S-11/A

As filed with the Securities and Exchange Commission on January 26, 2016

Registration No. 333-208894

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

AMENDMENT NO. 1 TO
FORM S-11
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
OF SECURITIES OF CERTAIN REAL ESTATE COMPANIES

 

MANHATTAN BRIDGE CAPITAL, INC.

(Exact Name of Registrant as Specified in its Charter)

New York	11-3474831
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

 

MBC FUNDING II CORP.

(Exact Name of Registrant as Specified in its Charter)

New York	81-0758358
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

 

60 Cutter Mill Road, Suite 205
Great Neck, New York 11021
(516) 444-3400

(Address, including Zip Code, and Telephone Number, including Area Code, of Registrant’s Principal Executive Offices)

 

Assaf Ran
Chief Executive Officer
Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021
(516) 444-3400

(Name, Address, including Zip Code, and Telephone Number, including Area Code, of Agent for Service)

 

Copies to:

Stephen A. Zelnick, Esq. Morse, Zelnick, Rose & Lander, LLP 825 Third Avenue, 16th Floor New York, New York 10022 Tel: (212) 838-8040 Fax: (212) 208-6809	Brad L. Shiffman, Esq. Blank Rome LLP 405 Lexington Avenue New York, New York 10174 Tel: (212) 885-5442 Fax: (917) 332-3725

 

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. 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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer o	Smaller reporting company x
		(Do not check if a smaller reporting company)

 

CALCULATION OF REGISTRATION FEE

Title of Each Class of Security to be registered	Amount to be Registered	Maximum Offering price Per Unit	Maximum Aggregate Offering Price		Amount of Registration Fee
Senior secured notes due         , 2026			$	9,990,000.00	$	1,005.99(1)	*
Guarantee(2)

* Registration fee was previously paid.

(1) Calculated in accordance with Rule 457(r) promulgated under the Securities Act of 1933, as amended.

(2) No separate consideration will be received for the guaranties. Pursuant to Rule 457(n) promulgated under the Securities Act, no separate fee is payable with respect to the guaranties being registered.

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a), may determine.

EXPLANATORY NOTE

The sole purpose of this Amendment is to add MBC Funding II Corp. as a registrant to this Registration Statement, which was originally filed with the Securities and Exchange Commission on January 6, 2016.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is deemed effective. This preliminary prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

PRELIMINARY PROSPECTUS	SUBJECT TO COMPLETION	DATED JANUARY 26, 2016

$    

	MBC Funding II Corp

    % Senior Secured Notes due            , 2026 

MBC Funding II Corp. (“Funding”), a wholly-owned subsidiary of Manhattan Bridge Capital, Inc., a real estate investment trust, is offering $     aggregate principal amount of its   % senior notes due            , 2026 (the “Notes”) in accordance with the terms and conditions set forth in the Indenture Trust Agreement governing the Notes (the “Indenture”). The material terms of the Notes offered by this prospectus are as follows:

• Unless redeemed earlier as set forth in the Indenture, the entire outstanding principal balance of the Notes and all accrued but unpaid interest thereon will become due and payable on           , 2026 (the tenth anniversary of the issue date of the Notes).

• Interest on the outstanding balance of the Notes will begin to accrue at the rate of  % per annum beginning on            , 2016 (the first day following the three-month anniversary of the issue date of the Notes) and interest will be payable monthly in arrears, in cash, on the 15^th day of each calendar month beginning          , 2016 (the first calendar month following the month in which interest on the Notes begins to accrue).

• The Notes will be senior secured obligations of Funding. Funding’s assets initially will consist principally of a pool of mortgage loans secured by first priority liens on real estate that Funding will purchase from us with the net proceeds from the sale of the Notes. Under the Indenture, the aggregate principal amount of the mortgage loans owned by Funding and Funding’s cash on hand must always equal at least 120% of the principal amount of the indebtedness evidenced by the Notes.

• The principal amount of the Notes will be repaid in quarterly installments, if, and only if, at such time the sum of the aggregate principal amount of the mortgage loans held by Funding plus Funding’s cash on hand is less than 120% of the outstanding principal amount of the Notes.

• We will guarantee Funding’s obligations under the Notes and we will secure our obligations under the guaranty by pledging 100% of Funding’s equity.

• Funding may redeem the Notes, in whole or in part, at any time after           , 2019 (the third anniversary of the issue date of the Notes) upon at least 30 days prior written notice to the holders of the Notes (the “Noteholders”). The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest up to, but not including, the date of redemption, without penalty or premium; provided that (i) if the Notes are redeemed on or after           , 2019 (the third anniversary of the issue date of the Notes) but prior to           , 2020 (the fourth anniversary of the issue date of the Notes), the redemption price will be 103% of the principal amount of the Notes redeemed and (ii) if the Notes are redeemed on or after           , 2020 (the fourth anniversary of the issue date of the Notes) but prior to           , 2021 (the fifth anniversary of the issue date of the Notes), the redemption price will be 101.5% of the principal amount of the Notes redeemed plus, in either case, the accrued but unpaid interest on the Notes redeemed up to, but not including, the date of redemption.

• Each Noteholder has the right to cause Funding to redeem his Notes on           , 2021 (the fifth anniversary of the issue date of the Notes). The redemption price for each Note tendered for redemption will be equal to the outstanding principal balance of the such Note plus the accrued but unpaid interest thereon up to, but not including, the date of redemption.

• Funding may be obligated to offer to redeem the Notes if there is a “change of control” with respect to Funding or us or if Funding or we sell any assets unless, in the case of an asset sale, the proceeds are reinvested in the business of the seller. The redemption price in connection with a change of control will be 101% of the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption.

• The Notes will be issued in denominations of $25.00 and integral multiples of $1,000.00.

• We intend to list the Notes on the Nasdaq Global Market and they will trade under the symbol “    ”. We cannot assure you that an active trading market for the Notes will ever develop

Investing in the Notes involves risk. You should carefully consider all of the information in this prospectus before you purchase any Notes. In particular, see “Risk Factors” beginning on page 14 of this prospectus for a description of risks that you should consider before purchasing any Notes.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the Notes or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

	Per Note	Total
Public offering price	$	$
Underwriting discounts and commissions(1)	$	$
Proceeds to MBC Funding

(1) Does not include a non-accountable expense allowance equal to 1% of the gross proceeds of this offering payable to Aegis Capital Corp., the representative of the underwriters. See “Underwriting” for a description of the compensation payable to the underwriters.

We have granted the representative a 45-day option to purchase up to $     aggregate principal amount of Notes to cover over-allotments, if any.

We expect that delivery of the Notes will be made in New York, New York on or about           , 2016 in book entry form only through the facilities of the Depository Trust Company for the accounts of the purchasers.

Aegis Capital Corp

          , 2016

TABLE OF CONTENTS

SUMMARY		1
RISK FACTORS		14
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS		28
USE OF PROCEEDS		28
CAPITALIZATION		29
SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION		30
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION		32
BUSINESS		41
EXECUTIVE COMPENSATION		55
PRINCIPAL SHAREHOLDERS		59
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		60
DESCRIPTION OF THE NOTES		61
CERTAIN PROVISIONS OF NEW YORK LAW AND OF OUR RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS		73
RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK		76
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES		79
UNDERWRITING		84
LEGAL MATTERS		91
EXPERTS		91
WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE		91

You should rely only on the information contained in this prospectus or in any free writing prospectus that we may specifically authorize to be delivered or made available to you. We have not, and the underwriters have not, authorized anyone to provide you with any information other than that contained in this prospectus or any free writing prospectus that we may authorize to be delivered or made available to you. We take no responsibility for, and can provide no assurance as to the reliability of, any information that others may give you. This prospectus may only be used where it is legal to offer and sell our securities. The information in this prospectus is accurate only as of the date of this prospectus regardless of the time of delivery of this prospectus or any sale of our securities. Our business, financial condition, results of operations and prospects may have changed since that date. We are not, and the underwriters are not, making an offer of these securities in any jurisdiction where the offer is not permitted.

For investors outside the United States: We have not done anything that would permit any offering under this prospectus or any prospectus supplement to this prospectus or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating to, the offering of securities and the distribution of this prospectus outside the United States.

As used in this prospectus, unless the context otherwise requires, the terms “Manhattan Bridge Capital,” “we,” “us,” “our” and “our company” refer to Manhattan Bridge Capital, Inc., a New York corporation, and all entities owned or controlled by Manhattan Bridge Capital, Inc. All references in this prospectus to “Funding” or “MBC Funding” refer to MBC Funding II, Inc., our wholly-owned, special purpose subsidiary that is the issuer of the Notes.

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SUMMARY

This Summary highlights information contained elsewhere in this prospectus and does not contain all of the information that you should consider in making your investment decision. Before purchasing any Notes, you should carefully read this entire prospectus and any free writing prospectus that we may authorize to be delivered or made available to you, information incorporated herein by reference, our historical financial statements and the exhibits to the registration statement of which this prospectus is a part. Unless specifically provided otherwise, all of the information provided in this prospectus, as well as in any free writing prospectus that we may authorize to be delivered or made available to you, relates to Manhattan Bridge Capital.

Introduction

We, Manhattan Bridge Capital, Inc., are a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. We offer short-term, secured, non–banking loans (sometimes referred to as “hard money” loans), which we may renew or extend on, before or after their initial term expires, to real estate investors to fund their acquisition, renovation, rehabilitation, or development of residential or commercial properties located in the New York metropolitan area. We are organized and conduct our operations to qualify as a real estate investment trust (“REIT”) for federal income tax purposes. Prior to this offering our common shares were listed on the NASDAQ Capital Market and traded under the symbol “LOAN”. Commencing on        , 2016, our common shares will be listed on the NASDAQ Global Market. They will continue to trade under the symbol “LOAN”.

Our wholly-owned subsidiary, MBC Funding II Corp., referred to in this prospectus as “Funding”, is offering up to $     million aggregate principal amount of its   % senior secured notes due            , 2026, ten years from the date of issuance (the “Notes”). As indicated, the Notes will be the senior obligations of Funding and secured by all of Funding’s assets. In addition, we will guarantee the payment of all interest accruing on the Notes and the repayment of the principal amount of the Notes at maturity or earlier as provided in the Indenture pursuant to which the Notes will be issued and to which we will be a party (the “Indenture”).

We organized Funding on December 7, 2015, specifically for the purpose of this transaction. Prior to issuance of the Notes, Funding has no assets or liabilities and is not engaged in any trade or business. Our chief executive officer and chief financial officer will be the chief executive officer and chief financial officer, respectively, of Funding. Funding will not be charged for their services. Assaf Ran, our chief executive officer, chairman of the board, founder and controlling shareholder, will be the sole director of Funding. At this time, we do not contemplate that Funding will have any other shareholders, employees, officers or directors. We intend to treat Funding as a “qualified REIT subsidiary” for federal income tax purposes. As such, Funding will not be treated as a separate corporation for purposes of determining whether we qualify and operate as a REIT for U.S. federal income tax purposes. Essentially, for purposes of determining whether we qualify and operate as a REIT, Funding will be disregarded as a separate entity and all assets, liabilities and items of income, deduction and credit of Funding will be treated as our assets, liabilities and items of income, deduction and credit. Funding is not required to pay federal income tax, and our ownership of all of the stock of Funding does not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the voting power or value of the issuer’s securities or more than 5% of the value of our total assets.

Funding will use the net proceeds from the sale of the Notes to purchase from us, free and clear of all liens and other security interests, a pool of mortgage loans, which we originated and funded, each of which is secured by first priority security interests on real property. The aggregate outstanding principal balance of the mortgage loans that Funding will purchase from us will equal 120% of the aggregate principal amount of the Notes. Under the Indenture, we are required to maintain this ratio until all the Notes have been repaid in full. To the extent the aggregate principal amount of the mortgage loans owned by Funding plus Funding’s cash on hand are less than 120% of the indebtedness represented by the Notes, Funding is required to repay, on a quarterly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by Funding plus Funding’s cash on hand, if any, at such time is equal to or greater than 120% of the outstanding principal amount of the

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Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance unless the borrower is in default of its obligations under such mortgage loan.

We will use the net proceeds of this offering that we receive from Funding to pay down the outstanding balance on our Webster Credit Line, as more particularly described below and in the section of this prospectus entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” Funding will collect payments of interest and principal on the mortgages it holds and use those funds to make the required interest and principal payments to the Noteholders. Any excess cash received by Funding either will be distributed to us or held by Funding, in either case, to be used for working capital and general corporate purposes, including the payment of operating expenses, to fund capital expenditures, to pay down debt, to fund new real estate loans and to make dividend payments to our shareholders.

General

The properties securing our loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment and, typically, are not income producing. Each loan is secured by a first mortgage lien on real estate. In addition, each loan is personally guaranteed by the principal(s) of the borrower guaranty, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The face amounts of the loans we originate historically have ranged from $14,000 to a maximum of $1.475 million. Our board of directors established a policy limiting the maximum amount of any loan to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $1.5 million. Our loans typically have a maximum initial term of 12 months and bear interest at a flat rate equal of 12% to 15% per year. In addition, we usually receive origination fees, or “points,” ranging from 1% to 3% of the original principal amount of the loan as well as other fees relating to underwriting, funding and managing the loan. Interest is always payable monthly, in arrears. In the case of acquisition financing, the principal amount of the loan usually does not exceed 75% of the value of the property (as determined by an independent appraiser), and in the case of construction financing, up to 80% of construction costs.

Since commencing this business in 2007, we have never had to foreclose on a property and none of our loans have ever gone into default, although sometimes we have renewed or extended the term of a loan to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan we generally receive additional “points” and other fees.

Our officers are experienced in hard money lending under various economic and market conditions. Loans are originated, underwritten and structured by our chief executive officer, assisted by our chief financial officer, and then managed and serviced principally by our chief financial officer. A principal source of new transactions has been repeat business from prior customers and their referral of new business. We also receive leads for new business from brokers, banks and a limited amount of newspaper advertising and direct mail.

Our Competitive Strengths

We believe our competitive advantages include the following:

• Experienced management team.  Our chief executive officer and chief financial officer have successfully originated and serviced a portfolio of short-term, real estate mortgage loans generating attractive annual returns under varying economic and real estate market conditions.

• Long-standing relationships.  A significant portion of our business comes from repeat customers with whom we have long-standing relationships. These customers also provide us with new leads that could result in new lending opportunities.

• Knowledge of the market.  We have intimate knowledge of the New York metropolitan area real estate market, which enhances our ability to identify attractive opportunities and helps distinguish us from many of our competitors.

• Disciplined lending.  We utilize underwriting and loan closing procedures that include numerous checks and balances to evaluate the risks and merits of each potential transaction.

• Vertically-integrated loan origination platform.  We manage and control the loan process from origination through closing with our own personnel or independent third parties, including legal counsel and appraisers, with whom we have long relationships.

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• Structuring flexibility.  As a small, non-bank, neighborhood-focused real estate lender, we can move quickly and have much more flexibility than traditional lenders to structure loans to suit the needs of our clients.

• No legacy issues.  Unlike many of our competitors, we are not burdened by distressed legacy real estate assets.

Market Opportunity

We believe there is a significant market opportunity for a well-capitalized “hard money” lender to originate attractively priced loans to small scale real estate developers with strong credit fundamentals, particularly in the New York metropolitan area where real estate values continue to rise and substandard properties are being improved, rehabilitated and renovated. We also believe these developers would prefer to borrow from us rather than other lending sources because of our flexibility in structuring loans to suit their needs and our ability to close quickly.

Our Strategy

Our objective is to protect and preserve capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term principally through dividends. We intend to achieve this objective by continuing to focus exclusively on selectively originating, managing and servicing a portfolio of first mortgage real estate loans designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that our ability to react quickly to the needs of borrowers, our flexibility in terms of structuring loans to meet the needs of borrowers, our intimate knowledge of the New York metropolitan area real estate market, our expertise in “hard money” lending and our focus on newly originated first mortgage loans, should enable us to achieve this objective. Nevertheless, we will remain flexible in order to take advantage of other real estate opportunities that may arise from time to time, whether they relate to the mortgage market or to direct or indirect investments in real estate.

Our strategy to achieve our objective includes the following:

• capitalize on opportunities created by the long-term structural changes in the real estate lending market and the continuing lack of liquidity in the real estate market;

• take advantage of the prevailing economic environment as well as economic, political and social trends that may impact real estate lending currently and in the future as well as the outlook for real estate in general and particular asset classes;

• remain flexible in order to capitalize on changing sets of investment opportunities that may be present in the various points of an economic cycle; and

• operate so as to qualify as a REIT and for an exemption from registration under the Investment Company Act.

Leverage Policy/Financing Strategy

We have a $14.0 million line of credit with Webster Business Credit Corporation (“Webster”) that we can draw upon, from time to time, to make loans (the “Webster Credit Line”). Borrowings under the Webster Credit Line bear interest at a rate equal to (i) LIBOR plus 4.75% or (ii) Webster’s base commercial lending rate plus 3.25%, as we determine. The credit line expires and the outstanding indebtedness thereunder will become due and payable in full on February 27, 2018. As of September 30, 2015, the outstanding balance on the Webster Credit Line was approximately $10.1 million. Prior to entering into the Webster Credit Line, we had a $7.7 million credit facility (the “Sterling Credit Line”) with Sterling National Bank (“Sterling”). We paid off the entire balance due to Sterling with proceeds from the Webster Credit Line and terminated the Sterling Credit Line on February 27, 2015. Prior to entering into the Sterling Credit Line, we had a $300,000 credit line with Valley National Bank, which we paid off in 2011. In 2010, we raised $500,000 through the sale of senior secured notes, which have since been repaid. In addition, over the last six years we have raised approximately $8.7 million from the sale of short- and medium-term notes, of which $2.47 million and $1.1 million principal amount was outstanding at December 31, 2014 and at September 30, 2015, respectively. Finally, in July 2014 and May 2015 we raised gross proceeds of $5.0 million and $4.92 million, respectively, from public offerings of our common shares. We may in the future, decide to take on additional

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debt to expand our mortgage loan origination activities in order to increase the potential returns to our shareholders. Although we have no pre-set guidelines in terms of leverage ratio, the amount of leverage we will deploy will depend on our assessment of a variety of factors, which may include the liquidity of the real estate market in which most of our collateral is located, employment rates, general economic conditions, the cost of funds relative to the yield curve, the potential for losses and extension risk in our portfolio, the gap between the duration of our assets and liabilities, our opinion of the creditworthiness of our borrowers, the value of the collateral underlying our portfolio, and our outlook for interest rates and property values. We intend to use leverage for the sole purpose of financing our portfolio and not for the purpose of speculating on changes in interest rates.

Loan Origination and Underwriting Process

We will continue to focus on originating short-term first mortgage loans. We will continue to be responsible for each stage of the lending process, which includes: (1) sourcing deals from the brokerage community and directly from real estate owners, operators, developers and investors; (2) performing due diligence with respect to underwriting the loans; (3) undertaking risk management with respect to each loan and our aggregate portfolio; (4) closing the loan; and (5) managing the loan post-closing.

After identifying a particular lending opportunity, we perform financial, operational, credit and legal due diligence and evaluate the credit-worthiness of the borrower and its principals who will guaranty the loan to assess the risks of the investment. We analyze the opportunity and conduct follow-up due diligence as part of the underwriting process. As part of this process, the key factors that we consider include, but are not limited to, transactional documentation, loan-to-value ratios, credit-worthiness of the guarantors, the location of the property and property valuation. In evaluating the merits of any particular proposed loan transaction, we will also evaluate the impact of each loan on our existing loan portfolio. In particular, we need to evaluate whether the new loan would cause our portfolio to be too heavily concentrated with, or cause too much risk exposure to, any one borrower, class of real estate, neighborhood, or other issues. If we determine that a proposed investment presents excessive concentration risk, we may decide to forego the opportunity. As a REIT, we also need to determine the impact of each loan on our ability to maintain our REIT qualification.

Summary Risk Factors

An investment in the Notes involves various risks. You should consider carefully the risks discussed below and under the heading “Risk Factors” beginning on page 14 of this prospectus before purchasing Notes. If any of these risks occur, our business, financial condition, liquidity, results of operations, prospects and ability to make distributions to our shareholders could be materially and adversely affected. In that case, our ability to make interest payments on the Notes or to repay the Notes at maturity may be impaired and you may lose some or all of your investment.

• We are controlled by our shareholders whose interest may not always be aligned with the interests of the Noteholders.

• An active public trading market for the Notes may not develop.

• The Indenture will contain restrictive covenants that may limit Funding’s operating flexibility and adversely impact its financial condition.

• The limited covenants in the Indenture and the Notes may not provide adequate protection against significant events that could adversely affect Noteholders and Funding.

• Funding may not be able to make the required payments of interest and principal under the Notes.

• Funding is not obligated to contribute to a sinking fund to retire the Notes and the Notes are not guaranteed by any governmental agency.

• The collateral granted as security for Funding’s obligations under the Notes may be insufficient to repay the indebtedness upon a default.

• As the controlling shareholder of Funding, we have an inherent conflict and may not always act in the best interests of the Noteholders.

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• Various provision in the Indenture restrict the ability of the Indenture Trustee or the Noteholders to enforce their rights against us in the event Funding defaults on its obligations under the Notes.

• Funding has no obligation to redeem the Notes prior to their maturity date except in limited circumstances.

• Funding may not be able to redeem Notes when it is obligated to do so.

• The terms of the Indenture and the Notes only provide limited protection against significant events that could adversely impact Noteholders.

• If a bankruptcy petition is filed by or against us, Noteholders may receive a less than the outstanding balance on the Notes.

• We do not know all of the tax implications of an investment in the Notes for each Noteholder.

• Our loan origination activities, revenues and profits are limited by available funds.

• We operate in a highly competitive market and competition may limit our ability to originate loans with favorable interest rates.

• Management has broad authority to make lending decisions.

• Our chief executive officer and chief financial officer are critical to our business and our future success may depend on our ability to retain them.

• Terrorist attacks and other acts of violence or war may affect the real estate industry generally and our business, financial condition and results of operations.

• Security breaches and other disruptions could compromise proprietary information regarding our borrowers and expose us to liability.

• Our financial statements may be materially and adversely affected if our estimates prove to be inaccurate.

• Our existing credit facility has numerous financial and non-financial covenants, which could lead to a default.

• Our use of leverage may adversely affect our financial condition, which could adversely affect our obligations under the Guaranty.

• Our indebtedness could adversely affect our financial flexibility and our competitive position.

• We may incur additional debt, which could exacerbate the risks associated with our leverage.

• If we overestimate the yields on our loans or incorrectly value the collateral securing the loan, we may experience losses.

• Difficult conditions in the markets for mortgages and mortgage-related assets as well as the broader financial markets have resulted in a significant contraction in liquidity for mortgages and mortgage-related assets.

• Short-term loans may involve a greater risk of loss than traditional mortgage loans.

• We may be subject to “lender liability” claims.

• An increase in the rate of prepayment rates may have an adverse impact on the value of our portfolio as well as our revenue and income.

• Our loan portfolio is illiquid.

• The geographic concentration of our loan portfolio may make our revenues and the values of the mortgages and real estate securing our portfolio vulnerable to adverse changes in economic conditions in the New York metropolitan area.

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• A prolonged economic slowdown, a lengthy or severe recession or continued declining real estate values could impair our investments and harm our operations.

• We do not carry loan loss reserves.

• Our due diligence may not uncover all of a borrower’s liabilities or other risks to its business.

• Loans to real estate investors have greater risks than loans to homeowners.

• Values of residential and commercial properties are volatile.

• In the event of a default we may not be able to enforce our rights.

• We do not require borrowers to fund an interest reserve.

• Interest rate fluctuations could reduce our income.

• Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our investments.

• Defaults on our loans may cause declines in revenues and net income.

• Our revenues and the value of our portfolio may be negatively affected by casualty events occurring on properties securing our loans.

• Borrower concentration could lead to significant losses.

• Our management has limited experience managing a REIT and limited experience managing a portfolio of assets in the manner necessary to maintain an exemption under the Investment Company Act.

• We could be materially and adversely affected if we cannot qualify for an exemption from the Investment Company Act.

Our Organizational Structure

We originally organized as a New York corporation in 1989 and reorganized in February 1999 under the name DAG Media Inc. Following the sale of substantially all of our operating assets originally, we repositioned ourselves as a real estate finance company in 2007 and, in 2008, changed our name to Manhattan Bridge Capital, Inc. On December 7, 2015, we organized Funding as a New York corporation for sole purpose of issuing the Notes.

Until 2014, we operated as a taxable C-corporation. As a result, we were able to re-invest most of our net after-tax profits back into our business. We first qualified as a REIT for our taxable year ended December 31, 2014, and elected REIT status beginning with that year. We intend to maintain our REIT status for the foreseeable future. As a REIT, we are required to distribute at least 90% of our taxable income to our shareholder on an annual basis. We cannot assure you that we will qualify as a REIT or that, even if we do qualify initially, we will be able to maintain REIT status for any particular period of time. We also intend to operate our business in a manner that will permit us to maintain an exemption from registration under the Investment Company Act.

REIT Qualification

Our qualification as a REIT depends on our ability to meet on a continuing basis, through actual investment and operating results, various complex requirements under the Internal Revenue Code of 1986, as amended, (the “Code”), relating to, among other things, the sources of our gross income, the composition and values of our assets, our compliance with the distributions requirements applicable to REITs and the diversity of ownership of our outstanding common shares. Given that our chief executive officer owns a significant portion of our outstanding common shares and the limited number of outstanding common shares and the trading volume of our stock on NASDAQ, we cannot assure you that we will be able to maintain that qualification.

So long as we qualify as a REIT, we, generally, will not be subject to U.S. federal income tax on our taxable income that we distribute currently to our shareholders. If we fail to qualify as a REIT in any taxable

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year and do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax at regular corporate rates and may be precluded from qualifying as a REIT for the subsequent four taxable years following the year during which we lose our REIT qualification. Even if we qualify for taxation as a REIT, we may be subject to certain U.S. federal, state and local taxes on our income or property.

Distribution Policy

U.S. federal income tax law generally requires that a REIT distribute annually at least 90% of its taxable income, without regard to the deduction for dividends paid and excluding net capital gains, and that it pay tax at regular corporate rates to the extent that it annually distributes less than 100% of its taxable income. We intend to pay regular quarterly dividends in an amount necessary to maintain our qualification as a REIT. Any distributions we make to our shareholders will be at the discretion of our board of directors and will depend on, among other things, our actual results of operations and liquidity. These results and our ability to pay distributions will be affected by various factors, including the net interest and other income from our portfolio, our operating expenses and other expenditures.

In addition, in order to comply with REIT qualification requirements, we will, before the end of any REIT taxable year in which we have accumulated earnings and profits attributable to a non-REIT year, declare a dividend to our shareholders to distribute such accumulated earnings and profits. As of January 1, 2015 we had no accumulated earnings and profits.

Policies with Respect to Certain Activities

The following is a discussion of our investment, financing and other policies. For the most part, these policies are equally applicable to Funding. We intend to conduct our business in a manner such that we are not treated as an “investment company” under the Investment Company Act. In addition, we intend to conduct our business in a manner that is consistent with maintaining our qualification to be taxed as a REIT. These policies may be amended or revised from time to time at the discretion of our board of directors without a vote of our shareholders.

Investment in Real Estate or Interests in Real Estate

Our business has been and continues to be one that focuses on originating, servicing and managing a portfolio of funding short- and medium-term loans secured by first mortgages on residential and commercial real estate located in the New York metropolitan area held for investment or resale. Notwithstanding the foregoing, in March 2011 we purchased three two-family buildings in Bronx, New York. As of October 2014, all of those properties have been sold. Nevertheless, direct investment in real estate is not our primary focus. Any decision to invest in real estate or to purchase an interest in real estate outside of our core business would only be undertaken with the approval of our board of directors.

Securities of or Interests in Persons Primarily Engaged in Real Estate Activities

We have not, nor do we currently intend, to purchase securities of or interests in entities that are engaged in real estate activities. In any event, because we must comply with various requirements under the Code in order to maintain our qualification to be taxed as a REIT, including restrictions on the types of assets we may hold, the sources of our income and accumulation of earnings and profits, and because we want to avoid being characterized as an investment company under the Investment Company Act, our ability to engage in these types of transactions, such as acquisitions of C corporations, may be limited. Any decision to purchase securities of or interests in entities that are engaged in real estate activities would require the approval of our board of directors.

Investments in Other Securities

We currently own a minority interest which we acquired in August 2003 in Dune Medical Devices, a privately held Israeli company that is developing cancer detection technology. Other than that, we do not own any securities, nor do we intend to acquire any. Any decision to make an investment of this type would only be made with the approval of the board of directors.

Financing and Leverage Policy

We intend, when appropriate, to employ leverage and to use debt as a means to provide additional funds to expand and broaden our mortgage loan portfolio, fund distributions to our shareholders, to engage in other

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permitted activities and for general corporate purposes. Neither our restated certificate of incorporation nor our bylaws limit the amount or percentage of indebtedness that we may incur, nor have we adopted any policies addressing these issues. Any financing transaction would likely be in the form of a credit facility, such as a revolving line of credit similar to our existing Webster Credit Line. However, under the terms of the agreement governing the Webster Credit Line, we are prohibited from incurring any other funded indebtedness. We do not have any intention at the present time to sell all or a portion of our loan portfolio. The decision to use leverage and the appropriate level of leverage will be made by our board of directors based on its assessment of a variety of factors, including our historical and projected financial condition, liquidity and results of operations, financing covenants, the cash flow generation capability of assets, the availability of credit on favorable terms, our outlook for borrowing costs relative to the unlevered yields on our assets, maintenance of our REIT qualification, applicable law and other factors. Our decision to use leverage will not be subject to the approval of our shareholders and there are no restrictions in our governing documents in the amount of leverage that we may use.

Lending Policies

Real estate lending is our business and our current intention is to continue to focus exclusively on making short-term loans secured by first mortgage liens against residential and commercial real property held for investment or resale located in the New York metropolitan area. Our intent is to continue to focus on the New York metropolitan area market. We believe that this market presents many opportunities for a company like us that specializes in relatively small, secured real estate loans and we do not feel it is necessary for us to expand into other geographic markets at this time. Similarly, we intend to continue to focus only on lending opportunities that will be secured by first mortgage liens. At this time, we have no plans to fund mezzanine or subordinated debt and certainly not unsecured debt. Any change in our lending policy would require the approval of our board of directors.

Our chief executive officer has final and absolute authority over all lending decisions and wide latitude to set the terms of each particular loan. The only limitations on his authority are (A) the conditions and covenants contained in the Webster Credit Line (or any replacements thereof, to the extent the loan will be funded by an advance from the credit line) and (B) that the principal amount of any single loan may not exceed the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $1.5 million. Any loan that exceeds this limit requires approval of our board of directors.

Policies with Respect to Other Activities

We have the authority to issue debt securities, offer common shares, preferred shares or options to purchase shares, warrants and units consisting of two or more of the foregoing as well as to repurchase or otherwise reacquire our common shares or other securities in the open market or otherwise, and we may engage in such activities in the future. Our board of directors has the authority, without further shareholder approval, to amend our charter to increase the number of authorized common shares or preferred shares and to authorize us to issue additional common shares or preferred shares, in one or more series, including senior securities, in any manner, and on the terms and for the consideration, it deems appropriate, subject to applicable laws and regulations. We have not engaged in trading, underwriting or agency distribution or sale of securities of other issuers and do not intend to do so. In July 2014 we sold 1,754,386 common shares in an underwritten registered public offering. The gross proceeds from the sale of those securities were $5.0 million and the net proceeds after paying underwriting commissions and other fees and expenses relating to the offering, were approximately $4.3 million. In May 2015 we sold 1,120,000 common shares in an underwritten public offering (including 105,000 common shares sold pursuant to the exercise of the over-allotment option, in part.) The gross proceeds from the sale of those shares were $4.92 million and the net proceeds after paying underwriting commissions and other fees and expenses relating to the offering, were approximately $4.2 million. We have not sold any other equity securities in the past three years. In 2010, we raised $500,000 through the sale of senior secured notes. In addition, over the last six years we have raised an aggregate of $8.7 million from the sale of short- and medium-term notes of which $2.47 million and $1.1 million was outstanding as of December 31, 2014 and as of September 30, 2015. These notes will all become due on various dates on or before September 1, 2016. Finally, during 2012 and 2013 we purchased 96,269 common shares for an aggregate purchase price of $127,935 in accordance with Rule 10b-18 promulgated under the

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Exchange Act. Any decision to raise capital through the sale of equity or debt securities and any decision to repurchase common shares requires the approval of our board of directors.

