding IV, Ltd. Taberna Preferred Funding V, Ltd., Taberna Preferred Funding VII, Ltd., and Taberna Preferred Funding VIII, Ltd. that, as of [                      ], 2009, [the Company]/[the Guarantor], if applicable, and its subsidiaries had the following ratios and balances:
As of [Quarterly/Annual Financial Date], 20__
 	 	 	 	 	
Senior secured indebtedness for borrowed money (“Debt”)	 	$	 	 	
Senior unsecured Debt	 	$	 	 	
Subordinated Debt	 	$	 	 	
Total Debt	 	$	 	 	
Ratio of (x) senior secured and unsecured Debt to (y) total Debt	 	 	        	%	
 	 	 	 	
[FOR FISCAL YEAR END: Attached hereto are the audited consolidated financial statements (including the balance sheet, income statement and statement of cash flows, and notes thereto, together with the report of the independent accountants thereon) of the Company and its consolidated subsidiaries for the three years ended  [ date ] , 20___and all required Financial Statements (as defined in the Agreement) for the year ended  [ date ] , 20___ ]
[FOR FISCAL QUARTER END: Attached hereto are the unaudited consolidated and consolidating financial statements (including the balance sheet and income statement) of the Company and its consolidated subsidiaries and all required Financial Statements (as defined in the Agreement) for the year ended  [ date ] , 20___ ]  for the fiscal quarter ended  [ date ] , 20___. ]
The financial statements fairly present in all material respects, in accordance with U.S. generally accepted accounting principles (“GAAP”), the financial position of the Company and its consolidated subsidiaries, and the results of operations and changes in financial condition as of the date, and for the  [ ___quarter interim ] [ annual ]  period ended  [ date ] , 20___, and such financial statements have been prepared in accordance with GAAP consistently applied throughout the period involved (expect as otherwise noted therein).
I, the undersigned, the Chief Financial Officer, hereby certifies that I have reviewed the terms of the New Indenture and I have made, or have caused to be made by persons under my supervision, a detailed review of (i) the covenants of the Company set forth therein, and (ii) the transactions and conditions of the Company and its subsidiaries during the accounting period ended as of  [                      ]  (the “Accounting Period”), which Accounting Period is covered by the financial statements attached hereto. The examinations described in the preceding sentence did not disclose, and I have no knowledge of, the existence of any condition or event which constitutes a Default or an Event of Default (each as defined in the New Indenture) during or at the end of the Accounting Period or as of the date of this certificate [ , except as set forth below: ] .
Annex D-1

 
[Insert any exceptions by listing, in detail, the nature of the condition or event causing such noncompliance, the period during which such condition or event has existed and the action(s) the Company has taken, is taking, or proposes to take with respect to each such condition or event. ]
     IN WITNESS WHEREOF, the undersigned has executed this Officer’s Financial Certificate as of this                      day of                                           , 20___.
[COMPANY]
[company address]
Annex D-2

EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
I, Ivan Kaufman, certify that:
1.	 	I have reviewed this quarterly report on Form 10-Q of Arbor Realty Trust, Inc.;	
 	 	 	
2.	 	Based on my knowledge, this report does 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, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	 	
4.	 	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	 	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):	
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2009 	By:  	/s/ Ivan Kaufman  	 	
 	 	Name:  	Ivan Kaufman 	 	
 	 	Title:  	Chief Executive Officer 	 	

EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
I, Paul Elenio, certify that:
1.	 	I have reviewed this quarterly report on Form 10-Q of Arbor Realty Trust, Inc.;	
 	 	 	
2.	 	Based on my knowledge, this report does 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, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;	
 	 	 	
4.	 	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:	
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	 	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):	
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 11, 2009 	By:  	/s/ Paul Elenio  	 	
 	 	Name:  	Paul Elenio 	 	
 	 	Title:  	Chief Financial Officer 	 	

EXHIBIT 32.1
CERTIFICATION OF CEO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
          In connection with the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. (the “Company”) for the quarterly period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Ivan Kaufman, as Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
     (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
     (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 	 	 	 	 	 	 	
 	 	By:	 	/s/ Ivan Kaufman	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	Ivan Kaufman	 	 	
 	 	Title:	 	Chief Executive Officer	 	 	
Date: May 11, 2009
          This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
          A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2
CERTIFICATION OF CFO PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
          In connection with the Quarterly Report on Form 10-Q of Arbor Realty Trust, Inc. (the “Company”) for the quarterly period ended March 31, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Paul Elenio, as Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of his knowledge:
          (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
          (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
 	 	 	 	 	 	 	
 	 	By:	 	/s/ Paul Elenio	 	 	
 	 	 	 	 	 	 	
 	 	Name:	 	Paul Elenio	 	 	
 	 	Title:	 	Chief Financial Officer	 	 	
Date: May 11, 2009
          This certification accompanies the Report pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended.
          A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.