Conflict of Interest Policies

We have adopted certain policies that are designed to eliminate or minimize certain potential conflicts of interest. We have also adopted a code of business conduct and ethics that is designed to promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between our employees, officers and directors and our company. However, we cannot assure you that these policies, our Code of Ethics, or provisions of law will always be successful in eliminating the influence of such conflicts, and, if they are not successful, decisions could be made that might fail to reflect fully the interests of all shareholders.

Reporting Policies

We and Funding are subject to the information reporting requirements of the Exchange Act. Pursuant to these requirements, we are required to file, and have filed, annual and other periodic reports, current reports, proxy statements and other information, including audited financial statements, with the United States Securities and Exchange Commission (the “SEC”). They are also available on our corporate web site, www.manhattanbridgecapital.com, as well as the SEC website, www.sec.gov.

Restrictions on Ownership of our Common Shares

To assist us in complying with the limitations on the concentration of ownership of a REIT imposed by the Code, our restated certificate of incorporation:

• Prohibits any shareholder from beneficially or constructively owning, applying certain attribution rules under the Code, more than 4.0% by value or number of shares, whichever is more restrictive, of our outstanding capital stock. Assaf Ran, our chief executive officer, is exempt from this restriction. As of the date of this prospectus, Mr. Ran owns 34.57% of our outstanding common shares. In addition, our board of directors may, in its sole discretion, waive the ownership limit with respect to a particular shareholder if it is presented with evidence satisfactory to it that such ownership will not then or in the future jeopardize our qualification as a REIT.

• Prohibits any person from transferring shares of our capital stock if, as a result of such transfer, we would have fewer than 100 shareholders.

• Provides that any ownership or purported transfer of our capital stock in violation of the foregoing restrictions will result in the shares so owned or transferred being automatically transferred to a charitable trust for the benefit of a charitable beneficiary, and the purported owner or transferee acquiring no rights in those shares. If a transfer to a charitable trust would be ineffective for any reason to prevent a violation of the restriction, the transfer resulting in the violation will be void from the time of the purported transfer.

These ownership limitations could delay or prevent a transaction or a change in control of us that might involve a premium price for shares of our capital stock or otherwise be in the best interests of our shareholders.

Investment Company Act Exemption

We intend to conduct our operations so that we are not required to register as an investment company under the Investment Company Act. Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis. We rely on the exception set forth in Section 3(c)(5)(C) of the Investment Company Act that excludes from the definition of investment company “[a]ny person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses…

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(C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The SEC generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). At the present time, we qualify for the exemption under this section and our current intention is to continue to focus on originating short term loans secured by first mortgages on real property. However, if, in the future, we do acquire non-real estate assets without the acquisition of substantial real estate assets, we may qualify as an “investment company” and be required to register as such under the Investment Company Act, which could have a material adverse effect on us.

Corporate Information

Our offices are located at 60 Cutter Mill Road, Suite 205, Great Neck, New York 11021 and our telephone number is (516) 444-3400. The URL for our website is www.manhattanbridgecapital.com. The information contained on or connected to our website is not incorporated by reference into, and you must not consider the information to be a part of, this prospectus. Funding does not have a separate website.

All of Funding’s operations are conducted from our offices. Funding does not maintain its own website.

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The Offering

The summary below describes the principal terms of the Notes. The terms and conditions described below are subject to important limitations and exceptions. “Description of the Notes” contains a more detailed description of the terms and conditions of the Notes.

Issuer:

MBC Funding II Corp. (“Funding”), a wholly-owned, special purpose subsidiary of Manhattan Bridge Capital, Inc.

Notes Offered:

$     aggregate principal amount of    % senior secured notes due           , 2026 (the “Notes”). If the representative exercises the underwriters’ over-allotment option in full, the aggregate principal amount of the Notes sold in this offering will be $     .

Issue Price:

100% of the original principal amount, or $25.00 per Note. Notes must be purchased in integral multiples of $1,000.00

Maturity Date:

          , 2026 (ten years from the date of issuance) unless redeemed earlier in accordance with the terms of the Indenture. (See below.)

Interest:

Interest on the Notes will accrue at the rate of   % per annum commencing on            , 2016 (the first day following the three-month anniversary of the issue date of the Notes) and will be payable monthly, in arrears, in cash, on the 15^th day of each calendar month, commencing          , 2016 (the first month following the month in which interest on the Notes begins to accrue).

Guarantee:

We will fully and unconditionally guarantee Funding’s obligations under the Notes, which guaranty will be secured by a pledge of 100% of Funding’s equity.

Rank:

The Notes will be the senior secured obligations of Funding.

Security:

The Notes will be secured by all of the assets of Funding, which will consist primarily of a pool of mortgage loans, each of which is secured by first priority liens on real estate, and cash. The aggregate principal amount of the mortgage loans owned by Funding plus its cash on hand always must be equal to at least 120% of the outstanding principal amount of the Notes.

Issuer’s Right of Redemption:

Funding may redeem the Notes, in whole or in part, at any time after           , 2019 (the third anniversary of the issue date of the Notes) upon at least 30 days prior written notice to the Noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium; provided that (i) if the Notes are redeemed on or after           , 2019 (the third anniversary of the issue date of the Notes) but prior to           , 2020 (the fourth anniversary of the issue date of the Notes), the redemption price will be 103% of the principal amount of the Notes redeemed and (ii) if the Notes are redeemed on or after           , 2020 (the fourth anniversary of the issue date of the Notes) but prior to           , 2021 (the fifth anniversary of the issue date of the Notes), the redemption price will be 101.5% of the principal amount of the Notes redeemed plus, in either case, the accrued but unpaid interest on the Notes redeemed up to, but not including, the date of redemption.

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Noteholders’ Right of Redemption:

Each Noteholder has the right to cause Funding to redeem his, her, or its Notes on           , 2021, (the fifth anniversary of the issue date of the Notes). The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest up to, but not including, the date of redemption, without penalty or premium. In order to exercise this right, the Noteholder must notify Funding, in writing, no earlier than           , 202  (six months prior to the fifth anniversary of the issue date of the Notes) and no later than           , 202  (four months prior to the fifth anniversary of the issue date of the Notes). All Notes that are subject to a properly and timely notice will be redeemed on           , 2021 (the fifth anniversary of the issue date of the Notes). Any Noteholder who fails to make a proper and timely election will be deemed to have waived his, her or its right to have his, her or its Notes redeemed prior to the maturity date.

Issuer’s Obligation to Redeem:

Funding may be obligated to offer to redeem the Notes if there occurs a “change of control” with respect to us, Funding or a subsidiary of Funding or if there occurs a sale by us, Funding or a subsidiary of Funding or us of any of our respective assets unless, in connection with an asset sale, the consideration paid for the assets is not less than their fair market value and, to the extent the consideration is paid in cash, the net proceeds are reinvested in the business of the seller. The redemption price in connection with a “change of control” will be 101% of the principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption. The redemption price in connection with an asset sale will be the outstanding principal amount of the Notes redeemed plus accrued but unpaid interest thereon up to, but not including, the date of redemption.

Indenture Trustee:

TBD

Paying Agent:

TBD

Method of Purchase:

The Notes will be sold solely using DTC settlement procedures.

Denomination:

The Notes may be purchased in minimum denominations of $25.00 and integral multiples of $1,000.

Use of Proceeds:

Funding will use the net proceeds from this offering to purchase from us a pool of mortgage loans, which we originated and funded, each of which is secured by a first priority lien on real property. We, in turn, will use the proceeds from the sale of those mortgage loans to reduce the outstanding balance on the Webster Credit Line. As of September 30, 2015 the outstanding balance on the Webster Credit Line was $10.1 million. All amounts outstanding under the Webster Credit Line are fully due and payable on February 27, 2018.

Risk Factors:

You should carefully consider all of the information in this prospectus, before purchasing any Notes particularly the “Risk Factors” beginning on page 14.

Settlement:

We expect delivery of the Notes to occur against payment therefor on or about           , 2016 , which will be the    (  ^th) business day following the date of the pricing of the Notes.

Proposed NASDAQ Symbol For the Notes:

TBD

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SUMMARY FINANCIAL DATA

The following tables set forth our summary historical consolidated financial information and other data at the dates and for the periods indicated. The statements of operating data for the years ended December 31, 2014 and 2013 and balance sheet data as of December 31, 2014 are derived from our audited consolidated financial statements and related notes included in this prospectus. The operations data for the nine months ended September 30, 2015 and 2014 and the balance sheet data as of September 30, 2015 set forth below have been derived from our unaudited financial statements appearing elsewhere in this prospectus. Our unaudited interim financial information has been prepared on the same basis as our audited financial statements and, in our opinion, reflects all adjustments, consisting only of normal and recurring adjustments, that we consider necessary for a fair presentation of our financial position as of September 30, 2015 and operating results for the nine month periods ended September 30, 2015 and 2014.

The following summary historical consolidated financial information and other data are qualified in their entirety by reference to, and should be read in conjunction with, our audited consolidated financial statements and related notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Selected Historical Consolidated Financial Information,” and other financial information included in this prospectus. Historical results included below and elsewhere in this prospectus are not necessarily indicative of our future performance and the results for any interim period are not necessarily indicative of the operating results to be expected for the full fiscal year.

Operating Data:

	Year Ended December 31,				Nine Months Ended September 30,
	2014		2013		2015		2014
	(audited)				(unaudited)
Interest income	$	2,401,150	$	1,858,033	$	2,392,329	$	1,657,076
Origination fees	$	502,515	$	401,514	$	463,092	$	347,637
Total revenue	$	2,903,665	$	2,259,547	$	2,855,421	$	2,004,713
Total operating costs and expenses	$	1,442,518	$	1,282,128	$	1,193,376	$	939,401
Income from operations	$	1,461,147	$	977,419	$	1,662,045	$	1,065,312
Net income	$	1,454,505	$	582,967	$	1,645,040	$	1,058,264
Net income per share – basic	$	0.29	$	0.14	$	0.25	$	0.23
– diluted	$	0.29	$	0.14	$	0.25	$	0.22

Balance Sheet Data:

	As of December 31, 2014		As of September 30, 2015
			Actual		Pro forma, As Adjusted(1)
	(audited)		(unaudited)
Cash and cash equivalents	$	47,676	$	61,144
Loans receivable (short- and long-term)	$	24,032,476	$	29,144,040
Total assets	$	24,444,317	$	29,772,987
Total liabilities (all current)	$	10,577,863	$	11,532,429
Working capital	$	8,849,000	$	4,539,657
Returned earnings	$	113,346	$	207,166
Shareholders’ equity	$	13,866,454	$	18,240,558

(1) Pro forma, as adjusted balance sheet data gives effect to (i) 39,550 common shares that we issued after September 30, 2015 upon exercise of options and warrants and the receipt of $101,822 in connection therewith and (ii) the sale of the Notes as described in this prospectus.

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RISK FACTORS

Investing in the Notes involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus before purchasing any Notes. If any of the following risks occur, our business, financial condition, liquidity and/or results of operations could be materially and adversely affected. In that case, we may not be able to pay interest of the Notes or repay the Notes in full when they mature and you may lose some or all of your investment. Some statements in this prospectus, including statements in the following risk factors, constitute forward-looking statements. Please refer to the section entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Risks Related to the Notes

We are controlled by our shareholders whose interest may not always be aligned with the interests of the Noteholders.

Noteholders will not have any voting rights with respect to us or Funding (other than as set forth in the Indenture) or the right to influence management or day-to-day operations of Funding or of us. The interests of shareholders who do vote may be different or even in opposition of those of creditors such as the Noteholders. For example, shareholders may place a higher priority on the long-term, as opposed to short-term, performance of a company. Shareholders also tend to focus on building value and increasing stock price while creditors are more interested in cash flow. As of the date of this prospectus, Assaf Ran, our chief executive officer, beneficially owns 34.57%, of our outstanding common shares. Mr. Ran is also the chief executive officer and sole director of Funding. Thus, Mr. Ran currently has and will continue to exercise effective control over all corporate actions of Manhattan Bridge Capital and Funding.

An active public trading market for the Notes may not develop.

The Notes will be listed on the Nasdaq Global Market and will trade under the symbol “    ”. However, we cannot assure you that an active trading for the Notes will develop. If an active trading market does not develop you may not be able to sell your Notes for the price you want at the time you want. Accordingly, an investment in the Notes is not suitable for investors that require liquidity.

If a trading market does develop for the Notes, the liquidity of any such market will depend upon various factors, including:

• the number of Noteholders;

• the interest of securities dealers in making a market for the Notes;

• the overall market for debt securities;

• our financial performance and prospects; and

• the prospects for companies in our industry generally.

If the Notes trade after their initial issuance, they may trade at a discount from their initial offering price depending upon prevailing interest rates and other factors, including those listed above. As a result, we cannot assure you that you will be able to sell the Notes if you wish do so or, even if you can sell your Notes, that you will recover your entire investment.

The Indenture will contain restrictive covenants that may limit Funding’s operating flexibility and could adversely affect its financial condition.

The Indenture will contain restrictive covenants that could adversely affect Funding’s operating flexibility as well as its financial condition. For example, the Indenture requires Funding to maintain a specific debt coverage ratio at all times (i.e., 1.2:1.0) and limits or prohibits its ability to:

• acquire or dispose of assets;

• merge with another corporation; and:

• incur additional secured and unsecured indebtedness.

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Funding’s failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of the indebtedness evidenced by the Notes. For example, defaults under the mortgage loans held by Funding could result in a violation of the debt coverage ratio covenant. In that case, Funding is required to make quarterly payments of principal on the Notes until it is in compliance. We cannot assure you that in that event Funding will be able to repay all the Notes in full, or at all.

The limited covenants in the Indenture and the terms of the Notes will not provide protection against significant events that could adversely impact Funding’s obligations under the Notes.

Neither the Indenture nor the Notes require Funding to maintain any financial ratios or specific levels of net worth, revenues, income, cash flow or liquidity and, accordingly, do not protect the Noteholders in the event that Funding experiences significant adverse changes in its financial condition or results of operations or protect your interest as a Noteholder. For example, during the term of the Notes, the true value of the mortgage loans held by Funding may fluctuate based on a number of factors including interest rates on the loans relative to prevailing market rates, as well as the solvency and credit-worthiness of the borrower. However, as long as the borrowers are not in default of their obligations, Funding will not be deemed to be in default of the debt coverage ratio covenant in the Indenture.

Funding may not be able to make the required payments of interest and principal on the Notes.

Funding’s ability to make payments of principal and interest on the Notes is subject to general economic conditions and financial, business and other factors affecting its mortgage loan portfolio, many of which are beyond its control. Funding’s sole source of revenue and cash flow will be payments of interest and principal it receives with respect to its mortgage loan portfolio. To the extent the interest payments received by Funding exceed the payments required to be made to the Noteholders, and both prior to and after giving effect to the distribution of funds to us, Funding is in compliance with the debt coverage ratio and no default or event of default exists or would occur as a result of such distribution, Funding plans to distribute those excess funds to us. If Funding is unable to generate sufficient cash flow to service the debt evidenced by the Notes, it will be in default of its obligations under the Notes.

Funding is not obligated to contribute to a sinking fund to retire the Notes and the Notes are not guaranteed by any governmental agency.

Funding is not obligated to contribute funds to a sinking fund to repay principal or interest on the Notes upon maturity or default. The Notes are not certificates of deposit or similar obligations of, or guaranteed by, any depositary institution. Further, no governmental entity insures or guarantees payment on the Notes if we do not have enough funds to make principal or interest payments.

The collateral granted as security for Funding’s obligations under the Notes may be insufficient to repay the indebtedness upon an event of default.

The Notes will be secured by all of Funding’s assets, which will consist primarily of mortgage loans and cash. Under the Indenture, the aggregate principal amount of the mortgage loans held by Funding plus its cash on hand must equal at least 120% of the outstanding principal amount of the Notes at all times. We cannot assure you that the value of the collateral will be sufficient to redeem the Notes in full should Funding be in default of its payment obligations under the Notes. Specifically, if the mortgage loans are in default, we cannot assure you that Funding will be able to sell those loans for an amount equal to or even approximately equal to the outstanding principal balance of the Notes or that the properties securing the loans in default can be sold for an amount sufficient to fully repay the mortgage loans. Finally, any foreclosure action is likely to take a considerable amount of time and involve significant costs, further eroding Funding’s ability to stay current on its obligations under the Notes. Because of the foregoing, Noteholders risk the possibility that the collateral securing Funding’s obligations under the Notes may be insufficient to repay those securities upon an event of default.

As the controlling shareholder of Funding, we have an inherent conflict of interest and we may not always act in the best interests of the Noteholders.

We have absolute control over Funding. We own all of its stock and its chief executive officer and sole director is our controlling shareholder, chief executive officer and chairman of our board of directors. Subject

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to the requirements set forth in the Indenture, we will determine which mortgage loans Funding will purchase from us and any additional mortgage loans that we will transfer to Funding in order to meet the debt coverage ratio requirement set forth in the Indenture. In addition, we will decide whether Funding should extend the term of any mortgage loan in its portfolio that becomes due. Finally, we will decide how Funding should reinvest the principal payments on existing loans and the terms of any new mortgage loans that Funding will make. In making these decisions we may be conflicted by our obligations to our shareholders and our obligations to the Noteholders. We cannot assure you that the decisions we ultimately make will be in the best interest of the Noteholders.

Various provisions in the Indenture restrict the ability of the Indenture Trustee or the Noteholders to enforce their rights against us in the event Funding defaults on its obligations under the Notes.

We will guarantee Funding’s obligations under the Notes and we will secure that guaranty with a pledge of 100% of the issued and outstanding shares of Funding. However, if Funding is in default of its obligations to the Noteholders, the value of Funding may be less than the amount due to the Noteholders. Under the Indenture, if an event of default occurs, the Indenture Trustee, at the written direction of the holders of at least 50% of the principal amount of the Notes then outstanding, shall declare the unpaid principal and all accrued but unpaid interest on the Notes to be immediately due and payable. In addition, the Indenture Agreement provides that the neither the Indenture Trustee nor the Noteholders can exercise their rights under the guaranty until the Webster Credit Line has been paid in full. Furthermore, under our agreement with Webster, we are prohibited from making any payment, direct or indirect (whether for interest, principal, as a result of any redemption or repayment at maturity, on default, or otherwise), on the Notes so long as there are any unpaid balances on the Webster Credit Line, and, under the Indenture, neither the Noteholders nor the Indenture Trustee will have the right, directly or indirectly, to sue to enforce the Indenture or the Notes until Webster has been paid in full. Although the Webster Credit Line matures and is fully payable in February 2018, the likelihood is that we will either renew or extend the existing credit facility or replace it with another facility from another institutional lender. In either case, as a condition to extending or renewing the credit line or establishing a new credit line, Webster or the new lender, as the case may be, will likely insist in the same restriction. These provisions present the risk that, upon any default by Funding, the Noteholders will be unable to enforce their rights under our guaranty. Thus, the Indenture trustee and the Noteholders may never be able to enforce the guarantee upon an event of default.

Funding has no obligation to redeem the Notes prior to their maturity date except in limited circumstances.

The entire outstanding principal balance of the Notes and all accrued but unpaid interest thereon will be due and payable in full on            , 2026, the tenth anniversary of the issue date of the Notes. Except for specifically enumerated circumstances, Funding has no obligation, and the Noteholders will have no right to require Funding, to redeem any Notes prior to their maturity date. For example, if either we or Funding enter into a transaction that constitutes a “change in control” or an “asset sale,” as such terms are defined under the Indenture, Funding may be obligated to offer to redeem the Notes at a redemption price equal to 101% of their principal amount, in the case of a “change in control” and 100% of their principal amount in the case of an “asset sale” plus, in either case, the accrued and unpaid interest up to, but not including, the date of redemption. In addition, the Noteholders have a one-time right to cause Funding to redeem the notes on the fifth anniversary of the issue date of Notes and Funding has the right, but not the obligation, to redeem the Notes at any time beginning on the third anniversary of the isssue date of the Notes. As a result, any investment in the Notes should be considered illiquid and unable to be redeemed until their stated maturity.

Funding may not be able to redeem the Notes when it is obligated to do so, which would constitute an event of default.

In connection with transactions constituting a Change of Control or an Asset Sale (as such terms defined in the Indenture and as described in “Description of the Notes”), Funding may be obligated to offer to redeem the Notes at a price equal to 101% of their outstanding principal amount plus accrued and unpaid interest, if any, to, but not including, the date of repurchase. We cannot assure you that Funding will have sufficient financial resources available to satisfy its obligations to redeem the Notes. If it cannot, such failure would constitute an event of default under the Indenture. In addition, we cannot assure that under such

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circumstances you will be able to seek payment from us under the terms of the guaranty or that you would be able to sell your Notes. Thus, you could lose all or a substantial portion of your investment.

The terms of the Indenture and the Notes provide only limited protection against significant events that could affect adversely your investment in the Notes.

While the Indenture and the Notes contain terms intended to protect Noteholders upon the occurrence of certain events involving significant corporate transactions and our creditworthiness, these terms may not be sufficient to protect your investment in the Notes. For example, if either we or Funding enter into a transaction that constitutes a “change in control” or an “asset sale” as such terms are defined under the Indenture, Funding may be obligated to offer to redeem the Notes at a redemption price equal to 101% of their principal amount, in the case of a “change in control” and 100% in the case of an “asset sale” plus, in either case, the accrued and unpaid interest. However, the definition of the terms “change of control” and “asset sale” are limited and do not cover a variety of transactions that could negatively affect the value of the Notes. Thus, if we were to enter into a significant corporate transaction that negatively affects the value of the Notes, but that would not constitute a “change of control” or an “asset sale” for purposes of triggering Funding’s obligation to offer to redeem the Notes, you would not have any rights to require us to repurchase the Notes at that time and you could lose all or a portion of your investment.

If a bankruptcy petition were filed by or against us or Funding, you may receive less than the outstanding balance on the Notes.

If a bankruptcy case were filed by or against us or Funding under the U. S. Bankruptcy Code after the issuance of the Notes, the Noteholders may receive, on account of their claims related to the Notes, less than they would be entitled to under the terms of the Indenture.

We do not know all of the tax implications of an investment in the Notes for each Noteholder.

The section of this prospectus entitled “Material Federal Income Tax Considerations” sets forth a summary of federal income tax consequences to the purchasers of the Notes. No information is provided concerning tax consequences under any other federal, state, local or foreign laws that may apply to the Notes. Prospective investors or their representatives should read that section carefully in order to properly evaluate the federal income tax risks of an investment in the Notes. Each prospective investor should consult his personal counsel, accountant and other business advisors as to the federal, state, local and foreign tax consequences of an investment in the Notes. Noteholders will receive an IRS Form 1099-INT in connection with their receipt of interest payments.

Business Related Risks

Our loan origination activities, revenues and profits are limited by available funds. If we do not increase our working capital, we will not be able to grow our business.

As a real estate finance company, our revenue and net income is limited to interest received or accrued on our loan portfolio. Our ability to originate real estate loans is limited by the funds at our disposal. At December 31, 2014, we had virtually no cash or cash equivalents available for loan originations and general operations and no borrowing availability under the Sterling Credit Line. In February 2015, we replaced the Sterling Credit Line with the Webster Credit Line. As of September 30, 2015, we had approximately $3.9 million of borrowing availability under the Webster Credit Line. We intend to use the net proceeds from the sale of Notes, the proceeds from the repayment of loans outstanding, and the additional borrowing capacity under the Webster Credit Line to originate real estate loans. Nevertheless, if demand for our mortgage loans increases, we cannot assure you that we will be able to capitalize on this demand given the limited funds available to us to originate loans.

We operate in a highly competitive market and competition may limit our ability to originate loans with favorable interest rates.

We operate in a highly competitive market and we believe these conditions will persist for the foreseeable future as the financial services industry continues to consolidate, producing larger, better capitalized and more geographically diverse companies with broad product and service offerings. Thus, our

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profitability depends, in large part, on our ability to compete effectively. Our competition includes mortgage REITs, specialty finance companies, savings and loan associations, banks, mortgage banks, insurance companies, mutual funds, pension funds, private equity funds, hedge funds, institutional investors, investment banking firms, non-bank financial institutions, governmental bodies, family offices and high net worth individuals. We may also compete with companies that partner with and/or receive financing from the U.S. Government. Many of our competitors are substantially larger and have considerably greater financial, technical, marketing and other resources than we do. In addition, larger and more established competitors may enjoy significant competitive advantages, including enhanced operating efficiencies, more extensive referral networks, greater and more favorable access to investment capital and more desirable lending opportunities. Several of these competitors, including mortgage REITs, have recently raised or are expected to raise, significant amounts of capital, which enables them to make larger loans or a greater number of loans. Some competitors may also have a lower cost of funds and access to funding sources that may not be available to us, such as funding from various governmental agencies or under various governmental programs for which we are not eligible. In addition, some of our competitors may have higher risk tolerances or different risk assessments, which could allow them to consider a wider variety of possible loan transactions or to offer more favorable financing terms than we would. Finally, as a REIT and because we operate in a manner so as to be exempt from the requirements of the Investment Company Act, we may face further restrictions to which some of our competitors may not be subject. As a result, we may find that the pool of potential borrowers available to us is limited. We cannot assure you that the competitive pressures we face will not have a material adverse effect on our business, financial condition and results of operations.

Our chief executive officer and chief financial officer are each critical to our business and our future success may depend on our ability to retain them. In addition, as our business grows we will need to hire additional personnel.

Our future success depends to a significant extent on the continued efforts of our founder, president and chief executive officer, Assaf Ran, and our chief financial officer, Vanessa Kao. Mr. Ran generates most if not all of our loan applications, supervises all aspects of the underwriting and due diligence process in connection with each loan, structures each loan and has absolute authority (subject only to the maximum amount of the loan) as to whether or not to approve the loan. Ms. Kao services all loans in our portfolio. If Mr. Ran is unable to continue to serve as our chief executive officer on a full-time basis, we might not be able to generate sufficient loan applications and our business and operations would be adversely affected. In addition, in the future we may need to attract and retain qualified senior management and other key personnel, particularly individuals who are experienced in the real estate finance business and people with experience in managing a mortgage REIT. If we are unable to recruit and retain qualified personnel in the future, our ability to continue to operate and to grow our business will be impaired.

Terrorist attacks and other acts of violence or war may affect the real estate industry generally and our business, financial condition and results of operations.

The risk of terrorist attacks by extremist groups has risen dramatically over the last year. Any future terrorist attacks, the anticipation of any such attacks, and the consequences of any military or other response by the United States and its allies may have an adverse impact on the U.S. financial markets and the economy in general. In addition, a significant terrorist attack in New York City, such as those recently perpetrated in Paris, France and San Bernardino, California could have a material adverse impact on the New York real estate market, which, in turn, could make it more difficult for our borrowers to repay their loans. We cannot predict the severity of the effect that any such future events would have on the U.S. financial markets, including the real estate capital markets, the economy or our business. Any future terrorist attacks could adversely affect the credit quality of some of our loan portfolio. We may suffer losses as a result of the adverse impact of any future terrorist attacks and these losses may adversely impact our results of operations.

The enactment of the Terrorism Risk Insurance Act of 2002, or the TRIA, and the subsequent enactment of the Terrorism Risk Insurance Program Reauthorization Act of 2007, which extended TRIA through the end of 2020, requires insurers to make terrorism insurance available under their property and casualty insurance policies in order to receive federal compensation under TRIA for insured losses. However, this legislation does not regulate the pricing of such insurance. The absence of affordable insurance coverage may adversely affect the general real estate lending market, lending volume and the market’s overall liquidity and may reduce the

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number of suitable financing opportunities available to us and the pace at which we are able to make loans. If property owners are unable to obtain affordable insurance coverage, the value of their properties could decline and in the event of an uninsured loss, we could lose all or a portion of our investment.

Security breaches and other disruptions could compromise our information and expose us to liability, which would cause our business and reputation to suffer.

In the ordinary course of our business, we may acquire and store sensitive data on our network, such as our proprietary business information and personally identifiable information of our prospective and current borrowers. The secure processing and maintenance of this information is critical to our business strategy. Despite our security measures, our information technology and infrastructure may be vulnerable to attacks by hackers or breached due to employee error, malfeasance or other disruptions. Any such breach could compromise our networks and the information stored there could be accessed, publicly disclosed, lost or stolen. Any such access, disclosure or other loss of information could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, regulatory penalties, disruption to our operations and the services we provide to customers or damage our reputation, which could materially and adversely affect us.

Our financial statements may be materially and adversely affected if our estimates prove to be inaccurate.

Financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) require the use of estimates, judgments and assumptions that affect the reported amounts. Different estimates, judgments and assumptions reasonably could be used that would have a material effect on the financial statements, and changes in these estimates, judgments and assumptions are likely to occur from period to period in the future. Significant areas of accounting requiring the application of management’s judgment include, but are not limited to, assessing the adequacy of the allowance for loan losses. These estimates, judgments and assumptions are inherently uncertain, and, if they prove to be wrong, then we face the risk that charges to income will be required. For example, currently, we do not carry any loan loss reserves. However, a decline in economic condition could negatively impact the credit quality of our loan portfolio and require us to establish loan loss reserves, which could have an adverse impact on our net income. In addition, because we have limited operating history as a REIT and limited experience in making these estimates, judgments and assumptions, the risk of future charges to income may be greater than if we had more experience in these areas. Any such charges could significantly harm our business, financial condition, results of operations and the price of the Notes.

Our existing credit line has numerous covenants. If we are unable to comply with these covenants, the outstanding amount of the loan could become due and payable and, as a result, we may not be able to meet our obligation as guarantor of the Notes.

The Webster Credit Line contains various covenants and restrictions that are typical for these kinds of credit facilities, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers. If we fail to meet or satisfy any of these covenants, we would be in default under our agreement with Webster, and Webster could elect to declare outstanding amounts due and payable, terminate its commitments to us, require us to post additional collateral and/or enforce their interests against existing collateral. In addition, a default under our agreement with Webster would also constitute an event of default under the Indenture. Acceleration of our debt to Webster could significantly reduce our liquidity or require us to sell our assets to repay amounts due and outstanding. This would significantly harm our business, financial condition, results of operations and ability to make distributions and could result in the foreclosure of our assets which secure our obligations, which could cause the value of our outstanding securities to decline. A default could also significantly limit our financing alternatives such that we would be unable to pursue our leverage strategy, which could adversely affect our returns. As a result, our guarantee of the Notes may be unenforceable. In such event, if Funding were to default in its obligations under the Notes, you may lose all or a portion of your investment.

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Our use of leverage may adversely affect our financial condition, which could adversely affect our obligations under the Guaranty.

We do not have a formal policy limiting the amount of debt we incur and our governing documents contain no limitation on the amount of leverage we may use. We may significantly increase the amount of leverage we utilize at any time without approval of our board of directors. In addition, we may leverage individual assets at substantially higher levels. Incurring substantial debt could subject us to many risks that, if realized, would materially and adversely affect us, including the risk that:

• our cash flow from operations may be insufficient to make required payments of principal and interest on our outstanding indebtedness or we may fail to comply with all of the other covenants contained in the debt, which is likely to result in (i) acceleration of such debt (and any other debt containing a cross-default or cross-acceleration provision) that we may be unable to repay from internal funds or to refinance on favorable terms, or at all, (ii) our inability to borrow unused amounts under our financing arrangements, even if we are current in payments on borrowings under those arrangements and/or (iii) the loss of some or all of our assets pledged or liened to secure our indebtedness to foreclosure or sale;

• our debt may increase our vulnerability to adverse economic and industry conditions with no assurance that yields will increase with higher financing costs;

• we may be required to dedicate a substantial portion of our cash flow from operations to payments on our debt, thereby reducing funds available for operations, future business opportunities, shareholder distributions or other purposes; and

• we are not able to refinance debt that matures prior to the asset it was used to finance on favorable terms, or at all.

As a result, our ability to make payments to the Noteholders if Funding were to default on its obligations may be severely compromised.

Our indebtedness could adversely affect our financial flexibility and our competitive position.

We have, and expect that we will continue to have a significant amount of indebtedness. As of September 30, 2015, we had approximately $11.2 million of debt outstanding, consisting primarily of the amounts outstanding under the Webster Credit Line. Another $3.9 million was available under the Webster Credit Line as of that date. After this offering is completed, the total amount of our indebtedness, after taking into account our guarantee under the Indenture would increase to $24 million; $14 million to Webster and $10 million to the Noteholders. This level of indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of the indebtedness. Our indebtedness could have other important consequences to you and significantly impact our business. For example, it could:

• make it more difficult for us to satisfy our obligations;

• increase our vulnerability to adverse changes in general economic, industry and competitive conditions;

• require us to dedicate a substantial portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures and other general corporate purposes;

• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

• limit our ability to make material acquisitions or take advantage of business opportunities that may arise;

• expose us to fluctuations in interest rates, to the extent our borrowings bear variable rates of interest;

• place us at a competitive disadvantage compared to our competitors that have less debt;

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• limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions, debt service requirements, execution of our business plan or other general corporate purposes on reasonable terms or at all;

• reduce the amount of surplus funds distributable by our subsidiaries to us for use in our business, such as for the payment of indebtedness and dividends to our shareholders; and

• lead us to elect to make additional investments in our subsidiaries if their cash flow from operations is insufficient for them to make payments on their indebtedness.

We may incur additional debt, which could exacerbate the risks associated with our leverage.

We and our subsidiaries may incur substantial additional indebtedness in the future. The covenants in the agreement governing the Webster Credit Line and the Indenture governing the Notes offered hereby may limit our ability and the ability of our subsidiaries to incur additional indebtedness. To the extent that we are nevertheless able to incur additional indebtedness or such other obligations, the risks associated with our indebtedness described above, including our possible inability to service our debt, will increase.

Risks Related to Our Portfolio

If we overestimate the yields on our loans or incorrectly value the collateral securing the loan, we may experience losses.

Loan decisions are typically made based on the credit-worthiness of the borrower and the value of the collateral securing the loan. We cannot assure you that our assessments will always be accurate or the circumstances relating to a borrower or the collateral will not change during the loan term, which could lead to losses and write-offs. Losses and write-offs could materially and adversely affect our business, operations and financial condition and the market price of the Notes.

Difficult conditions in the markets for mortgages and mortgage-related assets as well as the broader financial markets have resulted in a significant contraction in liquidity for mortgages and mortgage-related assets, which may adversely affect the value of the assets that we intend to originate.

Our results of operations will be materially affected by conditions in the markets for mortgages and mortgage-related assets as well as the broader financial markets and the economy generally. In recent years, significant adverse changes in financial market conditions have resulted in a decline in real estate values, jeopardizing the performance and viability of many real estate loans. As a result, many traditional mortgage lenders suffered severe losses and several have even failed. This situation has negatively affected both the terms and availability of financing for small non-bank real estate finance companies. This could have an adverse impact on our financial condition, business and operations.

Short-term loans and loans on which the maturity date has been extended may involve a greater risk of loss than traditional mortgage loans.

Borrowers usually use the proceeds of a long-term mortgage loan or sale to repay our loans. We may therefore depend on a borrower’s ability to obtain permanent financing or sell the property to repay our loan, which could depend on market conditions and other factors. On our balance sheet we make a distinction between short- and long-term loans receivable. Long-term loans receivable are loans that are extended beyond their original maturity dates unless it is clear that the loan will be repaid within one year of the date on which the maturity date has been extended. At September 30, 2015, our long-term loans receivable was $13.5 million compared to $4.9 million at December 31, 2014. At September 30, 2015 long-term loans receivable represented approximately 46.4% of total loans receivable compared to 20.4% at December 31, 2014. These increases may be an indication that property owners are finding it more difficult to sell or refinance their properties. Our loans are also subject to risks of borrower defaults, bankruptcies, fraud, losses and special hazard losses that are not covered by standard hazard insurance. In the event of a default, we bear the risk of loss of principal and non-payment of interest and fees to the extent of any deficiency between the value of the mortgage collateral and the principal amount and unpaid interest of the loan. To the extent we (or Funding) suffer such losses with respect to our loans, our enterprise value and the price of our securities may be adversely affected. In the case of Funding, such losses could adversely impact the price of the Notes as well as Funding’s ability to make payments on the Notes.

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We may be subject to “lender liability” claims. Our financial condition could be materially and adversely impacted if we were to be found liable and required to pay damages.

In recent years, a number of judicial decisions have upheld the right of borrowers to sue lenders on the basis of various evolving legal theories, collectively termed “lender liability.” Generally, lender liability is founded on the premise that a lender has either violated a duty, whether implied or contractual, of good faith and fair dealing owed to the borrower or has assumed a degree of control over the borrower resulting in the creation of a fiduciary duty owed to the borrower or its other creditors or shareholders. We cannot assure you that such claims will not arise or that we will not be subject to significant liability if a claim of this type did arise.

An increase in the rate of prepayment of outstanding loans may have an adverse impact on the value of our portfolio as well as our revenue and income.

The value of our loan portfolio may be affected by prepayment rates and a significant increase in the rate of prepayments could have an adverse impact on our operating results. Prepayment rates cannot be predicted with certainty and no strategy can completely insulate us from prepayment or other such risks. In periods of declining interest rates, prepayment rates on mortgage and other real estate-related loans generally increase. Proceeds of prepayments received during such periods are likely to be reinvested by us in new loans yielding less than the yields on the loans that were prepaid, resulting in lower revenues and possibly, lower profits. A portion of our loan portfolio requires prepayment fees if a loan is prepaid. However, there can be no assurance that these fees will make us whole for the detriment incurred by virtue of the prepayment.

The lack of liquidity in our portfolio may adversely affect our business.

The illiquidity of our loan portfolio may make it difficult for us to sell such assets if the need or desire arises. As a result, if we are required to liquidate all or a portion of our portfolio quickly, we may realize significantly less than the outstanding loan balance.

The geographic concentration of our loan portfolio may make our revenues and the values of the mortgages and real estate securing our portfolio vulnerable to adverse changes in economic conditions in the New York metropolitan area.

Under our current business model, we have one asset class — mortgage loans that we originate, service and manage — and we have no current plans to diversify. Moreover, most of our collateral is located in a limited geographic area. At December 31, 2014, except for one loan in the original principal amount of $30,000, all of our outstanding loans are secured by properties located in the New York metropolitan area. A lack of geographical diversification makes our mortgage portfolio more sensitive to local and regional economic conditions. A significant decline in the New York metropolitan area economy could result in a greater risk of default compared with the default rate for loans secured by properties in other geographic locations. This could result in a reduction of our revenues and provision for loan loss allowances, which might not be as acute if our loan portfolio were more geographically diverse. Therefore, our loan portfolio is subject to greater risk than other real estate finance companies that have a more diversified asset base and broader geographic footprint. To the extent that our portfolio is concentrated in one region and/or one type of asset, downturns relating generally to such region or type of asset may result in defaults on a number of our assets within a short time period, which may reduce our net income and the value of our Securities and accordingly reduce our ability to make distributions to our shareholders.

A prolonged economic slowdown, a lengthy or severe recession or declining real estate values could impair our investments and harm our operations.

A prolonged economic slowdown, a recession or declining real estate values could impair the performance of our assets and harm our financial condition and results of operations, increase our funding costs, limit our access to the capital markets or result in a decision by lenders not to extend credit to us. Thus, we believe the risks associated with our business will be more severe during periods of economic slowdown or recession because these periods are likely to be accompanied by declining real estate values. Declining real estate values are likely to have one or more of the following adverse consequences:

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• reduce the level of new mortgage and other real estate-related loan originations since borrowers often use appreciation in the value of their existing properties to support the purchase or investment in additional properties;

• make it more difficult for existing borrowers to remain current on their payment obligations; and

• significantly increase the likelihood that we will incur losses on our loans in the event of default because the value of our collateral may be insufficient to cover our cost on the loan.

Any sustained period of increased payment delinquencies, foreclosures or losses could adversely affect both our net interest income from loans in our portfolio as well as our ability to originate new loans, which would materially and adversely affect our results of operations, financial condition, liquidity and business and our ability to make distributions to our shareholders.

We do not carry any loan loss reserves. If we are required to write-off all or a portion of any loan in our portfolio, our net income will be adversely impacted. Loan loss reserves are particularly difficult to estimate in a turbulent economic environment.

Based on our experience and our periodic evaluation of our loan portfolio, we have not deemed it necessary to create any loan loss reserves. Thus, a loss with respect to all or a portion of a loan in our portfolio will have an immediate and adverse impact on our net income. The valuation process of our loan portfolio requires us to make certain estimates and judgments, which are particularly difficult to determine during a period in which the availability of real estate credit is limited and real estate transactions have decreased. These estimates and judgments are based on a number of factors, including projected cash flows from the collateral securing our mortgage loans, if any, loan structure, including the availability of reserves and recourse guarantees, likelihood of repayment in full at the maturity of a loan, the relative strength or weakness of the refinancing market and expected market discount rates for varying property types. If our estimates and judgments are not correct, our results of operations and financial condition could be severely impacted.

Our due diligence may not reveal all of a borrower’s liabilities and may not reveal other weaknesses in its business.

Before making a loan to a borrower, we assess the strength and skills of such entity’s management and other factors that we believe are material to the performance of the loan. In making the assessment and otherwise conducting customary due diligence, we rely on the resources available to us and, in some cases, services provided by third parties. This process is particularly important and subjective with respect to newly organized entities because there may be little or no information publicly available about the entities. There can be no assurance that our due diligence processes will uncover all relevant facts or that the borrower’s circumstances will not change after the loan is funded. In either case, this could adversely impact the performance of the loan and our operating results.

Our loans are usually made to entities to enable them to acquire, develop or renovate residential or commercial property, which may involve a greater risk of loss than loans to individual owners of residential real estate.

We make loans to corporations, partnerships and limited liability companies who are looking to purchase, renovate and/or improve residential or commercial real estate held for resale or investment. More often than not, the property is under-utilized, poorly managed, or located in a recovering neighborhood. These loans may have a higher degree of risk than loans to individual property owners with respect to their primary residence or to owners of commercial operating properties because of a variety of factors. For instance, our borrowers usually do not have the need to occupy the property, or an emotional attachment to the property as borrowers of owner-occupied residential properties typically have, and therefore they do not always have the same incentive to avoid foreclosure. Similarly, in the case of non-residential property, a majority of the properties securing our loans have little or no cash flow. If the neighborhood in which the asset is located fails to recover according to the borrower’s projections, or if the borrower fails to improve the quality of the property’s performance and/or the value of the property, the borrower may not receive a sufficient return on the property to satisfy the loan, and we bear the risk that we may not recover some or all of our principal. Finally, there are difficulties associated with collecting debts from entities that may be judgment proof. While

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we try to mitigate these risks in various ways, including by getting personal guarantees from the principals of the borrower, we cannot assure you that these lending and credit enhancement strategies will be successful.

Volatility of values of residential and commercial properties may adversely affect our loans and investments.

Residential and commercial property values 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 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, such as what we have experienced in recent years (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 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 of a decline in the value of a property securing one of our loans, the borrower may have difficulty repaying our loan, which could result in losses to us. In addition, decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay our loans, which could also cause us to suffer losses.

Our inability to promptly foreclose on defaulted loans could increase our costs and/or losses.

The performance of first mortgage loans may depend on the performance of the underlying real estate collateral. In particular, mortgage loans secured by property held for investment or resale are subject to risks of delinquency and foreclosure, and risks of loss that are greater than similar risks associated with loans secured by owner-occupied residential properties. The ability of a borrower under a first mortgage loan to repay a loan secured by an income-producing property typically depends primarily on the successful operation of such property rather than upon the existence of independent income or assets of the borrower. If the net operating income of the property is reduced, the borrower’s ability to repay the loan is impaired and the borrower defaults, we may lose all or substantially all of our investment. If the property is not income producing, as is the case with most of our loans, the risks are even greater. While we have certain rights with respect to the real estate collateral underlying a first mortgage loan, and rights against the borrower and guarantor(s), in the event of a default there are a variety of factors that may inhibit our ability to enforce our rights to collect the loan, whether through a non-payment action against the borrower, a foreclosure proceeding against the underlying property or a collection or enforcement proceeding against the guarantor. These factors include, without limitation, state foreclosure timelines and deferrals associated therewith (including with respect to litigation); unauthorized occupants living in the property; federal, state or local legislative action or initiatives designed to provide residential property owners with assistance in avoiding foreclosures and that serve to delay the foreclosure process; government programs that require specific procedures to be followed to explore the refinancing of a residential mortgage loan prior to the commencement of a foreclosure proceeding; and continued declines in real estate values and sustained high levels of unemployment that increase the number of foreclosures and place additional pressure on the already overburdened judicial and administrative systems.

None of our loans are funded with interest reserves and our borrowers may be unable to pay the interest accruing on the loans when due, which could have a material adverse impact on our financial condition.

Our loans are not funded with an interest reserve. Thus, we rely on the borrowers to make interest payments as and when due from other sources of cash. Given the fact that most of the properties securing our loans are not income producing or even cash producing and most of the borrowers are entities with no assets other than the single property that is the subject of the loan, some of our borrowers have considerable difficulty servicing our loans and the risk of a non-payment of default is considerable. We depend on the borrower’s ability to refinance the loan at maturity or sell the property for repayment. If the borrower is unable to repay the loan, together with all the accrued interest, at maturity, our operating results and cash flows would be materially and adversely affected. Foreclosure of a mortgage loan can be an expensive and lengthy process that could have a substantial negative effect on our anticipated return on the foreclosed

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mortgage loan. In addition, in the event of the bankruptcy of the borrower, we may not have full recourse to the assets of the borrower, or the assets of the borrower or the guarantor may not be sufficient to satisfy the debt.

Interest rate fluctuations could reduce our ability to generate income and may cause losses, which could adversely impact our ability to meet our obligations as the guarantor of the Notes.

Our primary interest rate exposure relates to the yield on our loan portfolio and the financing cost of our debt. Our operating results depend, in part, on differences between the interest income generated by our loan portfolio net of credit losses and our financing costs. Thus, changes in interest rates will affect our revenue and net income in one or more of the following ways:

• our operating expenses may increase;

• our ability to originate loans may be adversely impacted;

• to the extent we use our credit line or other forms of debt financing to originate loans, our borrowing costs would rise, reducing the “spread” between our cost of funds and the yield on our outstanding mortgage loans, which tend to be fixed rate obligations;

• a rise in interest rates may discourage potential borrowers from refinancing existing loans or defer plans to renovate or improve their properties;

• increase borrower default rates;

• negatively impact property values making our existing loans riskier and new loans that we originate smaller; and

• rising interest rates could also result in reduced turnover of properties which may reduce the demand for new mortgage loans.

If we incur losses on a sustained basis and Funding defaults on its obligations under the Notes, we may not be able to make the necessary payments required under the Notes in our capacity as guarantor. This may result in Noteholders losing all or a portion of their investment.

Liability relating to environmental matters may impact the value of properties that we may acquire or the properties underlying our investments.

Under various U.S. federal, state and local laws, an owner or operator of real property may become liable for the costs of removal of certain hazardous substances released on its property. These laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the release of such hazardous substances. The presence of hazardous substances may adversely affect an owner’s ability to sell real estate or borrow using real estate as collateral. To the extent that an owner of a property underlying one of our debt instruments becomes liable for removal costs, the ability of the owner to make payments to us may be reduced, which in turn may adversely affect the value of the relevant mortgage asset held by us and our ability to make distributions to our shareholders. If we acquire any properties by foreclosure or otherwise, the presence of hazardous substances on a property may adversely affect our ability to sell the property and we may incur substantial remediation costs, thus harming our financial condition. The discovery of material environmental liabilities attached to such properties could have a material adverse effect on our results of operations and financial condition and our ability to make distributions to shareholders.

Defaults on our loans may cause declines in revenues and net income.

Defaults by borrowers could result in one or more of the following adverse consequences:

• a decrease in interest income, profitability and cash flow;

• the establishment of or an increase in loan loss reserves;

• write-offs and losses;

• default under our credit facilities; and

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• an increase in legal and enforcement costs, as we seek to protect our rights and recover the amounts owed.

As a result, we will have less cash available for paying our other operating expenses and for making distributions to our shareholders. This would have a material adverse effect on the market value of our securities.

Our revenues and the value of our portfolio may be negatively affected by casualty events occurring on properties securing our loans.

We require our borrowers to obtain, for our benefit, all risk property insurance covering the property and any improvements to the property collateralizing our loan in an amount intended to be sufficient to provide for the cost of replacement in the event of casualty. However, the amount of insurance coverage maintained for any property may not be sufficient to pay the full replacement cost following a casualty event. Furthermore, there are certain types of losses, such as those arising from earthquakes, floods, hurricanes and terrorist attacks, that may be uninsurable or that may not be economically feasible to insure. Changes in zoning, building codes and ordinances, environmental considerations and other factors may make it impossible for our borrowers to use insurance proceeds to replace damaged or destroyed improvements at a property. If any of these or similar events occur, the amount of coverage may not be sufficient to replace a damaged or destroyed property and/or to repay in full the amount due on loans collateralized by such property. As a result, our returns and the value of our investment may be reduced.

Borrower concentration could lead to significant losses, which could have a material adverse impact on our operating results and financial condition.

From time to time, a single borrower or a group of affiliated borrowers may account for more than 10% of our loan portfolio. For example, as of December 31, 2013, two affiliated borrower groups accounted for an aggregate of 25.5% of our loan portfolio. In contrast, as of December 31, 2014, no single loan, borrower or group of affiliated borrowers represented more than 10% of our loan portfolio. A default by one borrower in a group is likely to result in a default by the other borrowers in the group. Concentration of loans to one borrower or a group of affiliated borrowers poses a significant risk, as default would have a material adverse impact on our operating results, cash flow, the Webster Credit Line, financial condition and our ability to service our debt.

Risks Related to REIT Status and Investment Company Act Exemption

We have minimal experience operating as a REIT or managing a portfolio of assets in the manner necessary to maintain an exemption under the Investment Company Act, which may hinder our ability to achieve our business objectives or result in the loss of our qualification as a REIT.

Until 2014, we operated as a taxable C-corporation subject to federal corporate income taxes. Beginning with our 2014 taxable year we qualified as a REIT and made the election to be taxed as such. While we continue to be profitable, we cannot assure you that we will be able to continue to operate our business successfully now that we must operate in conformity with REIT requirements. In addition to the customary business risks and uncertainties associated with any financing business, including the risk that we will not achieve our objectives, we are also faced with the restrictions and limitations that apply to REITs. If we fail to manage these risks properly, we may not be able to make interest payments on the Notes or repay the Notes when they mature.

The rules and regulations applicable to REITs under the Code are highly technical and complex and the failure to comply with these rules and regulations in a timely manner could prevent us from qualifying as a REIT or could force us to pay unexpected taxes and penalties. None of our executive officers have any experience managing a portfolio of assets under these complex rules and regulations or operating a business in compliance with the numerous technical restrictions and limitations set forth in the Code applicable to REITs. In addition, we will be required to develop and implement or invest in substantial control systems and procedures in order for us to maintain our qualification as a public REIT. As a result, we cannot assure you that we will be able to successfully operate as a REIT or comply with rules and regulations applicable to REITs, which would substantially reduce our earnings and may reduce the value of our securities. In addition,

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in order to maintain our exemption from registration under the Investment Company Act, the assets in our portfolio will be subject to certain restrictions, which will limit our operations meaningfully. Neither of our executive officers has any experience managing a portfolio in the manner necessary to maintain our exemption from registration under the Investment Company Act, and no experience managing a public company under the constraints imposed by the Investment Company Act.

We could be materially and adversely affected if we are deemed to be an investment company under the Investment Company Act.

We intend to conduct our business in a manner that will qualify for the exception from the Investment Company Act set forth in Section 3(c)(5)(C) of the Investment Company Act. The SEC generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). Any significant acquisition by us of non-real estate assets without the acquisition of substantial real estate assets could cause us to meet the definitions of an “investment company.” If we are deemed to be an investment company, we could be required to dispose of non-real estate assets or a portion thereof, potentially at a loss, in order to qualify for the 3(c)(5)(C) exception. We may also be required to register as an investment company if we are unable to dispose of the disqualifying assets, which could have a material adverse effect on us.

Registration under the Investment Company Act would require us to comply with a variety of substantive requirements that impose, among other things:

• limitations on capital structure;

• restrictions on specified investments;

• restrictions on leverage or senior securities;

• restrictions on unsecured borrowings;

• prohibitions on transactions with affiliates;

• compliance with reporting, record keeping, voting, proxy disclosure and other rules and regulations that would significantly increase our operating expenses.

If we were required to register as an investment company but failed to do so, we could be prohibited from engaging in our business, and criminal and civil actions could be brought against us.

Registration with the SEC as an investment company would be costly, would subject us to a host of complex regulations and would divert attention from the conduct of our business, which could materially and adversely affect us. In addition, if we purchase or sell any real estate assets to avoid becoming an investment company under the Investment Company Act, our net asset value, the amount of funds available for investment and our ability to pay distributions to our shareholders could be materially adversely affected.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. All statements other than statements of historical facts contained in this prospectus, including statements regarding our future results of operations and financial position, strategy and plans, and our expectations for future operations, are forward-looking statements. The words “anticipate,” “estimate,” “expect,” “project,” “plan,” “seek,” “intend,” “believe,” “may,” “might,” “will,” “should,” “could,” “likely,” “continue,” “design,” and the negative of such terms and other words and terms of similar expressions are intended to identify forward-looking statements.

We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our and Funding’s financial condition, results of operations, strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in “Risk Factors.” In light of these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. In addition, neither we nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. We disclaim any duty to update any of these forward-looking statements after the date of this prospectus to confirm these statements in relationship to actual results or revised expectations.

All forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements as well as others made in this prospectus. You should evaluate all forward-looking statements made by us in the context of these risks and uncertainties.

USE OF PROCEEDS

We estimate that the net proceeds from the issuance and sale of the Notes will be approximately $     million (or approximately $     million if the representative exercises its over-allotment option in full) after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us.

Funding will use the net proceeds of this offering to purchase from us a pool of mortgage loans, originated and funded by us, each of which is secured by first priority liens on real property, free and clear of all liens and other security interests. Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by Funding, together with Funding’s cash on hand, must always equal at least 120% of the aggregate outstanding principal amount of the Notes at all times. To the extent the aggregate principal amount of the mortgage loans owned by Funding plus Funding’s cash on hand is less than 120% of the aggregate outstanding principal balance of the Notes, Funding is required to repay, on a quarterly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by Funding plus, Funding’s cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. For this purpose, each mortgage loan is deemed to have a value equal to its outstanding principal balance, unless the borrower is in default of its obligations.

Initially, we intend to use the net proceeds that we will receive from Funding as consideration for the mortgage loans described in the preceding paragraph to pay down the outstanding balance on the Webster Credit Line. As of September 30, 2015, the outstanding balance on the Webster Credit Line was $10.1 million and an additional $3.9 million is available for future borrowings. The maturity date of the Webster Credit Line is February 27, 2018. To the extent we use the net proceeds of this offering to pay down the outstanding balance on the Webster Credit Line, the amount available for future borrowings will increase.

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CAPITALIZATION

The following table sets forth our consolidated debt and shareholders’ equity as of September 30, 2015:

• on an actual basis; and

• on a pro forma, as adjusted basis to give effect to (i) our issuance of 39,550 common shares after September 30, 2015 upon exercise of warrants and options and our receipt of $101,822 of gross proceeds in connection therewith and (ii) the sale of the Notes offered under the terms set forth in this prospectus.

You should read this table together with the information contained in this prospectus, including the historical financial statements and related Notes included elsewhere in this prospectus.

	As of September 30, 2015
	(Actual)			(Pro Forma, As Adjusted)
Debt:
Line of credit	$	10,098,083
Short term loans		1,095,620
Total Debt		11,193,703
Shareholders’ equity:
Preferred shares, $0.01 par value, 5,000,000 shares authorized, no shares issued		—		$	—
Common shares, $0.001 par value, 25,000,000 shares authorized; 7,401,489 shares issued and 7,224,489 outstanding actual and pro forma; and      shares issued and      shares outstanding, pro forma as adjusted(1)		7,401
Additional paid in capital		18,395,326
Treasury shares, at cost, 177,000 common shares		(369,335	)
Retained earnings		207,166
Total shareholders’ equity		18,240,558		$
Total capitalization	$	29,434,261		$

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION

The following tables summarize our consolidated financial data for the periods indicated. You should read the following financial information together with the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the notes to those consolidated financial statements appearing elsewhere in this prospectus. The selected consolidated balance sheet data as of September 30, 2015 and the selected consolidated statements of operations and cash flow data for the nine months ended September 30, 2015 and 2014 were derived from our unaudited consolidated financial statements included elsewhere in this prospectus. The following selected historical consolidated financial information are qualified in their entirety by reference to, and should be read in conjunction with, our audited consolidated financial statements and related notes and the information under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other financial information included in this prospectus. Historical results included below and elsewhere in this prospectus are not necessarily indicative of our future performance and the results for any interim period are not necessarily indicative of the operating results to be expected for the full fiscal year.

Operating data:

	Year Ended December 31,				Nine Months Ended September 30,
	2014		2013		2015		2014
	(audited)				(unaudited)
Interest income from loans	$	2,401,150	$	1,858,033	$	2,392,329	$	1,657,076
Origination fees	$	502,515	$	401,514	$	463,092	$	347,637
Total revenue	$	2,903,665	$	2,259,547	$	2,855,421	$	2,004,713
Interest and amortization of debt service costs	$	563,368	$	442,661	$	493,652	$	383,721
General and administrative expenses	$	876,906	$	837,788	$	696,464	$	554,631
Total operating costs and expenses	$	1,442,518	$	1,282,128	$	1,193,376	$	939,401
Income from operations	$	1,461,147	$	977,419	$	1,662,045	$	1,065,312
Net income	$	1,454,505	$	582,967	$	1,645,040	$	1,058,264
Net income per common share outstanding  – basic	$	0.29	$	0.14	$	0.25	$	0.23
– diluted	$	0.29	$	0.14	$	0.25	$	0.22
Weighted average number of common shares outstanding:
– Basic		5,028,645		4,269,169		6,597,987		4,680,340
– Diluted		5,058,421		4,289,818		6,637,755		4,727,966

Balance Sheet Data:

	December 31, 2014		September 30, 2015
	(audited)		(unaudited)
Cash and cash equivalents	$	47,676	$	61,144
Short term loans receivable	$	19,138,426	$	15,633,990
Total current assets	$	19,426,863	$	16,072,086
Long term loans receivable	$	4,894,050	$	13,510,050
Total assets	$	24,444,317	$	29,772,987
Short term loans	$	2,469,465	$	1,095,620
Line of credit	$	7,700,000	$	10,098,083
Total liabilities, all current	$	10,577,863	$	11,532,429
Retained earnings	$	113,346	$	207,166
Total stockholders’ equity	$	13,866,454	$	18,240,558

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Cash flow data:

	Year Ended December 31,						Nine Months Ended September 30,
	2014			2013			2015			2014
	(audited)						(unaudited)
Net cash provided by operating activities	$	1,278,450		$	785,757		$	1,496,852		$	782,778
Net cash used in investing activities	$	(9,209,793	)	$	(1,070,584	)	$	(5,115,038	)	$	(8,308,384	)
Net cash provided by financing activities	$	6,957,996		$	1,065,157		$	3,631,654		$	6,564,666
Cash and cash equivalents, end of period	$	47,676		$	1,021,023		$	61,144		$	60,083

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

We are a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. We offer short-term, secured, non-banking loans (sometimes referred to as “hard money” loans), which we may renew or extend on, before or after their initial term expires, to real estate investors to fund their acquisition, renovation, rehabilitation or development of residential or commercial properties located in the New York metropolitan area. We are organized and conduct our operations to qualify as a REIT for federal income tax purposes. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. As a REIT, we are required to distribute at least 90% of our taxable income to our shareholders on an annual basis.

The properties securing our loans are generally classified as residential or commercial real estate and, typically, are held for resale or investment and typically, are not income producing. Each loan is secured by a first mortgage lien on real estate. In addition, each loan is personally guaranteed by the principal(s) of the borrower guaranty, which guaranty may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The face amounts of the loans we originate historically have ranged from $14,000 to a maximum of $1,475,000. Our board of directors established a policy limiting the maximum amount of any loan to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $1.5 million. Our loans typically have a maximum initial term of 12 months and bear interest at a fixed rate of 12% to 15% per year. In addition, we usually receive origination fees, or “points,” ranging from 1% to 3% of the original principal amount of the loan as well as other fees relating to underwriting, funding and managing the loan. Interest is always payable monthly, in arrears. In the case of acquisition financing, the principal amount of the loan usually does not exceed 75% of the value of the property (as determined by an independent appraiser), and in the case of construction financing, up to 80% of construction costs.

For the nine month periods ended September 30, 2015 and 2014 total amounts funded were $15,346,500 and $18,827,000, respectively, while principal payments received from borrowers during those periods were $10,234,936 and $10,518,616, respectively.

We use our own employees, outside lawyers and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers are also used to assist us in evaluating the worth of collateral. To date, we have not experienced any defaults and none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not go into default or prove to be non-collectible in the future.

We generally grant loans for a term of one year. When a performing loan reaches its maturity and the borrower requests an extension we may extend the term of the loan beyond one year and reclassify it as part of long term loans receivable. Prior to granting an extension of any loan, we reevaluate the underlying collateral.

At September 30, 2015, we were committed to an additional $1,820,000 in construction loans that can be drawn by the borrower when certain conditions are met.

In July 2014, we completed a public offering of 1,754,386 common shares. The gross proceeds from the offering were $5.0 million and the net proceeds were approximately $4.3 million, after deducting our underwriting discounts and commissions and offering expenses. As a result of this offering, we satisfied all of the requirements to be taxed as a REIT. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. In order to maintain our qualification as a REIT and avoid any excise tax on our net taxable income, we are required to distribute each year at least 90% of our taxable income. If we distribute less than 100% of our taxable income (but more than 90%), the undistributed portion will be taxed at the regular corporate income tax rates. As a REIT, we may also be subject to federal excise taxes and minimum state taxes.

On May 29, 2015, we completed another public offering of 1,015,000 common shares. In June 2015, the underwriter partially exercised its over-allotment option for an additional 105,000 common shares. The gross proceeds from the offering, including the partial exercise of the over-allotment option, were approximately

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$4.92 million and the net proceeds were approximately $4.2 million, after deducting our underwriting discounts and commissions and offering expenses.

On February 27, 2015, we repaid and terminated our Sterling Credit Line, as described in “Liquidity and Capital Resources” below, and replaced it with the Webster Credit Line, as described in “Liquidity and Capital Resources” below, pursuant to which we may borrow up to $14 million during the next three years. The Webster Credit Line provides for an interest rate of either LIBOR plus 4.75% or Webster’s base commercial lending rate plus 3.25%, as chosen by us for each drawdown, and expires on February 27, 2018. The credit line is secured by assignment of mortgages and other collateral and is guaranteed by Assaf Ran, our chief executive officer.

We organized Funding on December 7, 2015, specifically for the purpose of this transaction. Other than that, prior to issuance of the Notes, Funding has no assets or liabilities and is not engaged in any trade or business. Our chief executive officer and chief financial officer will be the chief executive officer and chief financial officer, respectively, of Funding. Funding will not be charged for their services. Assaf Ran, our chief executive officer, chairman of the board, founder and controlling shareholder, will be the sole director of Funding. At this time, we do not contemplate that Funding will have any other shareholders, employees, officers or directors. We intend to treat Funding as a “qualified REIT subsidiary” for federal income tax purposes. As such, Funding will not be treated as a separate corporation for purposes of determining whether we qualify and operate as a REIT for U.S. federal income tax purposes. Essentially, for purposes of determining whether we qualify and operate as a REIT, Funding will be disregarded as a separate entity and all assets, liabilities and items of income, deduction and credit of Funding will be treated as our assets, liabilities and items of income, deduction and credit. Funding is not required to pay federal income tax, and our ownership of the all of the stock of Funding does not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the voting power or value of the issuer’s securities or more than 5% of the value of our total assets.

Critical Accounting Policies and Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) a preset number of assumptions that consider past experience, (b) future projections, and (c) general financial market conditions. Actual amounts could differ from those estimates.

We recognize revenues in accordance with ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, we recognize revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or services have been rendered, (iii) the sales price charged is fixed or determinable, and (iv) collectability is reasonably assured.

Interest income from commercial loans is recognized, as earned, over the loan period.

Origination fee revenue on commercial loans is amortized over the term of the respective note.

We continually monitor events and changes in circumstances that could indicate that the carrying amounts of long lived assets, including intangible assets and goodwill, may not be recoverable. When such events or changes in circumstances occur, we assess the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets.

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Results of Operations

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Revenue

Total revenue for the nine-month period ended September 30, 2015 was approximately $2,855,000 compared to approximately $2,005,000 for the nine-month period ended September 30, 2014, an increase of $850,000, or 42.4%. The increase in revenue represents an increase in lending operations. For the nine month periods ended September 30, 2015 and 2014, revenue of approximately $2,392,000 and $1,657,000, respectively, was attributable to interest income on the secured commercial loans that we offer to small businesses, and approximately $463,000 and $348,000, respectively, was attributable to origination fees on such loans. Our loans are principally secured by collateral consisting of real property and, generally, accompanied by personal guarantees.

Interest and amortization of debt service costs

Interest and amortization of debt service costs for the nine-month period ended September 30, 2015 were approximately $494,000 compared to approximately $384,000 for the nine-month period ended September 30, 2014, an increase of $110,000, or 28.6%. The increase in interest and amortization of debt service costs was primarily attributable to the establishment of the Webster Credit Line and our use of the lines of credit available to us in order to increase our ability to make loans.

General and administrative expenses

General and administrative expenses for the nine-month period ended September 30, 2015 were approximately $696,000 compared to approximately $555,000 for the nine-month period ended September 30, 2014, an increase of $141,000 or 25.4%. The increase is primarily attributable to a special bonus to officers for establishing the Webster Credit Line and increases in payroll, consulting, banking, travel and meal expenses.

Other income

Other income for the nine month periods ended September 30, 2015 and 2014, was $0 and approximately $21,000, respectively, which represents the fees generated from the remaining seller buy back option in 2014. This option was fully exercised by the option holder in October 2014.

Write-down of investment in privately held company

Write-down of investment in privately held company for the nine month periods ended September 30, 2015 and 2014 was $15,000 and $0, respectively. In 2015, we wrote down the value of our investment in a privately held company due to the fact that it has experienced delays in executing its business plan.

Income tax expense

We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. For the nine month periods ended September 30, 2015 and 2014, we had income tax expenses of approximately $2,000 and $28,000, respectively. In 2015, the income tax expense represents the minimum state taxes. In 2014, the income tax expense was primarily due to our determination that we under accrued 2013 income tax expense.

Years Ended December 31, 2014 and 2013

Revenue

Total revenue for the year ended December 31, 2014 was approximately $2,904,000 compared to approximately $2,260,000 for the year ended December 31, 2013, an increase of $644,000, or 28.5%. The increase in revenue represents an increase in lending operations. In 2014, approximately $2,401,000 of our revenue represented interest income on secured, real estate loans that we offer to small businesses compared to approximately $1,858,000 in 2013, and approximately $503,000 represents origination fees on such loans compared to approximately $402,000 in 2013. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses.

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Interest and amortization of debt service costs

Interest and amortization of debt service costs for the year ended December 31, 2014 were approximately $563,000 compared to approximately $443,000 for the year ended December 31, 2013, an increase of $120,000 or 27.1%. The increase in interest and amortization of debt service costs was primarily attributable to our use of the Sterling Credit Line (described in “Liquidity and Capital Resources” below).

General and administrative expenses

General and administrative expenses for the year ended December 31, 2014 were approximately $877,000 compared to approximately $838,000 for the year ended December 31, 2013, an increase of $39,000 or 5%. The increase is primarily attributable to an excise tax in the amount of $14,000 on undistributed income in connection with becoming a REIT and increases in consulting fees and in customer relationship expenses, which were offset by decreases in travel expense and in board member fees.

Other income

Other income for the year ended December 31, 2014 was approximately $21,000 compared to approximately $28,000 for the year ended December 31, 2013. Other income represents the fees generated from the seller buy back options.

Write-down of investment in privately held company

Write-down of investment in privately held company was $0 and $35,000 for the years ended December 31, 2014 and 2013, respectively. In 2013, we wrote down the value of our investment due to the fact that the privately held company experienced delays in executing its business plan.

Income before income tax expense

Income before provision for income tax for the year ended December 31, 2014 was approximately $1,482,000 compared to approximately $970,000 for the year ended December 31, 2013, an increase of $512,000 or 52.8%. This increase is primarily attributable to the increase in revenue, offset by the increase in interest expense.

Income tax expense

Income tax expense, including interest and penalties, for the year ended December 31, 2014 was approximately $28,000 compared to $387,000 for the year ended December 31, 2013. The income tax expense for the year ended December 31, 2014, represents the under accrual of the prior year’s income tax expense.

As a REIT, we are entitled to claim deductions for distributions of taxable income to our shareholders thereby eliminating any corporate tax on such taxable income. Any taxable income not distributed to shareholders is subject to tax at the regular corporate tax rates and may also be subject to a 4% exercise tax to the extent it exceeds 10% of our total taxable income.

Liquidity and Capital Resources

At September 30, 2015, we had cash and cash equivalents of approximately $61,000 and working capital of approximately $4,540,000 as compared to cash and cash equivalents of approximately $48,000 and working capital of $8,849,000 at December 31, 2014. The decrease in working capital is primarily attributable to the reclassification of a portion of short-term loans to long-term loans receivable. At September 30, 2015, our long-term loans receivable represents 46.36% of our loan portfolio, compared to 20.36% at December 31, 2014.

For the nine month periods ended September 30, 2015 and 2014, net cash provided by operating activities was approximately $1,497,000 and $783,000, respectively. The increase in net cash provided by operating activities in the nine-month periods primarily resulted from an increase in net income, offset by an increase in interest receivable on loans and a decrease in accounts payable and accrued expenses.

For the years ended December 31, 2014 and 2013, net cash provided by operating activities was approximately $1.3 million and $786,000, respectively. The increase in net cash provided by operating activities primarily resulted from increases in net income, in accounts payable and accrued expenses, and in deferred origination fees, offset by a decrease in income taxes payable and an increase in interest receivable on loans.

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Net cash used in investing activities for the nine-month period ended September 30, 2015 was approximately $5,115,000 as compared to approximately $8,308,000 for the period ended September 30, 2014. Net cash used in investing activities for the nine-month period ended September 30, 2015 consisted of the issuance of our short term commercial loans in the amount of approximately $15,347,000 and the purchase of fixed assets of approximately of $3,000, offset by collection of these loans in the amount of approximately $10,235,000. In the period ended September 30, 2014 net cash used in investing activities consisted of the issuance of our short term commercial loans in the amount of $18,827,000, offset by collection of these loans in the amount of approximately $10,519,000.

For the year ended December 31, 2014 net cash used in investing activities was approximately $9.2 million, compared to approximately $1.1 million for the year ended December 31, 2013. Net cash used in investing activities for the year ended December 31, 2014, consisted of the issuance of our short term real estate loans in the amount of approximately $22.6 million and the purchase of fixed assets of approximately of $19,000, offset by collection of our real estate loans in the amount of approximately $13.2 million and the proceeds from exercise of option of approximately $147,000. Net cash used in investing activities for the year ended December 31, 2013, consisted of the issuance of our short term commercial loans in the amount of approximately $15.2 million, offset by collection of these loans in the amount of approximately $14.1 million.

Net cash provided by financing activities for the nine-month period ended September 30, 2015 was approximately $3,632,000 as compared to approximately $6,565,000 for the period ended September 30, 2014. Net cash provided by financing activities for the nine month period ended September 30, 2015 reflects the net proceeds from the public offering of approximately $4,237,000, the proceeds from lines of credit and short-term loans in the net amount of approximately $1,024,000 and the proceeds from the exercise of stock options and warrants of approximately $33,000, offset by the dividend payment of approximately $1,551,000, and the deferred financing costs on the establishment of the Webster Credit Line in the amount of approximately $111,000. In the period ended September 30, 2014, net cash provided by financing activities reflects the net proceeds from the public offering of approximately $4,289,000, the proceeds from the Sterling Credit Line and short-term loans in the amount of $2,650,000 and the proceeds from exercise of stock options of approximately $55,000, offset by dividend payments of approximately $429,000.

For the year ended December 31, 2014 net cash provided by financing activities was approximately $7.0 million, compared to approximately $1.1 million for the year ended December 31, 2013. Net cash provided by financing activities for the year ended December 31, 2014 reflects draw downs on the Sterling Credit Line of approximately $2.4 million, the proceeds of four short term loans in the aggregate amount of approximately $1.2 million received by us, the net proceeds from the July 2014 Public Offering of approximately $4.3 million, and the proceeds from exercise of stock options of approximately $55,000, offset by the dividend payments of approximately $853,000 and the deferred financing costs on the establishment of Webster Credit Line in the amount of approximately $33,000. Net cash provided by financing activities for the year ended December 31, 2013 reflects the use of the Sterling Credit Line of $1.9 million, the proceeds of a short term loan of $160,000 received by us, and the proceeds from exercise of stock options of approximately $23,000, offset by the repayments of senior secured notes of $500,000 and one of our short term loans of $240,000, the purchase of treasury shares of approximately $99,000 and the dividend payments of approximately $128,000.

On February 27, 2015, we entered into a Credit and Security Agreement with Webster Business Credit Corporation (“Webster”) pursuant to which we may borrow up to $14 million until February 27, 2018 (the “Webster Credit Line”) against assignments of mortgages and other collateral. The Webster Credit Line provides for an interest rate of either LIBOR plus 4.75% or the base commercial lending rate of Webster plus 3.25% as chosen by us for each drawdown. The Webster Credit Line contains various covenants and restrictions, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers. Mr. Ran, has personally guaranteed all of our obligations to Webster.

The Webster Credit Line replaced the $7.7 million credit facility (the “Sterling Credit Line”) with Sterling National Bank (“Sterling”). We paid off the entire balance due to Sterling with proceeds from the Webster Credit Line and terminated the Sterling Credit Line on February 27, 2015. In addition, we utilized the

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Webster Credit Line to repay in full loans from Mr. Ran in the aggregate amount of $1,100,000, as well as two short-term loans, outstanding at December 31, 2014, in the aggregate amount of $1,000,000, bearing interest at the rate of 12% per annum. At September 30, 2015, the outstanding amount under the Webster Credit Line was $10.1 million. The interest rate on the amount outstanding fluctuates daily. For example, the rate for December 16, 2015 was 5.0945%.

Until our initial public offering in 1999, our principal source of funds was cash flow from operations, which funded both our working capital needs and capital expenditures. In May 1999 we completed our initial public offering in which we raised net proceeds of approximately $6.4 million.

In 2010, we raised $500,000 through the sale of senior secured notes, which have since been repaid. In addition, over the last six years we have raised approximately $8.7 million from the sale of short- and medium-term notes, of which $2.47 million and $1.1 million principal amount was outstanding at December 31, 2014 and at September 30, 2015, respectively. All of these notes will become due and payable at various dates on or before September 1, 2016.

In July 2014, we completed a public offering of 1,754,386 common shares. The gross proceeds from the offering were $5.0 million and the net proceeds were approximately $4.3 million, after deducting our underwriting discounts and commissions and offering expenses. As a result of the July 2014 public offering, we satisfy all of the requirements to be taxed as a REIT. We elected to be taxed as a REIT commencing with our taxable year ended December 31, 2014. In order to maintain our qualification as a REIT and avoid any excise tax on our net taxable income, we are required to distribute each year at least 90% of our taxable income. If we distribute less than 100% of our taxable income (but more than 90%), the undistributed portion will be taxed at the regular corporate income tax rates. As a REIT, we may also be subject to federal excise taxes and minimum state taxes.

On May 29, 2015, we completed another public offering of 1,015,000 common shares. In June 2015, the underwriter partially exercised its over-allotment option for an additional 105,000 common shares. The gross proceeds from the offering, including the partial exercise of the over-allotment option, were approximately $4.9 million and the net proceeds were approximately $4.2 million, after deducting our underwriting discounts and commissions and offering expenses.

We anticipate that our current cash balances and the Webster Credit Line, as described above, together with our cash flows from operations will be sufficient to fund our operations for the next 12 months. However, we expect our working capital requirements to increase over the next 12 months as we continue to strive for growth.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of our requirements for capital resources.

Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2014:

Contractual Obligations	Total		Less than 1 Year		1 – 3 Years		3 – 5 Years		More than 5 years
Operating Lease Obligations(*)	$	69,500	$	41,400	$	28,100	$	—	$	—

(*) Operating lease obligations include utilities payable to the landlord under the lease.

Recent Technical Accounting Pronouncements

In January 2015, the FASB issued ASU 2015-01, “Income Statement - Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates the separate presentation of extraordinary items but does not change the requirement to disclose material items that are unusual or infrequent in nature. The ASU is effective for fiscal years beginning after December 15, 2015, as well as interim periods within those fiscal years. The

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ASU may be applied retrospectively to all prior periods presented in the financial statements, and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, “Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. Under the ASU, an entity presents debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The ASU is effective for public entities for fiscal years beginning after December 15, 2015, and interim periods therein. For private companies and not-for-profit organizations, the ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the Emerging Issues Task Force)”. The ASU provides reporting entities with an option to measure the fair value of certain investments using net asset value instead of fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU 2015-15, “Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. The ASU incorporates the SEC staff’s announcement that clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03. Therefore, debt issuance costs related to line-of-credit arrangements can be deferred and presented as an asset that is subsequently amortized over the time of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The ASU should be adopted concurrent with adoption of ASU 2015-03. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on our consolidated financial statements.

Quantitative and qualitative disclosures about market risk

We seek to manage our risks related to the credit quality of our loan portfolio, interest rates and liquidity while, at the same time, seeking to provide an opportunity to shareholders to realize attractive risk-adjusted returns through ownership of our capital stock. While we do not seek to avoid risk completely, we believe the risk can be quantified and seek to actively manage that risk to earn sufficient compensation to justify taking those risks and to maintain capital levels consistent with the risks we undertake. Our analysis of risks is based on our experience, estimates and assumptions. Actual economic conditions or implementation of our decisions may produce results that differ significantly from the estimates and assumptions used in our models and our historical operating results as shown in this prospectus.

Credit risk management

Through our underwriting and lending strategy, we seek to limit our credit losses. To date, we have never had a default. Nevertheless, we retain the risk of potential credit losses on all of our outstanding loans. We seek to manage this risk through employment of our extensive due diligence and rigorous underwriting processes and standards and through the judicious use of leverage. With respect to any particular loan transaction, we may, to the extent applicable and feasible, perform one or more of the following: (i) property level underwriting, including an extensive review of the property history, (ii) a market review, including a review of the existing/projected supply and demand characteristics of the particular market, including competitive property analysis, recent leases/trends, projected valuation compared to recent sales, and replacement cost analysis; (iii) borrower analysis, and (iv) cash flow analysis. In addition to taking a first mortgage lien on the property to secure the loan, we enhance our security with personal guaranties from the

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principals of the borrower, which, in turn, are collaterally secured by a pledge of the guarantors’ interests in the borrower. Our chief executive officer is responsible, either directly or indirectly through third parties, for conducting the due diligence, evaluating the credit-worthiness of an applicant and for setting the terms of the loan. Following funding of the loan, we monitor borrower performance and compliance with the terms of the loan. To the extent we detect any potential credit or legal risks that may be mitigated or resolved prior to impairment of the loan we look to take immediate remedial action.

Liquidity risk management

Liquidity risk is the risk of being unable to preserve stable, reliable, and cost-effective funding sources to meet all near-term and projected long-term financial obligations. In addition to the equity funding provided by our shareholders, our external funding sources consists primarily of the Webster Credit Line ($14 million), which enables us to draw funds on an as-needed basis at a relatively low interest rate — either LIBOR plus 4.75% or the base commercial lending rate of Webster plus 3.25% as chosen by us for each drawdown. The Webster Credit Line contains various covenants and restrictions, including limiting the amount that we can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans we make to our customers. The Webster Credit Line becomes fully payable on February 27, 2018. Assaf Ran, our chief executive officer, has personally guaranteed all of our obligations to Webster.

Interest rate risk

Interest rates are highly sensitive to many factors, including fiscal and monetary policies and domestic and international economic and political considerations, as well as other factors beyond our control. We will be subject to interest rate risk in connection with our loan portfolio as well as with our indebtedness. In general, we expect to originate loans with the net proceeds from this offering and draw downs on the Webster Credit Line. We mitigate interest rate risk by lending on a short-term basis at relatively high interest rates. Nevertheless, in the event of a significant rising interest rate environment and/or economic downturn, delinquencies and defaults could increase and result in loan losses to us, which could adversely affect our liquidity and operating results. Further, such delinquencies or defaults could have an adverse effect on the spread between the yield on our loan portfolio and our borrowing costs.

Our operating results will depend in large part on differences between the yield on our loan portfolio and our cost of borrowing. Historically, all of the loans in our portfolio are earning interest at a fixed rate between 12% and 15% while under our existing credit facilities, our cost of funds is based on a floating rate tied to an index such as the prime rate or LIBOR. Thus, during a period of rising interest rates, our borrowing costs generally will increase while the yields on our loan portfolio will remain flat, which is likely to result in a decline in our net interest spread and net interest margin. The severity of any such decline would depend on a number of factors including maturity dates of the loans in our portfolio, our ability to originate new loans at higher interest rates as well as the magnitude and duration of the interest rate increase.

Prepayment risk

Prepayment risk is the risk that principal will be repaid at a different rate than anticipated, causing the return on an asset to be less than expected. In order to mitigate this risk, many lenders charge pre-payment premiums or penalties. Historically, most of our loans were short-term, i.e., a term of less than one year; therefore, prepayments have not been a major risk for us. In any event, our loans, by their terms, are not prepayable until they have been outstanding for at least three months. After that, the borrowers have the right to prepay the loan at any time without premium or penalty.

Extension risk

Extension risk is the risk that borrowers will elect to extend the term of a loan beyond its stated maturity date. In a rising interest rate environment this poses a risk to the lender unless the borrower has to pay a premium to extend or the interest rate is adjusted to the prevailing market rate. Our typical loan does not give the borrower a right to extend. However, historically we have agreed to extend the maturity date on some of our loans. In consideration, we receive an extension fee and, in some cases, an adjustment to the interest rate.

Market risk

Real Estate Risk.  As a lender, we are subject to volatility and may be affected adversely by a number of factors, including, but not limited to, national, regional and local economic conditions (which may be

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adversely affected by industry slowdowns and other factors); local real estate conditions; changes or continued weakness in specific industry segments; construction quality, age and design; demographic factors; and retroactive changes to building or similar codes. Decreases in property values reduce the value of the collateral and the potential proceeds available to a borrower to repay the underlying loans or loans, as the case may be, which could also cause us to suffer losses. We try to mitigate these risks with personal guarantees from the principals of the borrower, which are collaterally secured by real estate as well.

Market Value Risk.  We have pledged or assigned certain loans to secure our obligations under the Webster Credit Line. In addition, conceivably in the future we may have to sell loans in our portfolio to raise cash to pay down debt or make distributions to our shareholders. In such instances the value of our portfolio is a factor. The estimated fair value of loans in our portfolio will fluctuate primarily due to changes in interest rates and other factors. Generally, in a rising interest rate environment, the estimated fair value of loans would be expected to decrease; conversely, in a decreasing interest rate environment, the estimated fair value of loans would be expected to increase. As market volatility increases or liquidity decreases, the fair value of our assets may be adversely impacted.

Risk management

To the extent consistent with maintaining our REIT qualification, we will seek to manage risk exposure to protect our loan portfolio against the effects of prepayments, defaults, extensions, interest rate volatility, credit spread movements and liquidity risks. Our efforts to manage risk will focus on monitoring our portfolio and managing the financing, interest rate, credit, prepayment and extension risks associated with our loan portfolio. We generally seek to manage this risk by:

• attempting to structure our financing agreements to maintain maximum flexibility on our part to manage our leverage ratio;

• attempting to structure our loans so that we are fully secured and protected against credit, prepayment and extension risk;

• employing a disciplined credit and due diligence culture that is designed to protect and preserve capital; and

• maintaining a healthy spread between the yield on our loan portfolio and our borrowing costs.

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BUSINESS

Manhattan Bridge Capital

We are a New York-based real estate finance company that specializes in originating, servicing and managing a portfolio of first mortgage loans. We offer short- and medium-term, secured, non-banking loans (sometimes referred to as “hard money” loans), which we may renew or extend on, before or after their initial term expires, to real estate investors to fund their acquisition, renovation, rehabilitation or improvement of properties located in the New York metropolitan area. We have been taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes beginning with our taxable year ending December 31, 2014.

We are organized as a New York corporation and operated as a fully-taxable C-corporation for federal, state and city income tax purposes through the end of our 2013 tax year. As a result, we were able to re-invest most of our net after-tax profits back into our business. In 2014 we concluded that it would be in the best interests of our shareholders if we operated as a REIT for U.S. federal income tax purposes. In July 2014, we completed a public offering of 1,754,386 common shares at a price to the public of $2.85 per share. As a result of that offering, we met all the requirements to qualify as a REIT and elected REIT status starting with that year.

In order to maintain our REIT status, we are required to distribute at least 90% of our taxable income to our shareholders each year. To the extent we distribute less than 100% of our taxable income to our shareholders (but more than 90%) we will maintain our REIT status but the undistributed portion will be subject to regular corporate income taxes. As a REIT, we may also be subject to federal excise taxes and minimum state taxes. We also intend to operate our business in a manner that will permit us to maintain our exemption from registration under the Investment Company Act.

Funding

We organized Funding on December 7, 2015, specifically for the purpose of this transaction. Prior to issuance of the Notes, Funding has no assets or liabilities and is not engaged in any trade or business. Our chief executive officer and chief financial officer will be the chief executive officer and chief financial officer, respectively, of Funding. Funding will not be charged for their services. Assaf Ran, our chief executive officer, chairman of the board, founder and controlling shareholder, will be the sole director of Funding. At this time, we do not contemplate that Funding will have any other shareholders, employees, officers or directors. We intend to treat Funding as a “qualified REIT subsidiary” for federal income tax purposes. As such, Funding will not be treated as a separate corporation for purposes of determining whether we qualify and operate as a REIT for U.S. federal income tax purposes. Essentially, for purposes of determining whether we qualify and operate as a REIT, Funding will be disregarded as a separate entity and all assets, liabilities and items of income, deduction and credit of Funding will be treated as our assets, liabilities and items of income, deduction and credit. Funding is not required to pay federal income tax, and our ownership of the all of the stock of Funding does not violate the restrictions against ownership of securities of any one issuer which constitute more than 10% of the voting power or value of the issuer’s securities or more than 5% of the value of our total assets.

Funding will use the net proceeds from the sale of the Notes to purchase from us, free and clear of all liens and other security interests, a pool of mortgage loans, originated and funded by us, each of which is secured by a first priority lien on real property. Under the terms of the Indenture, the aggregate outstanding principal balance of the mortgage loans held by Funding plus any cash on hand must always equal at least 120% of the aggregate outstanding principal amount of the Notes. Funding is required to maintain this ratio until all the Notes have been repaid in full. To the extent the aggregate principal amount of the mortgage loans owned by Funding plus Funding’s cash on hand, if any, is less than 120% of the indebtedness represented by the Notes, Funding will be required to repay, on a quarterly basis, the principal amount of the Notes equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by Funding plus Funding’s cash on hand, if any, at such time is equal to or greater than 120% of the outstanding principal amount of the Notes.

We will use the net proceeds of this offering that we receive from Funding to pay down the outstanding balance on our Webster Credit Line, as more particularly described below and in the section of this prospectus

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entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operation.” Funding will collect payments of interest and principal on the mortgages it holds and use those funds to make the required interest payments to the Noteholders. Any excess cash held by Funding will be distributed to us and will be used for working capital and general corporate purposes, including the payment of operating expenses, to fund capital expenditures, to pay down debt, to fund new real estate loans and to make dividend payments to our shareholders.

General

The properties securing the loans are generally classified as residential or commercial real estate and, typically, are not income producing. Each loan is secured by a first mortgage lien on real estate. In addition, each loan is personally guaranteed by the principal(s) of borrower, which guarantee may be collaterally secured by a pledge of the guarantor’s interest in the borrower. The face amount of the loans we originate historically ranged from $14,000 to a maximum of $1.475 million. Our lending policy limits the maximum amount of any loan to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $1.5 million. Our loans typically have a maximum initial term of 12 months and bear interest at a fixed rate of 12% to 15% per year. In addition, we usually receive origination fees or “points” ranging from 1% to 3% of the original principal amount of the loan as well as other fees relating to underwriting and funding the loan. Interest is always payable monthly, in arrears. In the case of acquisition financing, the principal amount of the loan usually does not exceed 75% of the value of the property (as determined by an independent appraiser) and in the case of construction financing, it is typically up to 80% of construction costs.

Since commencing this business in 2007, we have never foreclosed on a property and none of our loans have ever gone into default, although sometimes we have renewed or extended the term of a loan to enable the borrower to avoid premature sale or refinancing of the property. When we renew or extend a loan we generally receive additional “points” and other fees.

Our officers are experienced in hard money lending under various economic and market conditions. Loans are originated, underwritten and structured by our chief executive officer, assisted by our chief financial officer, and then managed and serviced principally by our chief financial officer. A principal source of new transactions has been repeat business from prior customers and their referral of new business. We also receive leads for new business from real estate brokers and mortgage brokers and a limited amount of newspaper advertising.

Our primary business objective is to grow our loan portfolio while protecting and preserving capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term through dividends. We intend to achieve this objective by continuing to selectively originate, fund loans secured by first mortgages on residential real estate held for investment located in the New York metropolitan area and to carefully manage and service our portfolio in a manner designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that current market dynamics in this market, specifically the demand/supply imbalance for relatively small real estate loans, presents significant opportunities for us to selectively originate high-quality first mortgage loans on attractive terms and that these conditions should persist for a number of years. We have built our business on a foundation of intimate knowledge of the New York metropolitan area real estate market combined with a disciplined credit and due diligence culture that is designed to protect and preserve capital. We believe that our flexibility and ability to structure loans that address the needs of our borrowers without compromising our standards on credit risk, our expertise, our intimate knowledge of the New York metropolitan area real estate market and our focus on newly originated first mortgage loans, has defined our success until now and should enable us to continue to achieve our objectives.

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The Market Opportunity

Real estate investment is a capital-intensive business that relies heavily on debt capital to acquire, develop, improve, construct, renovate and maintain properties. We believe that the demand for relatively small loans to acquire, renovate or improve residential real estate held in the New York metropolitan market, presents a compelling opportunity to generate attractive returns for an established, well-financed, non-bank lender like us. We have competed successfully in this market notwithstanding the fact that many traditional lenders, such as banks and other institutional lenders, also service this market. Our primary competitive advantage is our ability to approve and fund loans quickly and efficiently. In this environment, characterized by a supply-demand imbalance for financing and increasing asset values, we believe we are well positioned to capitalize and profit from these industry trends.

We believe there is a significant market opportunity for a well-capitalized” hard money” real estate finance company to originate attractively priced loans with strong credit fundamentals. Particularly in the New York metropolitan area, where real estate values continue to rise and substandard properties are being improved, rehabilitated and renovated, we believe there are many opportunities for a “hard money” lender providing capital for these purposes to small scale developers. We further believe that our flexibility to structure loans to suit the particular needs of our borrower and our ability to close quickly make us an attractive alternative to banks and other large institutional lenders for small real estate developers and investors.

Our Business and Growth Strategies

Our objective is to protect and preserve capital in a manner that provides for attractive risk-adjusted returns to our shareholders over the long term principally through dividends. We intend to achieve this objective by continuing to focus exclusively on selectively originating, servicing and managing a portfolio of short-term real estate loans secured by first mortgages on real estate located in the New York metropolitan area that are designed to generate attractive risk-adjusted returns across a variety of market conditions and economic cycles. We believe that our ability to react quickly to the needs of borrowers, our flexibility in terms of structuring loans to meet the needs of borrowers, our intimate knowledge of the New York metropolitan area real estate market, our expertise in “hard money” lending and our focus on newly originated first mortgage loans, should enable us to achieve this objective. Nevertheless, we will remain flexible in order to take advantage of other real estate related opportunities that may arise from time to time, whether they relate to the mortgage market or to direct or indirect investments in real estate.

Our strategy to achieve our objective includes the following:

• capitalize on opportunities created by the long-term structural changes in the real estate lending market and the continuing lack of liquidity in the real estate market;

• take advantage of the prevailing economic environment as well as economic, political and social trends that may impact real estate lending currently and in the future as well as the outlook for real estate in general and particular asset classes;

• remain flexible in order to capitalize on changing sets of investment opportunities that may be present in the various points of an economic cycle; and

• operate so as to qualify as a REIT and for an exemption from registration under the Investment Company Act.

In furtherance of these strategies, on February 27, 2015, we obtained a three-year $14 million revolving line of credit with Webster Business Credit Corporation to replace our existing $7.7 million credit facility with Sterling National Bank.

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Our Competitive Strengths

We believe our competitive strengths include:

• Experienced management team.  Our management team has successfully originated and serviced a portfolio of real estate mortgage loans generating attractive annual returns under varying economic and real estate market conditions. We expect that the experience of our management team will provide us with the ability to effectively deploy our capital in a manner that we believe will provide for attractive risk-adjusted returns but with a focus on capital preservation and protection.

• Long-standing relationships.  A significant portion of our business comes from repeat customers with whom we have long-standing relationships. These customers are also a referral source for new borrowers. So long as these customers remain active real estate investors they provide us with an advantage in securing new business and help us maintain a pipeline to attractive new opportunities that may not be available to many of our competitors or to the general market.

• Knowledge of the market.  Our intimate knowledge of the New York metropolitan area real estate market enhances our ability to identify attractive opportunities and helps distinguish us from many of our competitors.

• Disciplined lending.  We seek to maximize our risk-adjusted returns, and preserve and protect capital, through our disciplined and credit-based approach. We utilize rigorous underwriting and loan closing procedures that include numerous checks and balances to evaluate the risks and merits of each potential transaction. We seek to protect and preserve capital by carefully evaluating the condition of the property, the location of the property, the creditworthiness of the guarantors and the availability of other forms of collateral.

• Vertically-integrated loan origination platform.  We manage and control the loan process from origination through closing with our own personnel or independent legal counsel and appraisers, with whom we have long relationships, who together constitute a team highly experienced in credit evaluation, underwriting and loan structuring. We also believe that our procedures and experience allows us to quickly and efficiently execute opportunities we deem desirable.

• Structuring flexibility.  As a relatively small, non-bank real estate lender, we can move quickly and have much more flexibility than traditional lenders to structure loans to suit the needs of our clients. Our ability to customize financing structures to meet borrowers’ needs is one of our key business strengths.

• No legacy issues.  Unlike many of our competitors, we are not burdened by distressed legacy real estate assets. We do not have a legacy portfolio of lower-return or problem loans that could potentially dilute the attractive returns we believe are available in the current liquidity-challenged environment and/or distract and monopolize our management team’s time and attention. We do not have any adverse credit exposure to, and we do not anticipate that our performance will be negatively impacted by, previously purchased assets.

Our Real Estate Lending Activities

Our real estate lending activities involve originating, funding, servicing and managing short-term loans (i.e., loans with an initial term of not more than one year), secured by first mortgage liens on real estate property in the New York metropolitan area held for investment or resale. Generally, borrowers use the proceeds from our loans for one of three purposes: (i) to acquire and renovate existing residential (single, one or two family) real estate properties; (ii) to acquire vacant real estate and construct residential real properties; and (iii) to purchase and hold income producing properties. Our mortgage loans are structured to fit the needs and business plans of the borrowers. Revenue is generated primarily from the interest borrowers pay on our loans and, to a lesser extent, loan fee income generated on the origination and extension of loans.

Most of our loans are funded in full at the closing. However, our loan portfolio includes a number of construction loans, which are only partially funded at closing. At December 31, 2014, our unfunded commitment was approximately $2.55 million. At September 30, 2015, our unfunded commitment was approximately $1.82 million. Advances under construction loans are funded against requests supported by all

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required documentation (including lien waivers) as and when needed to pay contractors and other costs of construction. In the case of construction loans, the borrower will either deliver multiple notes or one global note for the entire commitment. In either case, interest only accrues on the funded portion of the loan.

In general, our strategy is to service and manage the loans we originate until they are paid. However, there have been a few instances where we have either used loans as collateral, or sold participating interests in loans. All of our loans are secured by properties located in the New York metropolitan area, which is where we are based. We have no intention at this time to attempt to expand into any other geographic market. Most of the properties we finance are residential, although on occasion they are classified as commercial. However, in all instances the properties are held only for investment by the borrowers. Most of these properties do not generate any cash flow.

The typical terms of our loans are as follows:

Principal amount — Historically, $14,000 to $1.475 million. Our lending policy limits the maximum loan amount to the lower of (i) 9.9% of the aggregate amount of our loan portfolio (not including the loan under consideration) and (ii) $1.5 million.

Loan-to-Value Ratio — Up to 75%, and/or up to 80% of construction costs.

Interest rate — Most of the loans in our portfolio have a fixed rate typically 12% to 15%.

Term — Generally, one year with early termination in the event of a sale of the property or a refinancing. More recently, the number of loans in our portfolio, both in absolute terms and as a percentage, with a term of greater than one year has grown. We entertain requests for granting extensions under certain conditions.

Prepayments — Borrower may prepay the loan at any time beginning three months after the funding date.

Covenants — To timely pay all interest on the loan property and to maintain hazard insurance with respect to the property.

Events of default — Include: (i) failure to make a payment when due; (ii) breach of a covenant.

Payment terms — Interest only is payable monthly in arrears. Principal is due in a “balloon” payment at the maturity date.

Escrow — None.

Reserves — None.

Security — The loan is evidenced by a promissory note, which is secured by a first mortgage lien on the real property owned by the borrower. In addition, each loan is guaranteed by the principals of the borrower, which may be collaterally secured by a pledge of the guarantor’s interest in the borrower.

Fees and Expenses — Borrowers generally pay an origination fee equal to 1% to 3% of the loan amount. If we agree to extend the term of the loan, we usually collect the same origination fee we charged on the initial funding of the loan. In addition, borrowers also pay a processing fee, wire fee, bounced check fee and, in the case of construction loans, check requisition fee for each draw from the loan. Finally, the borrower pays all expenses relating to obtaining the loan including the cost of a property appraisal, the cost of an environmental assessment report, if any, the cost of a credit report and all title, recording fees and legal fees.

Operating Data

Our lending activities increased each year since 2007, the first year we started making real estate loans. We believe our business will continue to grow given the strength of the New York real estate market and our reputation among real estate investors as a reliable and reasonable financing source.

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Our loan portfolio

The following tables highlight certain information regarding our real estate lending activities for the years ended December 31, 2014 and 2013 and the nine months ended September 30, 2015:

	Year Ended December 31,						Nine Months ended September 30, 2015
($ in thousands)	2014			2013
Loans originated	$	22,586		$	15,159		$	15,347
Loans repaid	$	13,248		$	14,089		$	10,235
Mortgage lending revenues	$	2,904		$	2,260		$	2,855
Mortgage lending expenses	$	566		$	444		$	497
Number of loans outstanding		86			60			88
Principal amount of loans earning interest	$	24,032		$	14,695		$	29,144
Average outstanding loan balance(1)	$	279		$	245		$	331
Percent of loans secured by New York area properties		100.0	%		100.0	%		100.0	%
Weighted average contractual interest rate		12.5	%		12.6	%		12.4	%
Weighted average term to maturity (in months)(2)		5.57			4.83			5.90

(1) Calculated based on the number of loans.

(2) Without giving effect to extension options.

At both September 30, 2015 and December 31, 2014, no single loan, borrower or group of affiliated borrowers accounted for more than 10% of our loan portfolio. At December 31, 2013 we had loans outstanding to two affiliated groups of borrowers, each of which accounted for more than 10% of our loan portfolio and which together accounted for 25.5% of our loan portfolio. One group consisted of eight borrowers, each of which was at least 50% owned by the same individual, and the second group consisted of six borrowers, each of which was at least 25% owned by the same individual. The aggregate outstanding principal balance on the loans to the first group was approximately $2.0 million, representing 13.5% of our loan portfolio and the aggregate outstanding principal balance on the loans to the second group was approximately $1.8 million, representing 12% of our loan portfolio.

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The following tables set forth information regarding the types of properties securing our mortgage loans outstanding at December 31, 2014 and 2013 and September 30, 2015, and the interest earned in each category (dollars in thousands):

	December 31, 2014							December 31, 2013							September 30, 2015
	Number of Loans		Interest Earned		Percentage			Number of Loans		Interest Earned		Percentage			Number of Loans		Interest Earned		Percentage
Residential		80	$	1,585		90	%		52	$	968		82	%		86	$	1,812		94.5	%
Commercial		4		172		10	%		3		140		12	%		1		90		4.7	%
Mixed Use		1		3		0	%		5		72		6	%		1		16		0.8	%
Other		1		3		0	%		0		—		0	%		0		0		0.0	%
Total		86	$	1,763		100	%		60	$	1,180		100	%		88	$	1,918		100.0	%

The following table sets forth information regarding the mortgage loans that Funding will purchase from us (as of            , 2016):

	Number of Loans	Principal Balance	Interest Rate	Average Months to Maturity
Residential			$
Commercial
Mixed Use
Other
Total			$

Our Origination Process and Underwriting Criteria

We primarily rely on our relationships with existing and former borrowers, real estate investors, real estate brokers and mortgage brokers to originate loans. Many of our borrowers are “repeat customers.” When underwriting a loan, the primary focus of our analysis is the value of a property and the credit worthiness of the borrower and its principals. Prior to making a final decision on a loan application we conduct due diligence of the borrower and its principals. In terms of the property, we usually require a third party appraisal and a third party assessment report. We also order title, lien and judgment searches. In most cases, we will also make an on-site visit to evaluate not only the property but the neighborhood in which it is located. Finally, we analyze and assess financial and operational data provided by the borrower relating to its operation and maintenance of the property. In terms of the borrower and its principals, we usually obtain third party credit reports from one of the major credit reporting services as well as personal financial information provided by the borrower and its principals. We analyze all this information carefully prior to making a final determination. Ultimately, our decision is based on our conclusions regarding the value of the property, which takes into account factors such as the neighborhood in which the property is located, the current use and potential alternative use of the property, current and potential net income from the property, the local market, sales information of comparable properties, existing zoning regulations, the creditworthiness of the borrower and its principles and their experience in real estate ownership, construction, development and management. In conducting our due diligence, we rely, in part, on third party professionals and experts including appraisers, engineers, title insurers and attorneys.

Before a loan commitment is issued, the loan must be reviewed and approved by our chief executive officer. Our loan commitments are generally issued subject to receipt by us of title documentation and title report, in a form satisfactory to us, for the underlying property. We require a personal guarantee from the principal or principals of the borrower.

Our Current Financing Strategies

Our financing strategies are critical to the success and growth of our business. Our financing strategies at this time are limited to equity and debt offerings. Our principal capital raising transactions have consisted of the following:

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Credit line.  As more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Sources” above, on February 27, 2015, we repaid and terminated the Sterling Credit Line and simultaneously entered into a Line of Credit Agreement with Webster pursuant to which we may borrow up to $14 million during the next three years (the “Webster Credit Line”). The Webster Credit Line provides for an interest rate equal to (i) LIBOR plus 4.75% or (ii) Webster’s base commercial lending rate plus 3.25%, as chosen by us for each drawdown, and expires on February 27, 2018. The Webster Credit Line is secured by assignment of mortgages and other collateral and is guaranteed by Assaf Ran, our chief executive officer.

Short-term loans.  In 2010, we raised $500,000 through the sale of senior secured notes, which have since been repaid. In addition, over the last six years we have raised approximately $8.7 million from the sale of short- and medium-term notes, of which $2.47 million and $1.1 million principal amount was outstanding at December 31, 2014 and at September 30, 2015, respectively. As of September 30, 2015, five (5) short-term notes having an aggregate principal amount of approximately $1.1 million and bearing interest from 8% to 12% remained outstanding. All of these notes will mature on or before September 1, 2016. Pursuant to the terms of the Webster Credit Line, we may not renew or extend these notes when they become due.

In July 2014, we sold 1,754,386 common shares in a registered public offering for an aggregate of $5.0 million or approximately $4.3 million, after deducting our underwriting discounts and commissions and offering expenses. In May 2015, we sold 1,120,000 common shares in a registered public offering (including 105,000 common shares sold upon a partial exercise of the over-allotment option by the representative of the several underwriters) for aggregate gross proceeds of $4.92 million or approximately $4.2 million, after deducting our underwriting discounts and commissions and offering expenses.

The following table shows our sources of capital, including our financing arrangements, and our loan portfolio as of December 31, 2014 and September 30, 2015:

Sources of Capital ($ in thousands):	December 31, 2014		September 30, 2015
Debt:
Short-term loans	$	2,469	$	1,096
Line of credit		7,700		10,098
Total debt	$	10,169	$	11,194
Other liabilities		409		338
Capital (equity)		13,866		18,241
Total sources of capital	$	24,444	$	29,773
Assets:
Loans:
Short-term loans	$	19,138	$	15,634
Long-term loans		4,894		13,510
Total loans	$	24,032	$	29,144
Other assets		412		629
Total assets	$	24,444	$	29,773

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Competition

The real estate finance market in the New York metropolitan area is highly competitive. We face competition for lending and investment opportunities from a variety of institutional lenders and investors and many other market participants, including specialty finance companies, REITs, commercial banks and thrift institutions, investment banks, insurance companies, hedge funds and other financial institutions as well as private equity funds, family offices and high net worth individuals. Many of these competitors enjoy competitive advantages over us, including greater name recognition, established lending relationships with customers, financial resources, and access to capital.

Notwithstanding the intense competition and some of our competitive disadvantages, we believe we have carved a niche for ourselves among small real estate developers, owners and contractors throughout the New York metropolitan area because of our ability to structure each loan to suit the needs of each individual borrower and our ability to act quickly. In addition, we believe we have developed a reputation among these borrowers for offering reasonable terms and providing outstanding customer service. We believe our future success will depend on our ability to maintain and capitalize on our existing relationships with borrowers and brokers and to expand our borrower base by continuing to offer attractive loan products, remain competitive in pricing and terms, and provide superior service.

Sales and Marketing

We do not engage any third parties for sales and marketing. Rather, we rely on our chief executive officer to generate lending opportunities as well as referrals from existing or former borrowers, brokers, and bankers and newspaper advertising and direct mail to generate lending opportunities. A principal source of new transactions has been repeat business from prior customers and their referral of new leads.

Intellectual Property

Our business does not depend on exploiting or leveraging any intellectual property rights. To the extent we own any rights to intellectual property, we rely on a combination of federal, state and common law trademarks, service marks and trade names, copyrights and trade secret protection. We have registered some of our trademarks and service marks in the United States Patent and Trademark Office including the following marks relating to our current business:

Manhattan Bridge Capital
 
DAG Funding Solutions

The protective steps we have taken may not deter misappropriation of our proprietary information. These claims, if meritorious, could require us to license other rights or subject us to damages and, even if not meritorious, could result in the expenditure of significant financial and managerial resources on our part.

Employees

As of September 30, 2015, we had three (3) full-time employees and no part-time employees. None of our employees is a member of a labor union and our relationship with all of our employees is good. In addition, we rely on outside various non-employee professionals, including lawyers, to handle various aspects of our transactions such as verifying title and ownership, filing liens and closing transactions. We also rely on third-party appraisers to assist management in evaluating the worth of collateral, when deemed necessary by management. Finally, we use independent construction inspectors as well as mortgage brokers and deal initiators.

Regulation

Our operations are subject, in certain instances, to supervision and regulation by state and federal governmental authorities and may be subject to various laws and judicial and administrative decisions imposing various requirements and restrictions. In addition, we may rely on exemptions from various requirements of the Securities Act of 1933, as amended (the “Securities Act”), the Exchange Act, the Investment Company Act and ERISA. These exemptions are sometimes highly complex and may in certain circumstances depend on compliance by third-parties who we do not control.

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Regulatory Reform

The Dodd-Frank Act, which went into effect on July 21, 2010, is intended to make significant structural reforms to the financial services industry. For example, pursuant to the Dodd-Frank Act, various federal agencies have promulgated, or are in the process of promulgating, regulations with respect to various issues that may affect us. Certain regulations have already been adopted and others remain under consideration by various governmental agencies, in some cases past the deadlines set in the Dodd-Frank Act for adoption. At the present time, we do not believe any regulations adopted under the Dodd-Frank Act apply to us. However, it is possible that regulations that will be adopted in the future will apply to us or that existing regulations will apply to us as our business evolves.

Regulation of Commercial Real Estate Lending Activities

Although most states do not regulate commercial finance, certain states impose limitations on interest rates and other charges and on certain collection practices and creditor remedies, and require licensing of lenders and financiers and adequate disclosure of certain contract terms. We also are required to comply with, among other statutes and regulations, certain provisions of the Equal Credit Opportunity Act that are applicable to commercial loans, The USA PATRIOT Act, regulations promulgated by the Office of Foreign Asset Control and federal and state securities laws and regulations.

Investment Company Act Exemption

Although we reserve the right to modify our business methods at any time, we are not currently required to register as an investment company under the Investment Company Act. However, we cannot assure you that our business strategy will not evolve over time in a manner that could subject us to the registration requirements of the Investment Company Act.

Section 3(a)(1)(A) of the Investment Company Act defines an investment company as any issuer that is or holds itself out as being engaged primarily in the business of investing, reinvesting or trading in securities. Section 3(a)(1)(C) of the Investment Company Act defines an investment company as any issuer that is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of the issuer’s total assets (exclusive of U.S. Government securities and cash items) on an unconsolidated basis, which we refer to as the 40% test. Real estate mortgages are excluded from the term “investment securities.”

We rely on the exception set forth in Section 3(c)(5)(C) of the Investment Company Act which excludes from the definition of investment company “[a]ny person who is not engaged in the business of issuing redeemable securities, face-amount certificates of the installment type or periodic payment plan certificates, and who is primarily engaged in one or more of the following businesses... (C) purchasing or otherwise acquiring mortgages and other liens on and interests in real estate.” The SEC generally requires that, for the exception provided by Section 3(c)(5)(C) to be available, at least 55% of an entity’s assets be comprised of mortgages and other liens on and interests in real estate, also known as “qualifying interests,” and at least another 25% of the entity’s assets must be comprised of additional qualifying interests or real estate-type interests (with no more than 20% of the entity’s assets comprised of miscellaneous assets). At the present time, we qualify for the exemption under this section and our current intention is to continue to focus on originating short term loans secured by first mortgages on real property. However, if, in the future, we do acquire non-real estate assets without the acquisition of substantial real estate assets, we may qualify as an “investment company” and be required to register as such under the Investment Company Act, which could have a material adverse effect on us.

If we were required to register as an investment company under the Investment Company Act, we would become subject to substantial regulation with respect to our capital structure (including our ability to use leverage), management, operations, transactions with affiliated persons (as defined in the Investment Company Act), portfolio composition, including restrictions with respect to diversification and industry concentration, and other matters.

Qualification for exclusion from the definition of an investment company under the Investment Company Act will limit our ability to make certain investments. In addition, complying with the tests for such exclusion could restrict the time at which we can acquire and sell assets.

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Properties

Our executive and principal operating office is located in Great Neck, New York. We use this space for all of our operations. This space is occupied under a lease that expires August 31, 2016. The current monthly rent is $3,535, including electricity. We believe this facility is adequate to meet our requirements at our current level of business activity.

Funding operates from our offices.

Legal Proceedings

As of the date of this prospectus, we are not a party to any material legal proceedings.

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MANAGEMENT

Executive Officers and Directors

Our executive officers and directors and the executive officers and director of Funding and their respective ages as of the date of this prospectus are as follows:

Name	Age	Position
Assaf Ran	49	Founder, Chairman of the Board, Chief Executive Officer, and President of Manhattan Bridge Capital, Inc.; Chief Executive Officer and President and sole director of MBC Funding II Corp.
Vanessa Kao	37	Chief Financial Officer, Vice President, Treasurer and Secretary of Manhattan Bridge Capital, Inc.; and Chief Financial Officer, Vice President, Treasurer and Secretary of MBC Funding II Corp.
Michael Jackson(1)(2)	51	Director
Eran Goldshmit(1)	49	Director
Mark Alhadeff	52	Director
Lyron Bentovim(3)	46	Director

(1) Member of the Compensation Committee, Audit Committee and Nominating Committee.

(2) Chairman of the Audit Committee.

(3) Member of the Audit Committee.

All directors hold office until the next annual meeting of shareholders and until their successors are duly elected and qualified. Officers are elected to serve subject to the discretion of the Board.

Set forth below is a brief description of the background and business experience of our executive officers and directors:

Assaf Ran, our founder, has been our chief executive officer and president since our inception in 1989 and the chief executive officer and president and sole director of Funding since its inception in             201 . Mr. Ran has 26 years of senior management experience leading public and private directories businesses. Mr. Ran started several yellow page businesses from the ground up and managed to make each one of them successful. Mr. Ran’s professional experience and background with us, as our director since March 1999, have given him the expertise needed to serve as one of our directors.

Vanessa Kao has been our chief financial officer, vice president, treasurer and secretary since rejoining us in June 2011. From July 2004 through April 2006 she served as our assistant chief financial officer. From April 2006 through December 2013, she was the chief financial officer of DAG Jewish Directories, Inc. Since January 2014, she has also served as the chief financial officer of Jewish Marketing Solutions, LLC. Ms. Kao is also the chief financial officer, Secretary and treasurer of Funding since its inception in            , 201 . Ms. Kao holds a M.B.A. in Finance and MIS/E-Commerce from the University of Missouri and a Bachelor degree of Business Administration in Finance from the National Taipei University in Taiwan.

Michael J. Jackson has been a member of the Board since July 2000. Since April 2007, he has been the chief financial officer and the executive vice president of iCrossing, Inc., a digital marketing agency. From October 1999 to April 2007, he was the executive vice president and chief financial officer of AGENCY.COM, a global Internet professional services company. He served as the chief accounting officer of AGENCY.com from May 2000 and as its corporate controller from August 1999 until September 2001. From October 1994 until August 1999, Mr. Jackson was a manager at Arthur Andersen, LLP and Ernst and Young. Mr. Jackson also served on the New York State Society Auditing Standards and Procedures Committee from 1998 to 1999 and served on the New York State Society’s SEC Committee from 1999 to 2001. Mr. Jackson holds an M.B.A. in Finance from Hofstra University and is a certified public accountant. For the five years ending May 2008, Mr. Jackson was a member of the board of directors of Adstar, Inc. (OTC PINK: ADST). Mr. Jackson’s professional experience and background with other companies and with us have given him the expertise needed to serve as one of our directors.

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Eran Goldshmit has been a member of the Board since March 1999. Mr. Goldshmit received certification as a financial consultant in February 1993 from the School for Investment Consultants, Tel Aviv, Israel, and a BA in business administration from the University of Humberside, England, in December 1998. From December 1998 until July 2001, Mr. Goldshmit was the general manager of the Carmiel Shopping Center in Carmiel, Israel. Since August 2001, he has been the president of the New York Diamond Center, New York, NY. Mr. Goldshmit’s professional experience and background with other companies and with us have given him the expertise needed to serve as one of our directors.

Mark Alhadeff has been a member of the Board since December 2005. He also served as the chief technology officer of DAG Interactive, Inc. Mr. Alhadeff is a co-founder of Ocean-7 Development, Inc., a technology corporation in the business of providing programming services as well as web development services and database solutions and has served as its president since its formation in 1996. Prior to founding Ocean-7, Mr. Alhadeff served as a consultant to various publishers, worked as an art director and was actively involved in creating and implementing the transition to digital production methodologies before they became common industry practice. Mr. Alhadeff is a Stony Brook University graduate. Mr. Alhadeff’s business experience and background with other companies and with us have given him the expertise needed to serve as one of our directors.

Lyron Bentovim has been a member of the Board since December 2008. Mr. Bentovim serves as the managing partner of DarkLight Partners, a strageic advisor to small and mid-cap companies. Prior to founding DarkLight Partners, Mr. Bentovim served as COO/CFO of Top Image Systems (NASDAQ: TISA). Prior to this position he served as COO/CFO of NIT Health. From August 2009 until July 2012, Mr. Bentovim has served as the Chief Operating Officer and the Chief Financial Officer of Sunrise Telecom Inc., a leader in test and measurement solutions for telecom, wireless and cable networks. Prior to joining Sunrise Telecom Inc. since January 2002, Mr. Bentovim has been a Portfolio Manager for Skiritai Capital LLC, an investment advisor based in San Francisco. Mr. Bentovim has over 20 years of industry experience, including his experience as a member of the board of directors at RTW Inc., Ault Inc, Top Image Systems, Three-Five Systems Inc., Sunrise Telecom Incorporated, and Argonaut Technologies Inc. Prior to his position in Skiritai Capital LLC, Mr. Bentovim served as the President, COO, and co-founder of WebBrix Inc. Additionally; Mr. Bentovim spent time as a Senior Engagement Manager with strategy consultancies USWeb/CKS, the Mitchell Madison Group LLC and McKinsey & Company Inc. Mr. Bentovim has an MBA from Yale School of Management and a Law degree from the Hebrew University. Mr. Bentovim’s professional experience and background with other companies and with us have given him the expertise needed to serve as one of our directors.

Director Independence

The members of the Board are Assaf Ran, Michael J. Jackson, Eran Goldshmit, Mark Alhadeff, and Lyron Bentovim.

The Board has determined, in accordance with NASDAQ’s Stock Market Rules, that: (i) Messrs. Jackson, Goldshmit and Bentovim (the “Independent Directors”) are independent and represent a majority of its members; (ii) Messrs. Jackson, Goldshmit and Bentovim, the members of the Audit Committee, are independent for such purposes; and (iii) Messrs. Jackson and Goldshmit, the members of the Compensation Committee, are independent for such purposes. In determining director independence, the Board applies the independence standards set by the NASDAQ. In its application of such standards the Board takes into consideration all transactions with Independent Directors and the impact of such transactions, if any, on any of the Independent Directors’ ability to continue to serve on the Board. To that end, for the fiscal year ended 2014, the Board considered the options awarded to the Independent Directors disclosed below and determined that those transactions were within the limits of the independence standards set by NASDAQ and did not impact their ability to continue to serve as Independent Directors.

Committees of the Board of Directors

We have three standing committees: the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee. Each committee is made up entirely of independent directors as defined under the NASDAQ Stock Market Rules. Current copies of each committee’s charter are available on our website at www.manhattanbridgecapital.com.

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Audit Committee.  The members of the Audit Committee are Michael Jackson, who serves as chairman, Eran Goldshmit and Lyron Bentovim. The Board has determined that each member of the Audit Committee is independent, as that term is defined in Section 10A(m)(3) of the Exchange Act and that Michael Jackson is qualified as an Audit Committee Financial Expert pursuant to Item 407(d)(5) of Regulation S-K. The Audit Committee oversees our accounting and financial reporting processes, internal systems of accounting and financial controls, relationships with auditors and audits of financial statements. Specifically, the Audit Committee’s responsibilities include the following:

• selecting, hiring and terminating our independent auditors;

• evaluating the qualifications, independence and performance of our independent auditors;

• approving the audit and non-audit services to be performed by the independent auditors;

• reviewing the design, implementation and adequacy and effectiveness of our internal controls and critical policies;

• overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and other accounting matters;

• with management and our independent auditors, reviewing any earnings announcements and other public announcements regarding our results of operations; and

• preparing the report that the Securities and Exchange Commission requires in our annual proxy statement.

Compensation Committee.  The members of the Compensation Committee are Michael Jackson and Eran Goldshmit, each of whom satisfies the standards of independence applicable to compensation committee members established under 162(m) of the Internal Revenue Code (the “Code”) and Section 16(b) of the Exchange Act. The Compensation Committee assists the Board in determining the compensation of our officers and directors. Specific responsibilities include the following:

• approving the compensation and benefits of our executive officers;

• reviewing the performance objectives and actual performance of our officers; and

• administering our stock option and other equity and incentive compensation plans.

Corporate Governance and Nominating Committee.  The members of the Compensation Committee are Michael Jackson and Eran Goldshmit, each of whom satisfies the standards of independence applicable to compensation committee members established under 162(m) of the Code and Section 16(b) of the Exchange Act. The Corporate Governance and Nominating Committee assists the Board by identifying and recommending individuals qualified to become members of the Board. Specific responsibilities include the following:

• evaluating the composition, size and governance of the Board and its committees and making recommendations regarding future planning and the appointment of directors to our committees;

• establishing a policy for considering shareholder nominees to the Board;

• reviewing our corporate governance principles and making recommendations to the Board regarding possible changes; and

• reviewing and monitoring compliance with our code of ethics and insider trading policy.

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EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth all compensation earned, in all capacities, during the years ended December 31, 2014 and 2013 by Assaf Ran, our chief executive officer (the “named executive officer”) and sole executive officer whose salary during the last completed fiscal year exceeded $100,000.

Summary Compensation Table

Name and Principal Position	Year		Salary ($)		Bonus ($)		Non-Equity Incentive Plan Compensation ($)		All Other Compensation ($)(1)		Total ($)
Assaf Ran Chief Executive Officer and President		2014	$	225,000	$	35,000	$	6,750	$	6,750	$	266,750
		2013	$	225,000	$	65,000	$	6,750	$	6,750	$	296,750

(1) Matching contributions are made pursuant to a simple master IRA plan.

Mr. Ran is also the chief executive officer and president of Funding. He will not be compensated for any services rendered to or on behalf of Funding.

Employment Contracts

In March 1999, we entered into an employment agreement with Assaf Ran, our President and Chief Executive Officer pursuant to which: (i) Mr. Ran’s employment term renews automatically on June 30^th of each year for successive one-year periods unless either party gives to the other written notice at least 180 days prior to June 30^th of its intention to terminate the agreement; (ii) Mr. Ran receives an annual base salary of $225,000 and annual bonuses as determined by the Compensation Committee of the Board, in its sole and absolute discretion, and is eligible to participate in all executive benefit plans established and maintained by us; and (iii) Mr. Ran agreed to a one-year non-competition period following the termination of his employment. If the employment agreement is terminated by Mr. Ran for “good reason” (as defined in the employment agreement) he shall be paid (1) his base compensation up to the effective date of such termination; (2) his full share of any incentive compensation payable to him for the year in which the termination occurs; and (3) a lump sum payment equal to 100% of the average cash compensation paid to, or accrued for, him in the two calendar years immediately preceding the calendar year in which the termination occurs.

Restricted Stock Grant

On September 9, 2011, upon shareholder approval at the 2011 annual meeting of shareholders, we granted 1,000,000 restricted common shares (the “Restricted Shares”) to Mr. Ran, our chief executive officer. Under the terms of the restricted shares agreement (the “Restricted Shares Agreement”), Mr. Ran agreed to forfeit options held by him exercisable for an aggregate of 280,000 common shares with exercise prices above $1.21 per share and agreed not to exercise additional options held by him for an aggregate of 210,000 common shares with exercise prices below $1.21 per share (the “Remaining Options”). Until their expiration, Mr. Ran will be required to forfeit approximately 4.76 Restricted Shares for each common share issued upon any exercise of the Remaining Options. In addition, Mr. Ran may not sell, convey, transfer, pledge, encumber or otherwise dispose of the Restricted Shares until the earliest to occur of the following: (i) September 9, 2026, with respect to  1/3 of the Restricted Shares, September 9, 2027 with respect to an additional  1/3 of the Restricted Shares and September 9, 2028 with respect to the final  1/3 of the Restricted Shares; (ii) the date on which Mr. Ran’s employment is terminated by us for any reason other than for “Cause” (i.e., misconduct that is materially injurious to us monetarily or otherwise, including engaging in any conduct that constitutes a felony under federal, state or local law); or (iii) the date on which Mr. Ran’s employment is terminated on account of (A) his death; or (B) his disability, which, in the opinion of his personal physician and a physician selected by us prevents him from being employed with us on a full-time basis (each such date being referred to as a “Risk Termination Date”). If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by us for Cause or by Mr. Ran voluntarily for any reason other than death or disability, Mr. Ran

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will forfeit that portion of the Restricted Shares which have not previously vested. Mr. Ran will have the power to vote the Restricted Shares and will be entitled to all dividends payable with respect to the Restricted Shares from the date the Restricted Shares are issued.

In connection with the Compensation Committee’s approval of the foregoing grant of Restricted Shares, the Compensation Committee consulted with and obtained the concurrence of independent compensation experts and informed Mr. Ran that it had no present intention of continuing its prior practice of annually awarding stock options to Mr. Ran as CEO. Also Mr. Ran, advised the Compensation Committee that he would not seek future stock option grants.

The grant of Restricted Shares was exempt from registration pursuant to Section 4(2) of the Securities Act. The stock certificates for the Restricted Shares were imprinted with restrictive legends and are held in escrow until vesting occurs.

Termination and Change of Control Arrangement

In the event of termination, Mr. Ran does not receive any severance and any non-vested options are automatically forfeited. If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by us for cause or by Mr. Ran voluntarily for any reason other than death or disability, Mr. Ran will forfeit that portion of the Restricted Shares which have not previously vested. If Mr. Ran is terminated for any reason other than for cause, the Restricted Shares become immediately transferable.

Outstanding Equity Awards at Fiscal Year-End

The following table sets forth information concerning outstanding equity awards by the named executive officer as of December 31, 2014.

Name	Year		Number of Shares That Have Not Vested (#)		Market Value of Shares That Have Not Vested ($)
Assaf Ran Chief Executive Officer and President		2011		1,000,000		4,030,000	(1)(2)

(1) Calculated based on the closing market price of $4.03 at the end of the last completed fiscal year on December 31, 2014.

(2) Mr. Ran may not sell, convey, transfer, pledge, encumber or otherwise dispose of the Restricted Shares until the earliest to occur of the following: (i) September 9, 2026, with respect to  1/3 of the Restricted Shares, September 9, 2027 with respect to an additional  1/3 of the Restricted Shares and September 9, 2028 with respect to the final  1/3 of the Restricted Shares; (ii) the date on which Mr. Ran’s employment is terminated by us for any reason other than for “Cause;” or (iii) on a Risk Termination Date. If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by us for Cause or Mr. Ran voluntarily terminates his employment for any reason other than death or disability, Mr. Ran will forfeit that portion of the Restricted Shares which have not previously vested.

Equity Compensation Plan Information

On June 23, 2009 we adopted the 2009 Stock Option Plan (the “Plan”) which replaced the 1999 Stock Option Plan as amended (the “Prior Plan”), which expired in May of 2009. All options granted under the Prior Plan were expired, exercised or cancelled.

The purpose of the Plan is to align the interests of our officers, other key employees, consultants and non-employee directors and those of our subsidiaries, if any, with those of our shareholders to afford an incentive to such officers, employees, consultants and directors to continue as such, to increase their efforts on our behalf and to promote the success of our business. The availability of additional shares will enhance our ability to achieve these goals and to attract qualified employees. The basis of participation in the Plan is upon discretionary grants of awards by the board of directors.

The Plan is administered by the Compensation Committee of the board of directors. The maximum number of common shares reserved for the grant of awards under the Plan was originally 200,000 but has since been increased to 400,000, subject to adjustment as provided in Section 9 of the Plan. As of

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December 31, 2014, approximately six persons were eligible to participate in the Plan, consisting of two executive officers and four directors (of whom three are non-affiliated directors). The Board has resolved not to grant any options to Mr. Ran until all of the Restricted Shares have vested.

Amendment and Termination of the Plan

The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time.

Exercise Price

The exercise price of an option granted under the Plan may be no less than the fair market value of a common share on the date of grant, unless, with respect to nonqualified stock options that are not intended as incentive stock options within the meaning of Section 422 of the Code from time to time, otherwise determined by the Compensation Committee. However, incentive stock options granted to a ten percent shareholder must be priced at no less than 110% of the fair market value of our common shares on the date of grant and their term may not exceed five years. All options granted under the Plan are for a term of no longer than ten years unless otherwise determined by the Compensation Committee. The Compensation Committee also determines the exercise schedule of each option grant.

Federal Income Tax Consequences

The following is a brief summary of the effect of federal income taxation upon the recipients and us with respect to the shares under the Plan and does not purport to be complete.

Non-qualified Stock Options.  The grant of non-qualified stock options will have no immediate tax consequences to us or the grantee. The exercise of a non-qualified stock option will require a grantee to include in his gross income the amount by which the fair market value of the acquired shares on the exercise date (or the date on which any substantial risk of forfeiture lapses) exceeds the option price. Upon a subsequent sale or taxable exchange of the shares acquired upon exercise of a non-qualified stock option, a grantee will recognize long or short-term capital gain or loss equal to the difference between the amount realized on the sale and the tax basis of such shares. We will be entitled (provided applicable withholding requirements are met) to a deduction for Federal income tax purposes at the same time and in the same amount as the grantee is in receipt of income in connection with the exercise of a non-qualified stock option.

Incentive Stock Options.  The grant of an incentive stock option will have no immediate tax consequences to us or our employee. If the employee exercises an incentive stock option and does not dispose of the acquired shares within two years after the grant of the incentive stock option nor within one year after the date of the transfer of such shares to him (a “disqualifying disposition”), he will realize no compensation income and any gain or loss that he realizes on a subsequent disposition of such shares will be treated as a long-term capital gain or loss. For purposes of calculating the employee’s alternative minimum taxable income, however, the option will be taxed as if it were a non-qualified stock option.

Compensation of Directors

Prior to 2015 each non-employee director received, upon first being elected as a member of the Board and each time they were re-elected, five-year options to purchase 7,000 common shares at an exercise price equal to the fair market value of a common share on the date of grant. Each also receives cash compensation of $600 per Board meeting attended and $300 for any other committee participation. Beginning with 2015, each non-employee director will receive cash compensation of $5,000 per annum in lieu of the options plus an additional $300 for each committee meeting attended. Assaf Ran and Mark Alhadeff do not receive compensation in connection with their positions on the Board.

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The table below sets forth the compensation paid to each of directors (other than Mr. Ran) for the year ended December 31, 2014.

Name	Fees Paid or Earned in Cash ($)		Option Awards ($)(1)		Total ($)
(a)
Michael Jackson(2)	$	3,000	$	5,034	$	8,034
*Phillip Michals	$	1,500		—	$	1,500
Eran Goldshmit(2)	$	3,000	$	5,034	$	8,034
Mark Alhadeff		—		—		—
Lyron Bentovim(3)	$	2,100	$	5,034	$	7,134

* Resigned from his position as a Board member effective on April 2, 2014.

(1) Represents stock option awards to purchase 7,000 common shares. Valuation is based on ASC Topic 718. The assumptions underlying valuation of equity awards are set forth in note 11 to our audited financial statements included elsewhere in this prospectus.

(2) At December 31, 2014, each of Messrs. Jackson and Goldshmit held stock options to purchase an aggregate of 35,000 common shares at exercise prices ranging from $1.02 to $2.92 per share.

(3) At December 31, 2014, Mr. Bentovim held stock options to purchase 7,000 common shares at an exercise price of $2.92 per share.

Mr. Ran is also the sole director of Funding. He will not receive any compensation in his capacity as such.

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PRINCIPAL SHAREHOLDERS

The following table, together with the accompanying footnotes, sets forth information, as of the date of this prospectus, regarding the beneficial ownership of our common shares by all persons known by us to beneficially own more than 5% of our outstanding common shares, each named executive officer, each director, and all of our directors and officers as a group.

Name of Beneficial Owner(1)	Title of Class		Amount of Beneficial Ownership(2)		Percentage of Class
Executive Officers and Directors
Assaf Ran(3)		Common		2,511,000		34.57	%
Michael Jackson		Common		35,000			*
Eran Goldshmit(4)		Common		37,050			*
Mark Alhadeff		Common		60,000			*
Lyron Bentovim(5)		Common		61,845			*
All officers and directors as a group (6 persons)(6)		Common		2,710,131		37.13	%

* Less than 1%

(1) Unless otherwise provided, the address of each of the individuals above is c/o Manhattan Bridge Capital, Inc., 60 Cutter Mill Road, Suite 205, Great Neck, New York 11021.

(2) A person is deemed to be a beneficial owner of securities that can be acquired by such person within 60 days from the date of this prospectus upon the exercise of options and warrants or conversion of convertible securities. Each beneficial owner’s percentage ownership is determined by assuming that options, warrants and convertible securities that are held by such person (but not held by any other person) and that are exercisable or convertible within 60 days from the date of this prospectus have been exercised or converted. Except as otherwise indicated, and subject to applicable community property and similar laws, each of the persons named has sole voting and investment power with respect to the shares shown as beneficially owned. All percentages are determined based on 7,264,039 shares outstanding.

(3) Includes 1,000,000 Restricted Shares granted to Mr. Ran on September 9, 2011, which was approved by shareholders at our 2011 annual meeting of shareholders. Mr. Ran may not sell, convey, transfer, pledge, encumber or otherwise dispose of the Restricted Shares until the earliest to occur of the following: (i) September 9, 2026, with respect to  1/3 of the Restricted Shares, September 9, 2027 with respect to an additional  1/3 of the Restricted Shares and September 9, 2028 with respect to the final  1/3 of the Restricted Shares; (ii) the date on which Mr. Ran’s employment is terminated by us for any reason other than for “Cause;” or (iii) on a Risk Termination Date. If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by us for Cause or Mr. Ran voluntarily terminates his employment for any reason other than death or disability, Mr. Ran will forfeit that portion of the Restricted Shares which have not previously vested.

(4) Includes an aggregate of 28,000 shares underlying options at exercise prices ranging from $1.02 to $2.92 per share.

(5) Includes 7,000 shares underlying options at an exercise price of $2.92 per share.

(6) Includes an aggregate of 35,000 shares underlying options beneficially owned by officers and directors as a group.

We own all of the issued and outstanding shares of Funding.

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

In September 2013, we borrowed $160,000 from the parent of a member of the Board who has since resigned from the Board. The loan is evidenced by a non-recourse promissory note bearing interest at the rate of 10% per annum and having a maturity date of September 1, 2015. Interest expense on this loan amounted to $16,000 and $4,978, respectively, for years ended December 31, 2014 and 2013.

In 2013, Mr. Ran made five separate loans to us in amounts ranging from $50,000 to $100,000, bearing interest at the rate of 6% per annum. All of these loans were repaid by us as of December 31, 2013. The aggregate interest expense for these loans was $1,124.

In 2014, Mr. Ran made seven separate loans to us in amounts ranging from $50,000 to $250,000, bearing interest at the rate of 6% per annum. At December 31, 2014, the outstanding balance of such loans is $50,000. The aggregate interest expense for these loans was $5,867.

In January 2015, Mr. Ran made three separate loans to us in the aggregate amount of $1,050,000, at an interest rate of 6% per annum. All the loans from Mr. Ran were repaid in full on February 27, 2015. The aggregate interest expense for these loans was $8,817.

In February 2015, we received a short-term loan in the amount of $175,000 from a parent of a former member of the Board bearing interest at the rate of 10% per annum.

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DESCRIPTION OF THE NOTES

General

The Notes are secured obligations of Funding and will be issued under the Trust Indenture Agreement between Funding and [•] as the “Indenture Trustee,” dated [•], as amended or supplemented from time to time (referred to herein as the “Indenture”). The terms and conditions of the Notes include those stated in the Indenture. The following is a summary of the material provisions of the Indenture. For a complete understanding of the Notes, you should review the definitive terms and conditions contained in the Indenture, which include definitions of certain terms used below. A copy of the Indenture has been filed with the SEC as an exhibit to the registration statement of which this prospectus is a part, and is available at no charge upon request.

The following is a summary of the material terms associated with the Notes:

• The Notes are general secured obligations of Funding. Funding’s obligations are secured by a grant of a security interest in all of Funding’s assets. Initially, the assets that will serve as collateral will consist of a pool of mortgage loans that Funding will purchase from us with the net proceeds of this offering plus either cash or other mortgage loans that we will contribute to Funding. Under the Indenture, the outstanding principal amount of the mortgage loans held by Funding plus Funding’s available cash must at all times be at least equal to at least 120% of the aggregate principal amount of the Notes then outstanding.

• Funding’s obligations under the Notes are fully and unconditionally guaranteed by us, but otherwise are not guaranteed by any other person or entity. Our guaranty is secured by a grant of a security interest in all of the equity interests in Funding. However, the Indenture Trustee and the Noteholders may not exercise any rights under our guaranty of the Notes until our obligations under the Webster Credit Agreement (as defined below) have been satisfied in full and the Webster Credit Agreement has been terminated, except that the Indenture Trustee and the Noteholders are permitted to exercise their rights under our guaranty of the Notes to the extent necessary for the Indenture Trustee or any Noteholder to exercise its rights with respect to the Manhattan Bridge Collateral (as defined below), in which case our obligations under our guaranty of the Notes will be limited to the proceeds of any sale of the Manhattan Bridge Collateral until our obligations under the Webster Credit Agreement have been satisfied in full and the Webster Credit Agreement has been terminated. Our guaranty will be effected pursuant to provisions contained in the Indenture, and the rights of the Indenture Trustee and the Noteholders under the guaranty will be limited by an inter-creditor agreement to be entered into with Webster Business Credit Corporation, our existing lender.

• The Notes are not savings accounts, certificates of deposit or other forms of “deposits,” and are not insured by the FDIC or any other governmental agency.

• The Notes do not have the benefit of a “sinking fund” for the retirement of principal.

• The Notes are not convertible into our capital stock or other securities.

• Funding may redeem the Notes, in whole or in part, at any time after            , 2019 (the third anniversary of the issue date of the Notes) upon at least 30 days prior written notice to the Noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest thereon up to, but not including, the date of redemption, without penalty or premium; provided that (i) if the Notes are redeemed on or after            , 2019 (the third anniversary of the issue date of the Notes) but prior to            , 2020 (the fourth anniversary of the issue date of the Notes), the redemption price will be 103% of the principal amount of the Notes redeemed and (ii) if the Notes are redeemed on or after            , 2020 (the fourth anniversary of the issue date of the Notes) but prior to            , 2021 (the fifth anniversary of the issue date of the Notes), the redemption price will be 101.5% of the principal amount of the Notes redeemed plus, in each case, the accrued but unpaid interest on the Notes redeemed up to, but not including, the date of redemption. If Funding elects to call and redeem your Notes, those redeemed Notes will cease to accrue interest after the redemption date under the terms and subject to the conditions of the Indenture.

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• Each Noteholder will have the right to cause Funding to redeem his, her or its Notes on            , 2021, (the fifth anniversary of the issue date of the Notes). The redemption price for each Note tendered for redemption will be equal to the outstanding principal amount of such Note on the date of redemption plus the accrued but unpaid interest up to, but not including, the date of redemption. In order to elect to have his, her or its Notes redeemed, a Noteholder must notify Funding, in writing, no earlier than            , 202  (six months prior to the fifth anniversary of the issue date of the Notes) and no later than           , 202  (four months prior to the fifth anniversary of the issue date of the Notes). All Notes that are subject to a properly and timely notice will be redeemed on            , 2021 (the fifth anniversary of the issuance date of the Notes). Any Noteholder who fails to make a proper and timely election will be deemed to have waived his right to have his Notes redeemed prior to the maturity date.

• Subject to certain conditions described in greater detail below, Funding is obligated to offer to redeem the Notes prior to the maturity date upon a “Change of Control” or upon any “Asset Sale.”

The Notes will be sold at 100% of their principal face amount, $25.00, and in integral multiples of $1,000. You may select the principal amount of the Notes you would like to purchase. The interest rate of the Notes will remain fixed until maturity. See “— Interest Rate and Maturity” below.

Investors holding a beneficial interest in a global certificate representing Notes sold in this offering, and anyone who subsequently acquires a beneficial interest in Notes in a qualified transfer, are referred to as “Noteholders” in this prospectus. Funding may modify or supplement the terms of the Notes described in this prospectus from time to time in a supplement to the Indenture.

The Notes will be listed and trade on the Nasdaq Global Market. The Notes may be transferred or exchanged for other Notes of a like aggregate principal amount subject to limitations contained in the Indenture. There will not be any charge or fee for any registration, transfer or exchange of Notes. However, Funding may require the registered holder (The Depository Trust Company (“DTC”) or its nominee) to pay any tax, assessment fee, or other governmental charge required in connection with any registration, transfer or exchange of Notes. The registered holder of any Notes will be treated as the owner of such Notes for all purposes.

Denomination

The Notes will be offered in denominations of $25.00 and in integral multiples of $1,000. You will determine the exact principal amount of Notes you purchase when you subscribe.

Term

The Notes offered pursuant to this prospectus will have a ten-year term to maturity. The maturity date will be the tenth anniversary of the issue date. After maturity, Funding will pay all outstanding principal and accrued but unpaid interest on the Notes on the 15^th day of the calendar month in which the maturity date falls if the maturity is prior to the 15^th day of the calendar month or on the 15^th day of the subsequent calendar month if the maturity date falls on or after the 15^th day of the calendar month. If the 15^th day of the months falls on a Saturday, Sunday or legal holiday, the payment will be made on the first business day following the 15^th of the month. The Notes do not earn interest after the maturity date or any date set for prepayment.

Should the original Noteholder (x) no longer be the holder of the Note or (y) be unavailable, or a change in payee be necessary, Funding may require a copy of the executed assignment to any transferee in order that it knows the principal is returned to the rightful party.

Interest Rate

The rate of interest Funding will pay on the Notes is     % per annum.

Payments on the Notes; Paying Agent and Registrar

Interest on the Notes will be paid on a monthly basis, in cash, in arrears.

Interest will begin to accrue on the Notes at the stated rate from and including the first day after the three-month anniversary of the issue date of the Notes until maturity. Interest will be payable on the 15^th day

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of each calendar month beginning with the first calendar month following the month in which the interest begins to accrue. Interest will be paid without any compounding. The Indenture provides that all interest will be calculated based on a year with twelve 30-day months.

Payments on the Notes will be made directly to you if you are the registered owner; otherwise they will be made to the depositary (DTC) and then credited to your brokerage or custodial account through DTC procedures followed by your brokerage firm or custodian. For more information on this procedure, see “Registration and Exchange” below.

Registration and Exchange

The Notes that are settled directly will generally be issued in book-entry form, which means that no physical instrument is created, subject, however, to limited exceptions described in the Indenture. The Notes settled through DTC settlement will be issued in the form of a single, fully registered global certificate deposited with, or on behalf of, DTC, in New York, NY, and registered in the name of Cede & Co., as nominee of DTC. Unless and until exchanged in whole or in part for Notes in definitive registered form, a global certificate may not be transferred except as a whole by the depositary to a nominee of such depositary, by a nominee of such depositary to such depositary or another nominee of such depositary, or by such depositary or any nominee of such depositary to a successor of such depositary or a nominee of such successor.

DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of its participants and to facilitate the clearance and settlement of securities transactions, such as transfers and pledges, among its participants in such securities through electronic computerized book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers banks, trust companies, clearing corporations and certain other organizations, some of whom own DTC. Access to DTC’s book-entry system is also available to others, such as banks, brokers, dealers and trust companies that clear through or maintain a custodial relationship with a participant, either directly or indirectly. The rules applicable to DTC and its participants are on file with the SEC.

Purchases of Notes within the DTC system must be made by or through direct participants, which will receive a credit for the Notes on DTC’s records. The ownership interest of each actual purchase of Notes will be recorded on the direct and indirect participants’ records. Noteholders will not receive written confirmation from DTC of their purchases, but are expected to receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the direct or indirect participants through which they entered into the transaction. Transfers of ownership interests in the Notes are to be accomplished by entries made on the books of participants acting on behalf of the actual Noteholders. Noteholders will not receive certificates representing their ownership interests in the Notes, except in the event that use of the book-entry system is discontinued.

To facilitate subsequent transfers, all Notes deposited by participants with DTC will be registered in the name of DTC’s nominee, Cede & Co. The deposit of Notes with DTC and their registration in the name of Cede & Co. will effect no change in beneficial ownership. DTC will have no knowledge of the actual beneficial owners of the Notes. DTC’s records will reflect only the identity of the direct participants to whose accounts such Notes are credited, which may or may not be the beneficial owners. The participants will remain responsible for keeping account of their holdings on behalf of their customers.

Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct and indirect participants to Noteholders will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

Funding will make payments due on the Notes to Cede & Co., as nominee of DTC, in immediately available funds. DTC’s practice is to credit direct participants’ accounts, upon DTC’s receipt of funds and corresponding detailed information, on the relevant payment date in accordance with their respective holdings

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shown on DTC’s records. Payments by participants and indirect participants to Noteholders will be governed by standing instructions and customary practices, as is the case with securities held for the account of customers in bearer form or registered in “street name,” and will be the responsibility of such participant or indirect participant and not Funding’s responsibility, or our responsibility or that of DTC, subject to any statutory or regulatory requirements as may be in effect from time to time. Funding is responsible for making all required payments to the Indenture Trustee. The Indenture Trustee is responsible for making all required payments to Cede & Co. Disbursement of such payments to direct participants is the responsibility of Cede & Co. Thereafter, disbursement of such payments to the beneficial owners is the responsibility of direct and indirect participants (i.e., brokers, dealers and custodians).

As long as the depositary, or its nominee, is the registered holder of a global certificate, the depositary or such nominee will be considered the sole owner and holder of the Notes represented thereby for all purposes under the Notes and the Indenture. Except in the limited circumstances referred to below, owners of beneficial interests in a global certificate will not be entitled to have such global certificate or any Notes represented thereby registered in their names, will not receive or be entitled to receive physical delivery of certificated Notes in exchange for the global certificate and will not be considered to be the owners or holders of such global certificate or any certificates represented thereby for any purpose under the Notes or the Indenture. Accordingly, each person owning a beneficial interest in such global certificate must rely on the procedures of the depositary and, if such person is not a participant, on the procedures of the participant through which such person owns its interest to exercise any rights of a holder under the Indenture. The laws of some jurisdictions require that certain purchasers of securities take physical delivery of securities in definitive form. Such laws may impair the ability to transfer beneficial interests in a global certificate.

If the depositary for a global certificate representing Notes is at any time unwilling or unable to continue as depositary and a successor depositary is not appointed by Funding within 90 days, Funding will issue Notes in definitive form in exchange for such global certificate. In addition, Funding may at any time and in its sole discretion determine not to have the Notes represented by one or more global certificates and, in such event, Funding will issue the Notes in definitive form in exchange for all of the global certificates representing the Notes. Finally, if an event of default, or an event which with the giving of notice or lapse of time or both would constitute an event of default, with respect to the Notes represented by a global certificate has occurred and is continuing, then Funding will issue Notes in definitive form in exchange for all of the global certificates representing the Notes.

DTC may discontinue providing its services as depository with respect to the Notes at any time by giving reasonable notice to Funding or the Indenture Trustee. Under such circumstances, in the event that a successor depositary is not obtained, Note certificates will be required to be printed and delivered.

Funding may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Note certificates will be printed and delivered to DTC.

Although DTC has agreed to the procedures provided above in order to facilitate transfers, it is under no obligation to perform these procedures, and these procedures may be modified or discontinued at any time.

The information in this section concerning DTC and DTCC’s book-entry system has been obtained from sources that we and Funding believe to be reliable, but neither we nor Funding takes any responsibility for the accuracy thereof.

Amortization and Repayment

The principal amount of the Notes shall be repaid in quarterly installments, if and only if the aggregate principal amount of all mortgage loans owned by Funding plus cash on hand at such time shall be less than 120% of the outstanding principal amount of the Notes. Such repayment shall be in an amount equal to the amount necessary such that, after giving effect to such repayment, the aggregate principal amount of all mortgage loans owned by Funding plus cash on hand at such time is equal to or greater than 120% of the outstanding principal amount of the Notes. The remaining principal balance of the Notes shall be repaid in full at maturity along with any accrued but unpaid interest. You should be aware that because payment is made to the depositary (as registered holder), and then credited to participating broker-dealers and custodians,

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and ultimately the investment accounts of beneficial holders, funds may not be received in a beneficial holder’s account for a number of business days after payment is actually made to the depositary.

Call and Redemption Prior to Stated Maturity

Funding may call and redeem, in whole or in part, principal amount and accrued but unpaid interest on any Notes prior to their stated maturity only as set forth in the Indenture and described below. No Noteholder has the right to put or otherwise require Funding to redeem any Note prior to its maturity date (as originally stated or as it may be extended), except as indicated in the Indenture and described below.

Issuer’s Right of Redemption

Funding has the right to redeem the Notes, in whole or in part, at any time after            , 2019 (the third anniversary of the issue date of the Notes) upon at least 30 days prior written notice to the Noteholders. The redemption price will be equal to the outstanding principal amount of the Notes redeemed plus the accrued but unpaid interest up to, but not including, the date of redemption, without penalty or premium; provided that (i) if the Notes are redeemed on or after            , 2019 (the third anniversary of the issue date of the Notes) but prior to            , 2020 (the fourth anniversary of the issue date of the Notes), the redemption price will be 103% of the principal amount of the Notes redeemed and (ii) if the Notes are redeemed on or after            , 2020 (the fourth anniversary of the issue date of the Notes) but prior to            , 2021 (the fifth anniversary of the issue date of the Notes), the redemption price will be 101.5% of the principal amount of the Notes redeemed plus, in each case, the accrued but unpaid interest on the Notes redeemed up to, but not including, the date of redemption. If Funding elects to call and redeem your Notes, those redeemed Notes will cease to accrue interest after the redemption date under the terms and subject to the conditions of the Indenture.

Noteholder’s Right of Redemption

Funding is required to redeem the Notes owned by a Noteholder at the request of such Noteholder in full on the fifth anniversary of the issue date of the Notes upon no less than four and no more than six months’ advanced written notice by such Noteholder. The redemption price for each Note for which a timely and valid election is made will be equal to the outstanding principal amount of the Note plus the accrued but unpaid interest thereon up to, but not including, the date of redemption. In order to exercise this right, the Noteholder must notify Funding, in writing, no earlier than              , 202  (six months prior to the fifth anniversary of the issue date of the Notes) and no later than              , 202  (four months prior to the fifth anniversary of the issue date of the Notes). All Notes that are subject to a properly and timely notice will be redeemed on              , 2021 (the fifth anniversary of the issue date of the Notes). Any Noteholder who fails to make a proper and timely election will be deemed to have waived his, her or its right to have his, her or its Notes redeemed prior to the maturity date.

Issuer’s Obligation to Redeem

Change of Control

As defined in the Indenture, a “Change of Control” means the occurrence of any of the following events:

(a)  any person or “group” (as such terms are used in the Exchange Act) is or becomes the “beneficial owner” (as defined in the Exchange Act, except that a person shall be deemed to have beneficial ownership of all shares that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of 50% or more of the total voting power of all outstanding shares of capital stock of Funding, us or any of our subsidiaries; or

(b)  either Funding or we consolidate with, or merge with or into, an unrelated entity other than a consolidation or merger where immediately after such transaction the person or persons that “beneficially owned” (as defined in the Exchange Act) immediately prior to such transaction, directly or indirectly, shares of capital stock representing 50% or more of the total voting power of all outstanding shares of capital stock of Funding, us or any of our subsidiaries “beneficially own or owns” (as so determined), directly or indirectly, shares of capital stock representing 50% or more of the total voting power of all outstanding shares of capital stock of the surviving entity;

(c)  we, directly or indirectly through our subsidiaries, sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of our assets (determined on a consolidated basis) to an unrelated person other than any such transaction where immediately after such transaction the person or persons that “beneficially owned” (as defined in the Exchange Act) immediately prior to such transaction, directly or

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indirectly, 50% or more of the total voting power of all outstanding shares of our capital stock, “beneficially own or owns”, directly or indirectly, 50% or more of the total voting power of all outstanding shares of the capital stock of the transferee; or

(d)  during any consecutive two-year period, the “continuing directors” (as defined) cease for any reason to constitute a majority of the board of directors of the Funding, us or any of our subsidiaries; or

(e)  either we or Funding adopt of a plan of liquidation or dissolution.

In the event of a “Change of Control,” Funding shall, within 30 days after the date of occurrence of such Change in Control (such date being the “Change of Control Date”), make an offer (the “Change of Control Offer”) to all Noteholders to purchase all outstanding Notes properly tendered pursuant to such offer, and, within 60 days after the Change of Control Date, all Notes properly tendered pursuant to such offer shall be accepted for purchase (the date of such purchase, the “Change of Control Purchase Date”) for a cash price equal to 101% of the principal amount thereof as of the Change of Control Purchase Date, plus accrued and unpaid interest up to, but not including, the Change of Control Purchase Date.

In order to effect the Change of Control Offer, Funding shall mail a notice to each Noteholder with a copy to the Indenture Trustee stating:

• that a Change of Control has occurred and that the Noteholder has the right to require Funding to purchase such Noteholder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof (the “Change of Control Purchase Price”) plus accrued and unpaid interest up to, but not including, the Change of Control Purchase Date;

• the Change of Control Purchase Date, which shall be a business day no earlier than 30 days nor later than 60 days from the date such notice is mailed;

• that, unless Funding defaults in the payment of the Change of Control Purchase Price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Purchase Date; and

• the procedures determined by Funding, consistent with the Indenture, that a Noteholder must follow in order to have his, her or its Notes purchased.

Alternatively, Funding will not be required to make a Change of Control Offer as provided above, if, in connection with or in contemplation of any Change of Control, Funding has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Purchase Price and has purchased all Notes properly tendered in accordance with the terms of such Alternate Offer so long as the terms and conditions of such contemplated Change of Control are described in reasonable detail to the Noteholders in the notice delivered in connection with such Alternate Offer.

Funding’s ability to pay cash to the Noteholders upon a purchase may be limited by its then existing financial resources. We cannot assure you that Funding will have sufficient funds available when necessary to make any required purchases. Funding’s failure to make or consummate the Change of Control Offer or pay the Change of Control Purchase Price when due would result in an Event of Default and would give the Indenture Trustee and the Noteholders the rights described under “Events of Default.”

Funding will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in a manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by Funding or makes an Alternate Offer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or Alternate Offer.

The existence of a Noteholder’s right to require us to purchase his, her or its Notes upon a Change of Control may deter a third party from acquiring Funding in a transaction that constitutes a Change of Control.

Asset Sales

As defined in the Indenture, an “Asset Sale” means any direct or indirect sale, conveyance, transfer, lease (that has the effect of a disposition) or other disposition (including, without limitation, any merger,

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consolidation or sale/leaseback transaction or upon any condemnation, eminent domain or similar proceedings) to any person other than Funding, MBC or its or our wholly-owned subsidiaries (each an “MBC Entity”), in one transaction or a series of related transactions:

(i)  by us or by Funding of any capital stock of any subsidiary;

(ii)  by an MBC Entity of any assets that constitute substantially all of an operating unit or line of business; or

(iii)  by us or by Funding of any other assets or asset (including, without limitation, any mortgage loans or intellectual property);

in each case, other than:

(1)  sales of property or equipment that, in the reasonable determination of the seller, has become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the seller’s business;

(2)  any transaction between or among one or more MBC Entities (other than a sale of assets by Funding to us); or

(3)  any transaction constituting a Change of Control.

No MBC Entity will, and will not cause or permit any other MBC Entity over which it has control to, directly or indirectly, make any Asset Sale, unless:

• the consideration received in connection with such Asset Sale is at least equal to the fair market value of the assets sold or otherwise disposed of; and

• at least 75% of such consideration received consists of (A) cash or cash equivalents, (B) assets (other than securities) to be used in a related business, (C) in the case of an Asset Sale by us, the capital stock of any person engaged in a related business that is, or as a result of or in connection with the acquisition of such capital stock by an MBC Entity (other than Funding) becomes, an MBC Entity or (D) a combination of the foregoing.

If at any time any non-cash consideration received by an MBC Entity in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the net cash proceeds thereof shall be applied accordingly.

An MBC Entity may apply an amount equal to the net cash proceeds of any Asset Sale within 120 days of receipt thereof to make an investment in or expenditures for assets (other than securities) to be used in a related business or acquire the capital stock of any person engaged in a related business that is, or as a result of or in connection with such investment becomes, an MBC Entity. To the extent all or part of the net cash proceeds of any Asset Sale are not applied or committed within 120 days of such Asset Sale as described above (such net cash proceeds, the “Unutilized Net Cash Proceeds”), Funding shall, within 20 days after such 120^th day, make an offer to purchase (a “Net Proceeds Offer”) all outstanding Notes up to an aggregate maximum principal amount of Notes equal to such Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, up to, but not including, the purchase date thereof.

If Funding makes a Net Proceeds Offer, Funding will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other applicable federal or state securities laws and regulations and any applicable requirements of any securities exchange on which the Notes are listed, and any violation of the provisions of the Indenture relating to such Net Proceeds Offer occurring as a result of such compliance will not be deemed a default or an event of default.

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Transfers

The Notes will be transferable in accordance with the terms and conditions set forth in the Indenture. For Notes that are represented by a global certificate held by a depositary or its nominee, transfers of beneficial interests in such certificate must be effected in accordance with the procedures and rules of the depositary.

Upon transfer of a Note, Funding will provide the new registered Noteholder with a purchase confirmation that will evidence the transfer of the account on Funding’s records. If applicable (e.g., if transferred to a custodial account), a new certificate will be issued. Nevertheless, no written confirmations will be provided with respect to transfers of beneficial interests in a global certificate held by a depositary or its nominee.

Quarterly Statements

Funding will provide registered Noteholders with quarterly statements, which will indicate, among other things, the account balance at the end of the quarter, interest credited, redemptions made, if any, and the interest rate paid during the quarter. These statements will be sent electronically on or prior to the 10^th business day after the end of each calendar quarter. If a Noteholder is unwilling or unable to receive quarterly statements electronically, Funding will mail the statements to the address of record on or prior to the 10^th business day after the end of each calendar quarter. In such a case, Funding may charge such Noteholders a reasonable fee to cover its expenses incurred in mailing the statements.

Ranking

The Notes will constitute senior secured debt of Funding. The payment of principal and interest on the Notes will be structurally senior to all present and future claims of Funding’s creditors.

Guarantee by Manhattan Bridge Capital

We have fully and unconditionally guaranteed the payment of principal and interest on the Notes.

Collateral Security

The Notes are secured by the assets of Funding. Funding will grant a security interest in all of its assets to the Indenture Trustee for the benefit of the Noteholders. The assets of Funding consist, and are expected to consist, primarily of (i) a pool of mortgage loans, originated and funded by us, secured by first priority liens on real property, purchased by Funding from us on the date the Notes are issued, (ii) mortgage loans, originated and funded by us, contributed or sold to Funding to replace mortgage loans held by Funding that are either repaid in full or are in default; (iii) mortgage loans originated by Funding, (iv) loan repayment proceeds received from obligors with respect to Funding’s mortgage loans and (v) all proceeds from the sale of mortgage loans and properties acquired in foreclosure. The assets of Funding subject to the Indenture Trustee’s security interests are referred to as the “Funding Collateral.”

As indicated above, we own 100% of the equity interests in Funding and will fully and unconditionally guarantee Funding’s obligations under the Notes. Our guarantee will be secured by a grant to the Indenture Trustee, for the benefit of the Noteholders, of a security interest in 100% of the equity ownership interests issued by Funding. The equity interests subject to the Indenture Trustee’s security interest are referred to as the “Manhattan Bridge Collateral.”

Together, the Funding Collateral and the Manhattan Bridge Collateral comprise all of the collateral security for Funding’s obligations under the Notes. To the extent that we subsequently establish one or more wholly owned subsidiaries of Funding, the Notes will be secured by a security interest in the equity ownership interests of those subsidiaries.

Agreement with Webster Business Credit Corporation

As described above, we will guarantee the repayment of the Notes, which guaranty will be secured by the Manhattan Bridge Collateral. As consideration for agreeing to permit us to provide the Manhattan Bridge Collateral and guarantee the Notes, Webster, as our existing lender pursuant to that certain Credit and Security Agreement (the “Webster Credit Agreement”) between Webster and us dated as of February 27, 2015, will require that Funding guarantee the obligations of Manhattan Bridge to Webster under the Webster Credit

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Agreement on an unsecured basis. Additionally, Webster and the Indenture Trustee, for the benefit of the Noteholders, will enter into an agreement which will provide, inter alia, that (i) Webster will not exercise any rights under the Funding guaranty for so long as the Notes are outstanding or any interest, fees, expenses or other obligations in connection with the Notes are unpaid and (ii) the Indenture Trustee and the Noteholders will not exercise any rights under our guaranty of the Notes until our obligations under the Webster Credit Agreement have been satisfied in full and the Webster Credit Agreement has been terminated, except that the Indenture Trustee and the Noteholders are permitted to exercise their rights under our guaranty of the Notes to the extent necessary for the Indenture Trustee or any Noteholder to exercise its rights with respect to the Manhattan Bridge Collateral, in which case our obligations under our guaranty of the Notes will be limited to the proceeds of any sale of the Manhattan Bridge Collateral until our obligations under the Webster Credit Agreement have been satisfied in full and the Webster Credit Agreement has been terminated. The Indenture Trustee will enter into a similar agreement in connection with any extension, modification, renewal, replacement or refinancing of the Webster Credit Line.

No Sinking Fund

The Notes are not associated with any sinking fund. A sinking fund is generally any account to which contributions will be made, from which payments of principal or interest owed on the Notes will be made.

Restrictive Covenants

The Indenture contains covenants that restrict Funding from certain actions as described below. In particular, the Indenture provides that:

• Funding will not declare or pay any dividends or other payments of cash or other property solely in respect of its capital stock to its shareholders unless no default and no event of default with respect to the Notes exists or would exist immediately following the declaration or payment of the dividend or other payment;

• to the extent legally permissible, Funding will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, which may affect the covenants or the performance of the Indenture;

• the aggregate principal amount of all mortgage loans owned by Funding plus cash on hand at any time shall at all times equal at least 120% of the outstanding principal amount of the Notes;

• neither Funding’s board of directors nor our board of directors will adopt a plan of liquidation that provides for, contemplates or the effectuation of which is preceded by (a) the sale, lease, conveyance or other disposition of all or substantially all of its or our assets, as the case may be, otherwise than (i) substantially as an entirety, or (ii) in a qualified sales and financing transaction, and (b) the distribution of all or substantially all of the proceeds of such sale, lease, conveyance or other disposition and of our remaining assets to the holders of our capital stock, unless, prior to making any liquidating distribution pursuant to such plan, Funding makes provision for the satisfaction of its obligations under the Notes; and

• Funding may not incur any additional indebtedness; though it will guarantee our obligations under the Webster Credit Agreement pursuant to the terms set forth above under the caption “— Agreement with Webster Business Credit Corporation.”

Consolidation, Mergers or Sales

The Indenture generally permits a consolidation or merger between Funding and another entity. It also permits the sale or transfer by Funding of all or substantially all of its property and assets. These transactions are permitted if:

• the resulting or acquiring entity, if other than Funding, is a United States corporation, limited liability company or limited partnership and assumes all of Funding’s responsibilities and liabilities under the Indenture, including the payment of all amounts due on the Notes and performance of the covenants in the Indenture; and

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• immediately after the transaction, and after giving effect to the transaction, no event of default exists under the Indenture.

If Funding consolidates or merges with or into any other entity or sells or leases all or substantially all of its assets, according to the terms and conditions of the Indenture, the resulting or acquiring entity will be substituted for Funding in the Indenture with the same effect as if it had been an original party to the Indenture. As a result, the successor entity may exercise Funding’s rights and powers under the Indenture in Funding’s name, and Funding (as an entity) will be released from all its liabilities and obligations under the Indenture and under the Notes. Nevertheless, no such transaction will by itself eliminate or modify the collateral that Funding has provided as security for its obligations under the Indenture.

Events of Default and Remedies

The Indenture provides that each of the following constitutes an event of default:

• the failure to pay principal on any Note after it becomes due and payable;

• the failure to pay interest on any Note or any other fees for a period of 30 days after they become due and payable;

• a failure to observe or perform certain material covenants, conditions or agreements in the Indenture immediately upon such failure, and a failure to observe or perform certain other material covenants, conditions or agreements in the Indenture but only after notice of failure from the Indenture Trustee or from the holders of 25% in aggregate principal amount of the then outstanding Notes and such failure is not cured within 30 days;

• any judgment is rendered or filed against us or Funding or with respect to any of our respective assets or which could reasonably be expected to have a material adverse effect (as defined in the Indenture);

• any representation or warranty made by us or Funding in the Indenture or any related agreement, document or financial or other statement shall prove to have been incorrect or misleading in any material respect on the date when made or deemed to have been made;

• termination or breach of any guaranty or any guarantor pledge agreement entered into in connection with the Notes or if any guarantor attempts to terminate, challenge the validity of or its liability under the related guaranty agreement or guarantor pledge agreement;

• certain events of bankruptcy, insolvency or reorganization with respect to us or Funding;

• we fail to make a payment on any material indebtedness when due or any default or event of default has occurred under the Webster Credit Agreement or any extension or replacement thereof or successor thereto; or

• the cessation of our business or the business of Funding.

The Indenture requires that Funding give immediate notice to the Indenture Trustee upon the occurrence of an event of default, unless it has been cured or waived. The Indenture Trustee may then provide notice to the Noteholders or withhold the notice if the Indenture Trustee determines in good faith that withholding the notice is in your best interest, unless the default is a failure to pay principal or interest on any Note.

If an event of default occurs, the Indenture Trustee, at the written direction of the holders of at least 50% in principal amount of the outstanding Notes, shall declare the unpaid principal and all accrued but unpaid interest on the Notes to be immediately due and payable. The Pledge and Security Agreement permits the Indenture Trustee to exercise on behalf of the Noteholders all rights and remedies as are available to a secured creditor under applicable law, subject to any limitations in the Indenture.

Amendment, Supplement and Waiver

Except as provided in the Indenture, the terms of the Indenture or the Notes then outstanding may be amended, supplemented or waived with the consent of the holders of at least a majority in principal amount of the Notes then outstanding (which consent will be presumed if a Noteholder does not object within 30 days of

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a request for consent), and any existing default or compliance with any provision of the Indenture or the Notes may be waived with the affirmative consent of the holders of a majority in principal amount of the then outstanding Notes.

Notwithstanding the foregoing, an amendment or waiver will not be effective with respect to the Notes held by a Noteholder who has not consented if such amendment or waiver:

• reduces the principal of, or changes the fixed maturity of, any Note;

• reduces the rate of or changes the time for payment of interest, including default interest, on any Note;

• reduces the premium payable upon the redemption of any Note or changes the time at which any Note may be redeemed as described in the Indenture and the Notes;

• waives a default or event of default in the payment of principal or interest on the Notes, except for a rescission or withdrawal of acceleration of the Notes made by the holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration;

• changes the currency of principal or interest payments on the Notes;

• impairs the rights of Noteholders to receive any payments when due pursuant to the terms of the Indenture;

• releases any guarantors of their obligations in connection with the Notes or releases any collateral that secures the obligations under the Notes;

• modifies any Change of Control Offer or Net Proceeds Offer; or

• causes the Notes or our guaranty or any subsequent guarantors to become contractually subordinate to any other indebtedness;

• reduces the percentage of the principal amount of outstanding Notes necessary to effectuate any amendments or waivers to the Indenture or the Notes; or

• makes any change in the provisions of the Indenture relating to amendments or waivers or the rights of Noteholders to receive payments of principal of or interest on the Notes.

Notwithstanding the foregoing, the following kinds of amendments or supplements to the Indenture may be effected by Funding and the Indenture Trustee without the consent of any Noteholder:

• to cure any ambiguity, defect or inconsistency;

• to provide for assumption of Funding’s obligations to the Noteholders in the event of a merger, consolidation or sale of all or substantially all of Funding’s assets;

• to provide for additional uncertificated or certificated Notes;

• to make any change that does not materially and adversely affect the legal rights under the Indenture of any Noteholder;

• to comply with requirements of the SEC in order to comply with applicable federal or state laws or regulations; or

• to comply with the rules or policies of a depositary of the Notes.

Rights of Noteholders

As a Noteholder, you have limited rights to vote on our actions as set forth in the Indenture. In general, you will have the right to vote on whether or not to approve some amendments to the Indenture. For a description of these rights, see “— Amendment, Supplement and Waiver” above. You will also have the right to direct some actions that the Indenture Trustee takes if there is an event of default with respect to the Notes. For a description of these rights, see above under the caption “— Events of Default.” For a complete

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description of your rights as a Noteholder, we encourage you to read a copy of the Indenture, which is filed as an exhibit to the registration statement of which this prospectus is a part. We will also provide you with a copy of the Indenture upon your request.

Subject to certain exceptions, the holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for some of the remedies available, except as otherwise provided in the Indenture. The Indenture Trustee may require reasonable indemnity, satisfactory to the Indenture Trustee, from Noteholders before acting at their direction. You will not have any right to pursue any remedy with respect to the Indenture or the Notes unless you satisfy the conditions contained in the Indenture.

The Indenture Trustee

General

[•  ] has agreed to be the Indenture Trustee under the Indenture. The Indenture contains certain limitations on the rights of the Indenture Trustee, should it become one of Funding’s creditors, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any claim as security or otherwise. The Indenture Trustee will be permitted to engage in other transactions with us or Funding.

Subject to certain exceptions, the holders of a majority in principal amount of the then outstanding Notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee. The Indenture provides that if an event of default specified in the Indenture shall occur and not be cured, the Indenture Trustee will be required, in the exercise of its power, to use the degree of care of a reasonable person in the conduct of his own affairs. Subject to such provisions, the Indenture Trustee will be under no obligation to exercise any of its rights or powers under the Indenture at the request of any Noteholder, unless the holder shall have offered to the Indenture Trustee security and indemnity satisfactory to it against any loss, liability or expense.

Resignation or Removal of the Indenture Trustee

The Indenture Trustee may resign at any time, or may be removed by the holders of a majority of the aggregate principal amount of the outstanding Notes. In addition, Funding may remove the Indenture Trustee for certain failures in its duties, including the insolvency of the Indenture Trustee. Nevertheless, no resignation or removal of the Indenture Trustee may become effective until a successor Indenture Trustee has accepted the appointment as provided in the Indenture.

Reports to the Indenture Trustee

Funding will provide the Indenture Trustee with (i) a calculation date report by the 15^th day of each calendar quarter containing a calculation of the debt coverage ratio that includes a summary of all cash, mortgage receivables serving as collateral, as well as Funding’s total outstanding indebtedness including outstanding principal balances, interest credited and paid, transfers made, any redemption or repayment and interest rate paid; (ii) copies of our unaudited quarterly consolidated financial statements, no earlier than when the same become a matter of public record; (iii) copies of our audited consolidated annual financial statements no earlier than when the same becomes a matter of public record; and (iv) any additional information reasonably requested by the Indenture Trustee.

Certain Charges

Funding and its servicing agents, if any, may assess service charges for changing the registration of any Note to reflect a change in name of the holder, multiple changes in interest payment dates or transfers (whether by operation of law or otherwise) of a Note by the holder to another person. The Indenture permits Funding to set off, against amounts otherwise payable to you under the Notes, the amount of these charges.

Satisfaction and Discharge of Indenture

The Indenture shall cease to be of further effect upon the payment in full of all of the outstanding Notes and the delivery of an officer’s certificate to the Indenture Trustee stating that Funding does not intend to issue additional Notes under the Indenture or, with certain limitations, upon deposit with the Indenture Trustee of funds sufficient for the payment in full of all of the outstanding Notes.

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CERTAIN PROVISIONS OF NEW YORK LAW AND OF OUR
RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS

The following summary of certain provisions of New York law and of our restated certificate of incorporation, does not purport to be complete and is subject to and qualified in its entirety by reference to the NYBCL and to our restated certificate of incorporation and bylaws. Copies of our certificate of incorporation and bylaws are filed as exhibits to the registration statement of which this prospectus forms a part. See “Where You Can Find More Information.” Except as otherwise indicated, the description below is equally applicable to Funding.

Our Board of Directors

We have one class of directors. Each director serves for a one-year term or until his or her successor is elected and qualified. Our bylaws provide that our board of directors will consist of not less than one and not more than nine directors. At the present time our board of directors consists of five members. Funding’s bylaws provide for only one director.

Election of Directors; Removals; Vacancies

Directors are elected by a plurality of all of the votes cast in the election of directors.

Under our bylaws a director may be removed for cause by the board of directors or by the shareholders acting by a simple majority.

Our bylaws provide that vacancies on our board of directors may be filled by the remaining directors, even if the remaining directors do not constitute a quorum. However, only shareholders can fill a vacancy on our board of directors that is caused by the removal of a director by action of shareholders. Any director elected to fill a vacancy will serve for the remainder of the full term of the director he or she is replacing or until his or her successor is duly elected and qualifies.

Meetings of Shareholders

Our bylaws provide that a meeting of our shareholders for the election of directors and the transaction of any business will be held annually on such day during the period from May 1 through October 31, other than a legal holiday and at the time and place set by the board of directors. Our bylaws provide that a special meeting of shareholders may be called at any time by the president and must be called by the president at the request in writing of a majority of the directors then in office or at the request in writing filed with our secretary by the holders of a majority of our issued and outstanding shares of capital stock entitled to vote at such a meeting.

Shareholder Actions by Written Consent

Under Section 615 of the NYBCL and our restated certificate of incorporation, shareholder action may be taken without a meeting if a written consent, setting forth the action so taken, is given by the shareholders entitled to cast not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting of shareholders.

Amendment of Certificate of Incorporation and Bylaws

Under the NYBCL, a New York corporation may amend its certificate of incorporation if such action is declared advisable by the board of directors and approved by the affirmative vote of shareholders entitled to cast a majority of all of the votes entitled to be cast on the matter. Our bylaws provide that each of our board of directors and our shareholders has the power to adopt, alter or repeal any provision of our bylaws and to make new bylaws.

Transactions Outside the Ordinary Course of Business

Under the NYBCL, a New York corporation generally may not dissolve, merge or consolidate with another entity, sell all or substantially all of its assets or engage in a statutory share exchange unless the action is declared advisable by the board of directors and approved by the affirmative vote of shareholders entitled to cast a majority of the votes entitled to be cast on the matter, unless a greater percentage is specified in the corporation’s certificate of incorporation. Our restated certificate of incorporation does not provide for a super majority vote on any matter.

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Business Combinations

Under the NYBCL, certain “business combinations” (including a merger, consolidation, statutory share exchange and, in certain circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities) between a New York corporation and an “interested shareholder” (defined generally as any person who beneficially owns, directly or indirectly, 20% or more of the voting power of the corporation’s outstanding voting shares) or an affiliate of such an interested shareholder are prohibited for five years after the most recent date on which the interested shareholder becomes an interested shareholder. Thereafter, any such business combination must generally be recommended by the board of directors of the corporation and approved by the affirmative vote of holders of a majority of the outstanding voting stock of the corporation other than shares held by the interested shareholder with whom (or with whose affiliate) the business combination is to be effected or held by an affiliate or associate of the interested shareholder, unless, among other conditions, the corporation’s common shareholders receive a minimum price (as described in the NYBCL) for their shares and the consideration is received in cash or in the same form as previously paid by the interested shareholder for its shares. A person is not an interested shareholder under the statute if the board of directors approved in advance the transaction by which the person otherwise would have become an interested shareholder. A corporation’s board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

REIT Qualification

Our restated certificate of incorporation provides that our board of directors may authorize us to revoke or otherwise terminate our REIT election, without approval of our shareholders, if it determines that it is no longer in our best interests to continue to qualify to be taxed as a REIT. Funding is a “qualified REIT subsidiary” for federal income tax purposes. See “Material United States Federal Income Tax Consequences.”

Limitation on Directors’ Liability and Indemnification of Directors and Officers

The NYBCL permits a New York corporation to include in its certificate of incorporation a provision limiting the liability of its directors to the corporation and its shareholders for money damages, except if a judgment or other final adjudication establishes that (i) the director’s acts were committed in bad faith, (ii) involved intentional misconduct or a knowing violation of law, (iii) he personally gained a financial profit or other advantage to which he was not legally entitled or (iv) his act involves (A) the declaration of a dividend that violated section 510 of the NYBCL; (B) the purchase or redemption of our shares in violation of section 513 of the NYBCL; (C) the distribution of assets to shareholders after dissolution without paying or adequately providing for the payment of all known liabilities; and (D) the making of loans to a director in violation of section 714 of the NYBCL.

The NYBCL permits us to indemnify any present or former director or officer, against judgments, fines, settlements and reasonable expenses including attorney’s fees actually and necessarily incurred as a result of the action or proceeding, including any appeals, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or not opposed to, the best interests of the corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.

In addition, the NYBCL permits us to advance reasonable expenses to a director or officer upon our receipt of an undertaking by or on behalf of such officer or director to repay such amount as, and to the extent, such officer or director is ultimately found not to be entitled to indemnification or, if entitled to indemnification, to the extent the amount advanced exceeds the indemnification to which such officer or director is entitled.

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Our restated certificate of incorporation and bylaws obligate us, to the fullest extent permitted by New York law in effect from time to time, to indemnify, pay or reimburse reasonable expenses in advance of final disposition of a proceeding to any present or former director or officer who is made or threatened to be made a party to, or witness in, a proceeding by reason of his or her service in that capacity and any individual who, while a member of our board of directors and at our request, serves or has served as a director, officer, trustee or manager of another corporation, real estate investment trust, limited liability company, partnership, joint venture, trust, employee benefit plan or any other enterprise and who is made or threatened to be made a party to, or witness in, the proceeding by reason of his or her service in that capacity authorized by;

• by the board, acting by a quorum consisting of directors who are not parties to such action or proceeding upon a finding that the director or officer has met the standard of conduct set forth in the NYBCL; or

• by the board upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in such sections has been met by such director or officer; or

• by the shareholders upon a finding that the director or officer has met the applicable standard of conduct set forth in such sections.

The indemnification and payment or reimbursement of expenses provided by the indemnification provisions of our restated certificate of incorporation and bylaws are not be deemed exclusive of or limit in any way other rights to which any person seeking indemnification or payment or reimbursement of expenses may be or may become entitled under any statute, bylaw, resolution, insurance, agreement, vote of shareholders or disinterested directors or otherwise.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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RESTRICTIONS ON OWNERSHIP OF CAPITAL STOCK

There are no restrictions on the ownership of Funding’s capital stock. However, a change in control of Funding would trigger the Noteholders’ right to cause Funding to redeem the Notes prior to the stated maturity date. See “Description of the Notes”.

In order for us to qualify to be taxed as a REIT under the Code, shares of our capital stock must be owned by 100 or more persons during at least 335 days of a taxable year of twelve months or during a proportionate part of a shorter taxable year (other than the first year for which an election to qualify to be taxed as a REIT has been made). Also, not more than 50% of the value of the outstanding shares of our stock (after taking into account options to acquire shares of stock) may be owned, directly or indirectly, by five or fewer individuals (as defined in the Code to include certain entities such as private foundations) during the last half of a taxable year (other than the first year for which an election to be a REIT has been made). To qualify to be taxed as a REIT, we must satisfy other requirements as well.

Our restated certificate of incorporation provides that, subject to the exceptions described below, no person or entity may own, or be deemed to own, beneficially or by virtue of the applicable constructive ownership provisions of the Code, more than 4.0%, by value or number of shares, whichever is more restrictive, of our outstanding capital stock. We refer to the person or entity that, but for operation of the ownership limits or another restriction on ownership and transfer of shares as described below, would beneficially own or constructively own shares of our capital stock in violation of such limits or restrictions and, if appropriate in the context, a person or entity that would have been the record owner of such shares as a “prohibited owner.”

The constructive ownership rules under the Code are complex and may cause shares owned beneficially or constructively by a group of related individuals and/or entities to be deemed owned beneficially or constructively by one individual or entity. As a result, even if a shareholder’s actual ownership does not exceed the share ownership limits described, on a constructive ownership basis such shareholder may exceed those limits.

The ownership limits described above do not apply to Assaf Ran, our current chief executive officer, who, as of the date of this prospectus, owns 34.57% of our outstanding common shares, or any other shareholder whose ownership exceeds the limit described above at the time we filed our restated certificate of incorporation. In addition, our board of directors, in its sole discretion, may exempt, prospectively or retroactively, a particular shareholder from the ownership limits or establish a different limit on ownership (the “excepted holder limit”) if we obtain representations and undertakings from such shareholders as are reasonably necessary for the board of directors to determine that such shareholder’s beneficial or constructive ownership of our shares will not result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify to be taxed as a REIT. Any violation or attempted violation of any such representations or undertakings will result in such shareholder’s shares being automatically transferred to a charitable trust. As a condition of granting the waiver or establishing the excepted holder limit, our board of directors may require an opinion of counsel or a ruling from the IRS, in either case in form and substance satisfactory to our board of directors, in its sole discretion, in order to determine or ensure our status as a REIT. Our board of directors may impose such conditions or restrictions as it deems appropriate in connection with granting such a waiver or establishing an excepted holder limit.

In connection with granting a waiver of the ownership limits or creating an excepted holder limit or at any other time, our board of directors may from time to time increase or decrease the common share ownership limit, for all other persons, unless, after giving effect to such increase, five or fewer individuals could beneficially own, in the aggregate, more than 49.9% in value of our outstanding shares or we would otherwise fail to qualify to be taxed as a REIT. A reduced ownership limit will not apply to any person or entity whose percentage ownership of our common shares or our shares of all classes and series, as applicable, is, at the effective time of such reduction, in excess of such decreased ownership limit until such time as such person’s or entity’s percentage ownership of our common shares or our shares of all classes and series, as applicable, equals or falls below the decreased ownership limit, but any further acquisition of our common shares or shares of all other classes or series, as applicable, will violate the decreased ownership limit.

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Thus, our restated certificate of incorporation prohibits:

• any person from beneficially or constructively owning, applying certain attribution rules of the Code, shares of our capital stock that would result in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise cause us to fail to qualify to be taxed as a REIT;

• any person from transferring shares of our capital stock if the transfer would result in shares of our capital stock being beneficially owned by fewer than 100 persons (determined under the principles of Section 856(a)(5) of the Code); and

• any person from beneficially or constructively owning shares of our capital stock to the extent such ownership would result in our failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code.

Any person who acquires or attempts or intends to acquire beneficial or constructive ownership of shares of our capital stock that will or may violate the ownership limits or any of the other restrictions on ownership and transfer of shares of our capital stock described above, or who would have owned shares of our stock transferred to the trust as described below, must immediately give notice to us of such event or, in the case of an attempted or proposed transaction, give us at least 15 days’ prior written notice and provide us with such other information as we may request in order to determine the effect of such transfer on our status as a REIT. The foregoing restrictions on ownership and transfer of shares of our capital stock will not apply if our board of directors determines that it is no longer in our best interests to attempt to qualify, or to continue to qualify, to be taxed as a REIT or that compliance with the restrictions and limits on ownership and transfer of shares of our capital stock described above is no longer required.

If any transfer of shares of our capital stock would result in shares of our capital stock being beneficially owned by fewer than 100 persons, the transfer will be null and void and the intended transferee will acquire no rights in the shares. In addition, if any purported transfer of shares of our capital stock or any other event would otherwise result in any person violating the ownership limits or an excepted holder limit established by our board of directors, or in our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or otherwise failing to qualify to be taxed as a REIT or as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code, then that number of shares (rounded up to the nearest whole share) that would cause the violation will be automatically transferred to, and held by, a trust for the exclusive benefit of one or more charitable organizations selected by us, and the intended transferee or other prohibited owner will acquire no rights in the shares. The automatic transfer will be effective as of the close of business on the business day prior to the date of the violating transfer or other event that results in a transfer to the trust. If the transfer to the trust as described above is not automatically effective, for any reason, to prevent a violation of the applicable ownership limits or our being “closely held” under Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year) or our otherwise failing to qualify to be taxed as a REIT or as a “domestically controlled qualified investment entity,” then the transfer of the shares will be null and void and the intended transferee will acquire no rights in such shares.

Shares of our capital stock held in the trust will be issued and outstanding shares. The prohibited owner will not benefit economically from ownership of any shares of our capital stock held in the trust and will have no rights to distributions and no rights to vote or other rights attributable to the shares held in the trust. The trustee of the trust will exercise all voting rights and receive all distributions with respect to shares held in the trust for the exclusive benefit of the charitable beneficiary of the trust. Any distribution made before we discover that the shares have been transferred to a trust as described above must be repaid by the recipient to the trustee upon demand by us. Subject to New York law, effective as of the date that the shares have been transferred to the trust, the trustee will have the authority to rescind as void any vote cast by a prohibited owner before our discovery that the shares have been transferred to the trust and to recast the vote in accordance with the desires of the trustee acting for the benefit of the charitable beneficiary of the trust. However, if we have already taken irreversible corporate action, then the trustee may not rescind and recast the vote.

Shares of our capital stock transferred to the trustee are deemed offered for sale to us, or our designee, at a price per share equal to the lesser of (i) the price paid by the prohibited owner for the shares (or, in the case

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of a devise or gift, the market price at the time of such devise or gift) and (ii) the market price on the date we, or our designee, accepts such offer. We may reduce the amount so payable to the prohibited owner by the amount of any dividend or distribution that we made to the prohibited owner before we discovered that the shares had been automatically transferred to the trust, and we may pay the amount of any such reduction to the trustee for distribution to the charitable beneficiary. We have the right to accept such offer until the trustee has sold the shares of our capital stock held in the trust as discussed below. Upon a sale to us, the interest of the charitable beneficiary in the shares sold terminates, and the trustee must distribute the net proceeds of the sale to the prohibited owner and must distribute any distributions held by the trustee with respect to such shares to the charitable beneficiary.

If we do not buy the shares, the trustee must, within 20 days of receiving notice from us of the transfer of shares to the trust, sell the shares to a person or entity designated by the trustee who could own the shares without violating the ownership limits or the other restrictions on ownership and transfer of shares of our capital stock. After the sale of the shares, the interest of the charitable beneficiary in the shares transferred to the trust will terminate and the trustee must distribute to the prohibited owner an amount equal to the lesser of (i) the price paid by the prohibited owner for the shares (or, if the prohibited owner did not give value for the shares in connection with the event causing the shares to be held in the trust (for example, in the case of a gift, devise or other such transaction), the market price of the shares on the day of the event causing the shares to be held in the trust) and (ii) the sales proceeds (net of any commissions and other expenses of sale) received by the trust for the shares. The trustee may reduce the amount payable to the prohibited owner by the amount of any distribution that we paid to the prohibited owner before we discovered that the shares had been automatically transferred to the trust and that are then owed by the prohibited owner to the trustee as described above. Any net sales proceeds in excess of the amount payable to the prohibited owner must be paid immediately to the charitable beneficiary, together with any distributions thereon. In addition, if, prior to the discovery by us that shares have been transferred to a trust, such shares are sold by a prohibited owner, then such shares will be deemed to have been sold on behalf of the trust and, to the extent that the prohibited owner received an amount for or in respect of such shares that exceeds the amount that such prohibited owner was entitled to receive, such excess amount will be paid to the trustee upon demand. The prohibited owner has no rights in the shares held by the trustee.

In addition, if our board of directors determines that a transfer or other event has occurred that would violate the restrictions on ownership and transfer of shares of our stock described above, our board of directors may take such action as it deems advisable to refuse to give effect to or to prevent such transfer, including, but not limited to, causing us to redeem the shares, refusing to give effect to the transfer on our books or instituting proceedings to enjoin the transfer.

Every owner of 4% or more (or such lower percentage as required by the Code or the regulations promulgated thereunder) of our capital stock, within 30 days after the end of each taxable year, must give us written notice stating the shareholder’s name and address, the number of shares of each class and series of our capital stock that the shareholder beneficially owns and a description of the manner in which the shares are held. Each such owner must provide to us such additional information as we may request in order to determine the effect, if any, of the shareholder’s beneficial ownership on our status as a REIT and to ensure compliance with the ownership limits. In addition, any person or entity that is a beneficial owner or constructive owner of shares of our capital stock and any person or entity (including the shareholder of record) who is holding shares of our capital stock for a beneficial owner or constructive owner must, on request, provide to us such information as we may request in order to determine our status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the ownership limits.

Certificates representing shares of our capital stock will bear a legend referring to the restrictions on ownership and transfer of shares of our capital stock described above.

The restrictions on ownership and transfer of shares of our stock described above could delay, defer or prevent a transaction or a change in control, including one that might involve a premium price for our common shares or otherwise be in the best interests of our shareholders.

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MATERIAL UNITED STATES FEDERAL INCOME TAX CONSEQUENCES

The following is a summary of certain United States federal income tax (and, with respect to non-U.S. Noteholders (as defined below) estate tax) consequences relating to the purchase, ownership and disposition of the Notes, but does not purport to be an analysis of all potential tax effects. This summary is based on the Code, administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, all of which are subject to change (possibly with retroactive effect) or to different interpretations. This summary does not address the tax consequences to subsequent purchasers of the notes and is limited to persons who purchase the notes for cash at original issue, at the offering price, and hold the notes as capital assets within the meaning of Section 1221 of the Code. It does not discuss all of the tax consequences that may be relevant to a Noteholder in light of such Noteholder’s particular circumstances (such as the application of the alternative minimum tax) or to Noteholders subject to special rules such as financial institutions, tax-exempt entities, U.S. Noteholders (as defined below) whose “functional currency” is not the U.S. dollar, insurance companies, partnerships, other pass-through entities and investors in those entities, dealers in securities or foreign currencies, persons holding Notes as part of a hedge, straddle, “constructive sale,” “conversion” or other integrated transaction, persons subject to U.S. federal estate or gift tax arising from the purchase, ownership, or disposition of Notes, or former U.S. citizens or long-term residents subject to taxation as expatriates under Section 877 of the Code or the effect of any state, local or foreign laws. In addition, this summary also does not discuss tax consequences to an owner of a Note held through any entity treated as a partnership for United States federal income tax purposes or other pass-through entity. We have not sought and will not seek any rulings from the Internal Revenue Service, which we refer to as the IRS, with respect to the matters discussed below. There can be no assurance that the IRS will not take a different position concerning the tax consequences of the purchase, ownership or disposition of the Notes or that any such position would not be sustained.

PLEASE CONSULT YOUR OWN TAX ADVISER REGARDING THE APPLICATION OF UNITED STATES FEDERAL INCOME AND MEDICARE TAX LAWS TO YOUR PARTICULAR SITUATION AND THE CONSEQUENCES OF U.S. FEDERAL ESTATE OR GIFT TAX LAWS, STATE, LOCAL AND FOREIGN TAX LAWS AND TAX TREATIES.

As used herein, the term “U.S. Noteholder” means a beneficial owner of a Note that is for United States federal income tax purposes:

• an individual who is a citizen or resident of the United States;

• a corporation (including an entity treated as a corporation for United States federal income tax purposes) created or organized under the laws of the United States, any state thereof or the District of Columbia;

• an estate, the income of which is subject to United States federal income taxation regardless of its source; or

• a trust, if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or if a valid election is in place to treat the trust as a U.S. person.

Except as modified for estate tax purposes, as used herein, the term “non-U.S. Noteholder” means a beneficial owner of a Note that is, for United States federal income tax purposes, an individual, corporation, estate, or trust and is not a U.S. Noteholder.

In certain circumstances, we may be obligated to pay you amounts in excess of stated interest or principal on the Notes. For example, we will be obligated to pay a premium if we exercise our right to redeem the Notes before the stated maturity date. Our obligation to pay such excess amounts may implicate the provisions of the Treasury regulations relating to “contingent payment debt instruments.” Under these regulations, however, one or more contingencies will not cause a debt instrument to be treated as a contingent payment debt instrument if, as of the issue date, such contingencies in the aggregate are “remote” or are considered to be “incidental.” We believe and intend to take the position that the foregoing contingencies should be treated as remote and/or incidental. Our determination is binding on you unless you disclose your contrary position in the manner required by applicable Treasury regulations. Our determination is not,

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however, binding on the IRS and if the IRS successfully challenged this determination, it could affect the timing and amount of your income and could cause the gain from the sale or other disposition of a Note to be treated as ordinary income rather than capital gain. This disclosure assumes that the Notes will not be considered contingent payment debt instruments. Noteholders are urged to consult with their own tax advisors regarding the potential application to the Notes of the contingent payment debt regulations and the consequences thereof.

Tax Consequences to U.S. Noteholders

This section applies to you if you are a U.S. Noteholder.

Payments of stated interest

Stated interest on a Note will be taxable to you as ordinary income at the time it either accrues or is received in accordance with your regular method of accounting for United States federal income tax purposes.

Original issue discount

It is expected that the Notes will not be issued with an issue price that is less than their stated redemption price at maturity by more than the statutory de minimis amount. As a result, the notes will not be subject to the original issue discount, which we refer to as OID, rules. If, however, the “stated redemption price at maturity” (generally equal to the sum of all payments required under the Notes other than payments of qualified stated interest) of the Notes exceeds the issue price by more than a de minimis amount, you will be required to include OID in income for United States federal income tax purposes as it accrues under a constant yield method, regardless of your method of accounting. As a result, you may be required to include OID in taxable income prior to the receipt of cash. OID that has been included in a Noteholder’s taxable income increases the basis in the Notes for purposes of computing gain or loss on a subsequent sale, exchange, redemption, or other taxable disposition of a Note.

Sales, exchange, retirement, redemption or disposition of the notes

Upon the sale, exchange, retirement, redemption or other taxable disposition of a Note, you will recognize gain or loss equal to the difference between the amount realized and your adjusted tax basis in the Note. Your adjusted tax basis in a Note will generally equal the cost of the Note to you. The amount realized excludes any amounts attributable to accrued but unpaid stated interest, which will be includable in income as interest (taxable as ordinary income) to the extent not previously included in income. Any gain or loss generally will be capital gain or loss and will be long-term capital gain or loss if at the time of the sale, exchange, retirement, redemption or other table disposition, the Note has been held for more than one year. For non-corporate Noteholders, certain preferential tax rates may apply to gain recognized as long term capital gain. The deductibility of net capital losses is subject to limitation.

Medicare tax

A 3.8% Medicare tax will be imposed on a portion or all of the net investment income of certain individuals with a modified adjusted gross income of over $200,000 ($250,000 in the case of joint filers or $125,000 in the case of married individuals filing separately) and on the undistributed net investment income of certain estates and trusts. For these purposes, “net investment income” generally will include interest (including interest paid with respect to a Note), dividends, annuities, royalties, rents, net gain attributable to the disposition of property not held in a trade or business (including net gain from the sale, exchange, redemption or other taxable disposition of a Note) and certain other income, but will be reduced by any deductions properly allocable to such income or net gain. If you are a U.S. Noteholder that is an individual, estate or trust, you are urged to consult your tax advisors regarding the applicability of the Medicare tax to your income and gains in respect of your investment in the Notes.

Tax Consequences to Non-U.S. Holders

This section applies to you if you are a non-US. Noteholder.

Payments of interest

Subject to the discussions below concerning effectively connected income and backup withholding, payments of interest on the Notes by us or any paying agent to you will not be subject to U.S. federal

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withholding tax, provided that (a) pursuant to the “portfolio interest” exception (i) you do not own, actually or constructively, 10% or more of the total combined voting power of all classes of our stock entitled to vote, (ii) you are not a controlled foreign corporation (within the meaning of the Code) that is related, directly or indirectly, to us, (iii) you are not a bank receiving interest on the Notes on an extension of credit made pursuant to a loan agreement entered into in the ordinary course of your trade or business and (iv) you certify on IRS Form W-8BEN (or appropriate substitute form), under penalties of perjury, that you are not a U.S. person, provided that if you hold the Note through a financial institution or other agent acting on your behalf, you provide appropriate documentation to your agent and your agent provides certification under penalties of perjury to Funding or the paying agent that it has received such a Form W-8BEN (or suitable substitute form) from you or a qualifying intermediary and furnishes Funding or the paying agent with a copy or (b) you are entitled to the benefits of an income tax treaty under which such interest is exempt from U.S. federal withholding tax, and you or your agent provides Funding a properly executed IRS Form W-8BEN (or an appropriate substitute form evidencing eligibility for the exemption). Additional certifications and procedures may be required if the Notes are held through intermediaries. Payments of interest on the Notes that do not meet the above — described requirements and that are not effectively connected with your conduct of a U.S. trade or business will be subject to a United States federal income tax of 30% (or such lower rate as provided by an applicable income tax treaty), collected by means of withholding.

Sale, exchange, retirement, redemption or disposition of the Notes

Subject to the discussion below concerning effectively connected income and backup withholding, you generally will not be subject to United States federal income tax on any gain realized on the sale, exchange, or other disposition of a Note unless you are an individual who is present in the United States for at least 183 days during the taxable year of disposition and certain other conditions are met, in which case you will be subject to a to a 30% United States federal income tax on the gain derived from the sale, which may be offset by certain U.S. source capital losses.

Effectively connected income

The preceding discussion assumes that the interest and gain received by the non-U.S. Noteholder is not effectively connected with the conduct by such non-US. Noteholder of a trade or business in the United States. If you are engaged in a trade or business in the United States and your investment in a Note is effectively connected with such trade or business, although you will be exempt from the 30% withholding tax (provided a required certification, generally on IRS Form W-8ECI, or an appropriate substitute, is provided), you generally will be subject to regular United States federal income tax at graduated rates on any interest and gain with respect to the Notes in the same manner as if you were a U.S. Noteholder, and if you are a foreign corporation you may also be subject to a branch profits tax at 30% (or such lower rate provided by an applicable income tax treaty) on your effectively connected earnings and profits (subject to adjustments) attributable to such interest and gain. If you are eligible for the benefits of a tax treaty, any effectively connected income or gain generally will be subject to United States federal income tax only if it is also attributable to a permanent establishment maintained by you in the United States.

Foreign Account Tax Compliance Act

Under Sections 1471 through 1474 of the Code, which we refer to as FATCA, unless a “grandfather rule” applies to debt obligations issued by a U.S. issuer, a 30% withholding tax may be required on certain payments to holders of those obligations (including intermediaries) that do not provide certain information to the applicable withholding agent, which may include the name, address, taxpayer identification number and certain other information with respect to direct and certain indirect US. holders. Certain countries have entered into, and other countries are expected to enter into, agreements with the United States to facilitate the type of information reporting required under FATCA, which will reduce, but not eliminate the risk of FATCA withholding for investors in, or holding Notes through financial institutions in, such countries. If applicable, FATCA withholding applies to payments of U.S. source dividends, interest, and other fixed payments, and to payments from the disposition of property producing such payments (e.g., Notes) beginning January 1, 2019. If FATCA withholding were to apply, neither Funding nor any paying agent nor any other person would be required to pay additional amounts as a result of such withholding.

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Information Reporting and Backup Withholding

If you are a U.S. holder, information reporting will generally apply to payments of interest on the Notes or the proceeds of the sale or other taxable disposition (including a retirement or redemption) of the Notes. Generally, backup withholding will apply to such payments and proceeds if:

• you fail to furnish a taxpayer identification number, which we refer to as a TIN, in the prescribed manner;

• the IRS notifies us that the TlN furnished by you is incorrect;

• the IRS notifies us that you are subject to back up withholding because you previously failed to report properly the receipt of reportable interest or dividend payments; or

• you fail to certify under penalties of perjury that you are not subject to backup withholding when such certification is required.

The present U.S. federal backup withholding rate is 28%.

If you are a non-U.S. Noteholder, generally, back-up withholding does not apply to payments of interest if the certification described under “— Tax consequences to non-U.S. Noteholders-Payments of interest” is provided to us (provided that we have no actual knowledge or reason to know that you are a U.S. person). Information reporting may still apply to payments of interest even if a certification is provided and interest is exempt from such withholding. Payments of proceeds made to a non-U.S. Noteholder upon a sale or other taxable disposition (including a retirement or redemption) of Notes by (i) a U.S. office of a broker will be subject to information reporting and backup withholding unless the above mentioned certification is provided to us and (ii) a foreign office of a foreign broker, will not be subject to information reporting or backup withholding, unless the broker has certain connections with the United States, in which case information reporting (but generally not backup withholding) will apply (except where the broker has in its records documentary evidence that the beneficial owner is not a U.S. person and certain other conditions are met or the beneficial owner otherwise establishes an exemption). Backup withholding may apply to any payment that the broker is required to report if the broker has actual knowledge or reason to know that the payee is a U.S. person. In addition to the foregoing, we must report annually to the IRS and to each non-U.S. holder on IRS Form 1042-S the entire amount of interest paid to you. This information may also be made available to the tax authorities in the country in which you reside under the provisions of an applicable income tax treaty or other agreement.

Noteholders should consult their tax advisers regarding the application of information reporting and backup withholding to their particular situations, the availability of an exemption therefrom and the procedure for obtaining such an exemption, if available. Any amounts, withheld from a payment to you under the backup withholding rules will be allowed as a refund or credit against your federal income tax liability, provided that the required information is timely furnished to the IRS. Some holders (including. among others, corporations) are generally not subject to information reporting and backup withholding.

U.S. Federal Estate Taxes

A Note held by an individual who is not a citizen or resident of the United States (as specifically defined for estate tax purposes) at the time of death will not be includable in the decedent’s gross estate for U.S. estate tax purposes, provided that such Noteholder or beneficial owner did not at the time of death actually or constructively own 10% or more of the combined voting power of all of our classes of stock entitled to vote, and provided that, at the time of death payments with respect to such note would not have been effectively connected with the conduct by such holder of a trade or business in the United States.

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Possible Legislative or Other Actions Affecting Tax Consequences

Prospective holders of the Notes should recognize that the present federal income tax treatment of investment in Funding may be modified by legislative, judicial or administrative action at any time and that any of these actions may affect investments and commitments previously made. The rules dealing with federal income taxation are constantly under review by persons involved in the legislative process and by the IRS and the Treasury Department, resulting in revisions of regulations and revised interpretations of established concepts as well as statutory changes. Revisions in federal tax laws and interpretations thereof could adversely affect the tax consequences of investment in Funding.

State and Local Taxes

You may be subject to state or local taxes in other jurisdictions such as those in which you are deemed to be engaged in activities or own property or other interests. The state and local tax treatment of Noteholders may not conform to the federal income tax consequences discussed above.

THE UNITED STATES FEDERAL INCOME AND ESTATE TAX SUMMARY SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON YOUR PARTICULAR SITUATION. YOU SHOULD CONSULT WITH YOUR OWN TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO YOU OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE NOTES, INCLUDING THE TAX CONSEQUENCES UNDER STATE, LOCAL, FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN FEDERAL OR OTHER TAX LAWS.

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UNDERWRITING

Aegis Capital Corp. is acting as the representative of the underwriters of the offering. We have entered into an underwriting agreement dated             with the representative. Subject to the terms and conditions of the underwriting agreement, we have agreed to sell to each underwriter named below and each underwriter named below has severally and not jointly agreed to purchase from us, at the public offering price per Note less the underwriting discounts set forth on the cover page of this prospectus, the principal amount of Notes listed next to its name in the following table:

Underwriter	Principal Amount of Notes
Aegis Capital Corp.
Total

The underwriters are committed to purchase all the Notes offered by us other than those covered by the option to purchase additional Notes described below, if they purchase any Notes. The obligations of the underwriters may be terminated upon the occurrence of certain events specified in the underwriting agreement. Furthermore, pursuant to the underwriting agreement, the underwriters’ obligations are subject to customary conditions, representations and warranties contained in the underwriting agreement, such as receipt by the underwriters of officers’ certificates and legal opinions.

We have agreed to indemnify the underwriters against specified liabilities, including liabilities under the Securities Act and to contribute to payments the underwriters may be required to make in respect thereof.

The underwriters are offering the Notes, subject to prior sale, when, as and if issued to and accepted by them, subject to approval of legal matters by their counsel and other conditions specified in the underwriting agreement. The underwriters reserve the right to withdraw, cancel or modify offers to the public and to reject orders in whole or in part.

Over-allotment Option.  We have granted the representative an over-allotment option. This option, which is exercisable for up to 45 days after the date of this prospectus, permits the representative to purchase additional Notes up to a maximum aggregate principal amount of $     (15% of the aggregate principal amount of the Notes sold in the firm commitment portion of this offering) from us to cover over-allotments, if any. If the representative exercises all or part of this option, it will purchase the Notes covered by the option at the public offering price per Note that appears on the cover page of this prospectus, less the underwriting discount. If this option is exercised in full, the aggregate principal amount of all the Notes sold in this offering to the public will be $     and the total net proceeds, before expenses, to us will be $    .

Discount.  The following table shows the public offering price, underwriting discount and proceeds, before expenses, to us. The information assumes either no exercise or full exercise by the underwriters of their over-allotment option.

	Per Note	Total Without Over-Allotment Option	Total With Over-Allotment Option
Public offering price	$	$	$
Underwriting discount (    %)	$	$	$
Non-accountable expense allowance (    %)(1)	$	$	$
Proceeds, before expense, to us	$	$	$

(1) Non-accountable expense allowance shall not be payable with respect to any Notes sold pursuant to the representative’s exercise of the over-allotment option.

The underwriters propose to offer the Notes offered by us to the public at the public offering price per Note set forth on the cover of this prospectus. In addition, the underwriters may offer some of the Notes to other securities dealers at such price less a concession of up to $     per Note. If all of the Notes offered by us are not sold at the public offering price per Note, the underwriters may change the offering price per Note and other selling terms by means of a supplement to this prospectus.

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We have agreed to pay the expenses relating to the offering, including the following: (a) all filing fees and communication expenses relating to the registration of the notes with the SEC; all fees, expenses and disbursements relating to background checks of our officers and Directors in an amount not to exceed $5,000 per individual and $20,000 in the aggregate; (b) all filing fees associated with the review of this offering by FINRA and all fees relating to the listing of the Notes on Nasdaq; (c) all fees, expenses and disbursements relating to the registration or qualification of the Notes under state “blue sky” and securities laws, including payment of up to $     for “blue-sky” counsel; (d) all fees, expenses and disbursements relating to the registration, qualification or exemption of securities offered under the securities laws of foreign jurisdictions designated by the underwriters; (e) the cost of commemorative mementos and lucite tombstones up to $2,500; (e) the fees and expenses of underwriter’s legal counsel in an amount not to exceed $    ; (f) upon successfully completing this offering, up to $25,000 for the underwriters’ use of Ipreo’s book-building, prospectus tracking and compliance software for this offering; and (h) upon successfully completing this offering, up to $20,000 of the representative’s actual accountable road show expenses for the offering.

We estimate that the total expenses of the offering payable by us, excluding the total underwriting discount, will be approximately $    .

Discretionary Accounts.  The underwriters do not intend to confirm sales of the securities offered hereby to any accounts over which they have discretionary authority.

Lock-Up Agreements.  We, our directors and executive officers and holders of 5% or more of our shares expect to enter into lock up agreements with the representative prior to the commencement of this offering pursuant to which each of these persons or entities, for a period of three months from the effective date of the registration statement of which this prospectus is a part without the prior written consent of the representative, agree not to (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of our securities or any securities convertible into or exercisable or exchangeable for common shares owned or acquired on or prior to the closing date of this offering (including any common shares acquired after the closing date of this offering upon the conversion, exercise or exchange of such securities); (2) file or caused to be filed any registration statement relating to the offering of any shares of our capital shares; or (3) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of common shares, whether any such transaction described in clause (1), (2) or (3) above is to be settled by delivery of common shares or such other securities, in cash or otherwise, except for certain exceptions and limitations.

The lock-up period described in the preceding paragraphs will be automatically extended if: (1) during the last 17 days of the restricted period, we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the lock-up period, we announce that we will release earnings results during the 16-day period beginning on the last day of the lock-up period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the date of the earnings release.

Right of First Refusal.  Subject to certain limited exceptions, until six months from the effective date of the Offering, the representative has a right of first refusal to act as our sole investment banker, book runner and/or placement agent for each and every future public or private equity or debt offering, including all equity linked financings of our company, or any successor to or any subsidiary of the Company during such twelve-month period. The representative shall have the sole right to determine whether or not any other broker dealer shall have the right to participate in any such offering and the economic terms of any such participation.

Electronic Offer, Sale and Distribution of Securities.  A prospectus in electronic format may be made available on the websites maintained by one or more of the underwriters or selling group members, if any, participating in this offering and one or more of the underwriters participating in this offering may distribute prospectuses electronically. The representative may agree to allocate a portion of this offering to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the underwriters and selling group members that will make internet distributions on the same basis as other allocations. Other than the prospectus in electronic format, the information on these websites is

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not part of, nor incorporated by reference into, this prospectus or the registration statement of which this prospectus forms a part, has not been approved or endorsed by us or any underwriter in its capacity as underwriter, and should not be relied upon by investors.

Stabilization.  In connection with this offering, the underwriters may engage in stabilizing transactions, over-allotment transactions, syndicate-covering transactions, penalty bids and purchases to cover positions created by short sales.

• Stabilizing transactions permit bids to purchase securities so long as the stabilizing bids do not exceed a specified maximum, and are engaged in for the purpose of preventing or retarding a decline in the market price of the securities while the offering is in progress.

• Over-allotment transactions involve sales by the underwriters of securities in excess of the number of securities the underwriters are obligated to purchase. This creates a syndicate short position that may be either a covered short position or a naked short position. In a covered short position, the number of securities over-allotted by the underwriters is not greater than the number of securities that they may purchase in the over-allotment option. In a naked short position, the number of securities involved is greater than the number of securities in the over-allotment option. The underwriters may close out any short position by exercising their over-allotment option and/or purchasing securities in the open market.

• Syndicate covering transactions involve purchases of securities in the open market after the distribution has been completed in order to cover syndicate short positions. In determining the source of securities to close out the short position, the underwriters will consider, among other things, the price of securities available for purchase in the open market as compared with the price at which they may purchase securities through exercise of the over-allotment option. If the underwriters sell more securities than could be covered by exercise of the over-allotment option and, therefore, have a naked short position, the position can be closed out only by buying securities in the open market. A naked short position is more likely to be created if the underwriters are concerned that after pricing there could be downward pressure on the price of the securities in the open market that could adversely affect investors who purchase in the offering.

• Penalty bids permit the representative to reclaim a selling concession from a syndicate member when the securities originally sold by that syndicate member are purchased in stabilizing or syndicate covering transactions to cover syndicate short positions.

These stabilizing transactions, syndicate covering transactions and penalty bids may have the effect of raising or maintaining the market price of the Notes or preventing or retarding a decline in the market price of the Notes. As a result, the price of the Notes in the open market may be higher than it would otherwise be in the absence of these transactions. Neither we nor the underwriters make any representation or prediction as to the effect that the transactions described above may have on the price of the Notes. These transactions may be effected on the NASDAQ Global Market, in the over-the-counter market or otherwise and, if commenced, may be discontinued at any time.

Passive market making.  In connection with this offering, underwriters and selling group members may engage in passive market making transactions in the Notes on the NASDAQ Global Market or on the OTC QB in accordance with Rule 103 of Regulation M under the Exchange Act, during a period before the commencement of offers or sales of the Notes and extending through the completion of the distribution. A passive market maker must display its bid at a price not in excess of the highest independent bid of that security. However, if all independent bids are lowered below the passive market maker’s bid, then that bid must then be lowered when specified purchase limits are exceeded.

Offer Restrictions Outside the United States¹¹

Other than in the United States, no action has been taken by us or the underwriters that would permit a public offering of the Notes in any jurisdiction where action for that purpose is required. The Notes may not be offered or sold, directly or indirectly, nor may this prospectus or any other offering material or

¹¹ Is this section really necessary?

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advertisements in connection with the offer and sale of any such securities be distributed or published in any jurisdiction, except under circumstances that will result in compliance with the applicable rules and regulations of that jurisdiction. Persons into whose possession this prospectus comes are advised to inform themselves about and to observe any restrictions relating to the offering and the distribution of this prospectus. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities offered by this prospectus in any jurisdiction in which such an offer or a solicitation is unlawful.

Australia

This prospectus is not a disclosure document under Chapter 6D of the Australian Corporations Act, has not been lodged with the Australian Securities and Investments Commission and does not purport to include the information required of a disclosure document under Chapter 6D of the Australian Corporations Act. Accordingly, (i) the offer of the Notes under this prospectus is only made to persons to whom it is lawful to offer the securities without disclosure under Chapter 6D of the Australian Corporations Act under one or more exemptions set out in section 708 of the Australian Corporations Act, (ii) this prospectus is made available in Australia only to those persons as set forth in clause (i) above, and (iii) the offeree must be sent a notice stating in substance that by accepting this offer, the offeree represents that the offeree is such a person as set forth in clause (i) above, and, unless permitted under the Australian Corporations Act, agrees not to sell or offer for sale within Australia any of the Notes sold to the offeree within 12 months after its transfer for the offeree under this prospectus.

China

The information in this document does not constitute a public offer of the securities, whether by way of sale or subscription, in the People’s Republic of China (excluding, for purposes of this paragraph, Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan). The Notes may not be offered or sold directly or indirectly in the PRC to legal or natural persons other than directly to “qualified domestic institutional investors.”

European Economic Area — Belgium, Germany, Luxembourg and Netherlands

The information in this document has been prepared on the basis that all offers of the Notes will be made pursuant to an exemption under the Directive 2003/71/EC (“Prospectus Directive”), as implemented in Member States of the European Economic Area (each, a “Relevant Member State”), from the requirement to produce a prospectus for offers of securities.

An offer to the public of the Notes has not been made, and may not be made, in a Relevant Member State except pursuant to one of the following exemptions under the Prospectus Directive as implemented in that Relevant Member State:

• to legal entities that are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;

• to any legal entity that has two or more of (i) an average of at least 250 employees during its last fiscal year; (ii) a total balance sheet of more than €43,000,000 (as shown on its last annual unconsolidated or consolidated financial statements) and (iii) an annual net turnover of more than €50,000,000 (as shown on its last annual unconsolidated or consolidated financial statement);

• to fewer than 100 natural or legal persons (other than qualified investors within the meaning of Article 2(1)I of the Prospectus Directive) subject to obtaining the prior consent of the company or any underwriter for any such offer; or

• in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of Notes shall result in a requirement for the publication by the company of a prospectus pursuant to Article 3 of the Prospectus Directive.

France

This document is not being distributed in the context of a public offering of financial securities (offre au public de titres financiers) in France within the meaning of Article L.411-1 of the French Monetary and Financial Code (Code monétaire et financier) and Articles 211-1 et seq. of the General Regulation of the

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French Autorité des marchés financiers (“AMF”). The Notes have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in France.

This document and any other offering material relating to the Notes has not been, and will not be, submitted to the AMF for approval in France and, accordingly, may not be distributed or caused to be distributed, directly or indirectly, to the public in France.

Such offers, sales and distributions have been and shall only be made in France to (i) qualified investors (investisseurs qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2 and D.411-1 to D.411-3, D. 744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation and/or (ii) a restricted number of non-qualified investors (cercle restreint d’investisseurs non-qualifiés) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2 and D.411-4, D.744-1, D.754-1 and D.764-1 of the French Monetary and Financial Code and any implementing regulation.

Pursuant to Article 211-3 of the General Regulation of the AMF, investors in France are informed that the Notes cannot be distributed (directly or indirectly) to the public by the investors otherwise than in accordance with Articles L.411-1, L.411-2, L.412-1 and L.621-8 to L.621-8-3 of the French Monetary and Financial Code.

Ireland

The information in this document does not constitute a prospectus under any Irish laws or regulations and this document has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005 (the “Prospectus Regulations”). The Notes have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i) qualified investors as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 100 natural or legal persons who are not qualified investors.

Israel

The Notes have not been approved or disapproved by the Israeli Securities Authority (the ISA), or ISA, nor have they been registered for sale in Israel. The Notes may not be offered or sold, directly or indirectly, to the public in Israel, absent the publication of a prospectus. The ISA has not issued permits, approvals or licenses in connection with the offering or publishing the prospectus; nor has it authenticated the details included herein, confirmed their reliability or completeness, or rendered an opinion as to the quality of the Notes. Any resale in Israel, directly or indirectly, to the public of the Notes is subject to restrictions on transferability and must be effected only in compliance with the Israeli securities laws and regulations.

Italy

The offering of the Notes in the Republic of Italy has not been authorized by the Italian Securities and Exchange Commission (Commissione Nazionale per le Società e la Borsa, “CONSOB”) pursuant to the Italian securities legislation and, accordingly, no offering material relating to the Notes may be distributed in Italy and such securities may not be offered or sold in Italy in a public offer within the meaning of Article 1.1(t) of Legislative Decree No. 58 of 24 February 1998 (“Decree No. 58”), other than:

• to Italian qualified investors, as defined in Article 100 of Decree no. 58 by reference to Article 34-ter of CONSOB Regulation no. 11971 of 14 May 1999 (“Regulation no. 1197l”) as amended (“Qualified Investors”); and

• in other circumstances that are exempt from the rules on public offer pursuant to Article 100 of Decree No. 58 and Article 34-ter of Regulation No. 11971 as amended.

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Any offer, sale or delivery of the Notes or distribution of any offer document relating to the Notes in Italy (excluding placements where a Qualified Investor solicits an offer from the issuer) under the paragraphs above must be:

• made by investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with Legislative Decree No. 385 of 1 September 1993 (as amended), Decree No. 58, CONSOB Regulation No. 16190 of 29 October 2007 and any other applicable laws; and

• in compliance with all relevant Italian securities, tax and exchange controls and any other applicable laws.

Any subsequent distribution of the Notes in Italy must be made in compliance with the public offer and prospectus requirement rules provided under Decree No. 58 and the Regulation No. 11971 as amended, unless an exception from those rules applies. Failure to comply with such rules may result in the sale of such Notes being declared null and void and in the liability of the entity transferring the Notes for any damages suffered by the investors.

Japan

The Notes have not been and will not be registered under Article 4, paragraph 1 of the Financial Instruments and Exchange Law of Japan (Law No. 25 of 1948), as amended (the “FIEL”) pursuant to an exemption from the registration requirements applicable to a private placement of securities to Qualified Institutional Investors (as defined in and in accordance with Article 2, paragraph 3 of the FIEL and the regulations promulgated thereunder). Accordingly, the Notes may not be offered or sold, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan other than Qualified Institutional Investors. Any Qualified Institutional Investor who acquires Notes may not resell them to any person in Japan that is not a Qualified Institutional Investor, and acquisition by any such person of Notes is conditional upon the execution of an agreement to that effect.

Portugal

This document is not being distributed in the context of a public offer of financial securities (oferta púbica de valores mobiliários) in Portugal, within the meaning of Article 109 of the Portuguese Securities Code (Código dos Valores Mobiliários). The Notes have not been offered or sold and will not be offered or sold, directly or indirectly, to the public in Portugal. This document and any other offering material relating to the Notes has not been, and will not be, submitted to the Portuguese Securities Market Commission (Comissão do Mercado de Valores Mobiliários) for approval in Portugal and, accordingly, may not be distributed or caused to distributed, directly or indirectly, to the public in Portugal, other than under circumstances that are deemed not to qualify as a public offer under the Portuguese Securities Code. Such offers, sales and distributions of Notes in Portugal are limited to persons who are “qualified investors” (as defined in the Portuguese Securities Code). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Sweden

This document has not been, and will not be, registered with or approved by Finansinspektionen (the Swedish Financial Supervisory Authority). Accordingly, this document may not be made available, nor may the Notes be offered for sale in Sweden, other than under circumstances that are deemed not to require a prospectus under the Swedish Financial Instruments Trading Act (1991:980) (Sw. lag (1991:980) om handel med finansiella instrument). Any offering of Notes in Sweden is limited to persons who are “qualified investors” (as defined in the Financial Instruments Trading Act). Only such investors may receive this document and they may not distribute it or the information contained in it to any other person.

Switzerland

The Notes may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange (“SIX”) or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure standards for issuance prospectuses under art. 652a or art. 1156 of the Swiss Code of Obligations or the disclosure standards for listing prospectuses under art. 27 ff. of the

89

SIX Listing Rules or the listing rules of any other stock exchange or regulated trading facility in Switzerland. Neither this document nor any other offering material relating to the Notes may be publicly distributed or otherwise made publicly available in Switzerland.

Neither this document nor any other offering material relating to the Notes has been or will be filed with or approved by any Swiss regulatory authority. In particular, this document will not be filed with, and the offer of the Notes will not be supervised by, the Swiss Financial Market Supervisory Authority (FINMA).

This document is personal to the recipient only and not for general circulation in Switzerland.

United Arab Emirates

Neither this document nor the Notes have been approved, disapproved or passed on in any way by the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates, nor have we received authorization or licensing from the Central Bank of the United Arab Emirates or any other governmental authority in the United Arab Emirates to market or sell the Notes within the United Arab Emirates. This document does not constitute and may not be used for the purpose of an offer or invitation. No services relating to the Notes, including the receipt of applications and/or the allotment or redemption of the Notes, may be rendered within the United Arab Emirates by us.

No offer or invitation to subscribe for Notes is valid or permitted in the Dubai International Financial Centre.

United Kingdom

Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended (“FSMA”)) has been published or is intended to be published in respect of the Notes. This document is issued on a confidential basis to “qualified investors” (within the meaning of section 86(7) of FSMA) in the United Kingdom, and the Notes may not be offered or sold in the United Kingdom by means of this document, any accompanying letter or any other document, except in circumstances that do not require the publication of a prospectus pursuant to section 86(1) FSMA. This document should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) received in connection with the issue or sale of the Notes has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) of FSMA does not apply to us.

In the United Kingdom, this document is being distributed only to, and is directed at, persons (i) who have professional experience in matters relating to investments falling within Article 19(5) (investment professionals) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (“FPO”), (ii) who fall within the categories of persons referred to in Article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc.) of the FPO or (iii) to whom it may otherwise be lawfully communicated (together “relevant persons”). The investments to which this document relates are available only to, and any invitation, offer or agreement to purchase will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

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LEGAL MATTERS

The validity of the Notes will be passed upon for Funding by Morse, Zelnick, Rose and Lander LLP, New York, New York. Certain legal matters in connection with this offering will be passed upon for the underwriters by Blank Rome LLP, New York, New York.

EXPERTS

Our consolidated financial statements as of and for the year ended December 31, 2014 included in this Prospectus have been audited by Hoberman & Lesser, LLP, an independent registered public accounting firm, in reliance on their report thereon, given on the authority of such firm as experts in auditing and accounting. Our consolidated financial statements as of and for the year ended December 31, 2013 included in this Prospectus have been audited by Hoberman, Goldstein & Lesser, P.C., an independent registered public accounting firm, in reliance on their report thereon, included therein given on the authority of such firm as experts in auditing and accounting.

WHERE YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE

We and Funding have filed with the SEC a joint registration statement on Form S-11 under the Securities Act with respect to the Notes offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement or the exhibits and schedules filed therewith. For further information about us and the Notes offered hereby, we refer you to the registration statement and the exhibits and schedules filed thereto. Statements contained in this prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the registration statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the registration statement.

We are a reporting company and file annual, quarterly and current reports, proxy statements and other material with the SEC. As we have guaranteed Funding’s obligations under the Notes, the Notes are also deemed registered under the Exchange Act. All information regarding the Notes and Funding will be incorporated into the reports we file with the SEC as set forth in the preceding sentence. You may read and copy our reports, proxy statements and other information, including the registration statement of which this prospectus is a part at the Public Reference Room of the SEC, 100 F Street, N.E., Room 1580, Washington D.C. 20549. You may obtain information on the operation of the public reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file electronically with the SEC. The address of that site is www.sec.gov.

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MANHATTAN BRIDGE CAPITAL, INC.
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements at and for the nine months ended September 30, 2015 and 2014 (unaudited):
Balance Sheets at September 30, 2015 and December 31, 2014 (audited)		F-2
Statements of Operations		F-3
Statements of Cash Flows		F-4
Notes to Consolidated Financial Statements		F-5
Consolidated Financial Statements at and for years ended December 31, 2014 and 2013 (audited):
Report of Independent Registered Public Accounting Firm		F-12
Balance Sheets		F-14
Statements of Operations		F-15
Statements of Changes in Shareholders’ Equity		F-16
Statements of Cash Flows		F-17
Notes to Consolidated financial Statements		F-18

F-1

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
CONSOLIDATED BALANCE SHEETS

	September 30, 2015			December 31, 2014
	(unaudited)			(audited)
Assets
Current assets:
Cash and cash equivalents	$	61,144		$	47,676
Short term loans receivable		15,633,990			19,138,426
Interest receivable on loans		322,582			213,766
Other current assets		54,370			26,995
Total current assets		16,072,086			19,426,863
Long term loans receivable		13,510,050			4,894,050
Property and equipment, net		17,636			19,088
Security deposit		6,816			6,816
Investment in privately held company		50,000			65,000
Deferred financing costs		116,399			32,500
Total assets	$	29,772,987		$	24,444,317
Liabilities and Stockholders’ Equity
Current liabilities:
Short term loans	$	1,095,620		$	2,469,465
Line of credit		10,098,083			7,700,000
Accounts payable and accrued expenses		89,591			163,622
Deferred origination fees		249,135			244,776
Total liabilities, all current		11,532,429			10,577,863
Commitments and contingencies
Stockholders’ equity:
Preferred shares – $.01 par value; 5,000,000 shares authorized; no shares issued		—			—
Common shares – $.001 par value; 25,000,000 authorized; 7,401,489 and 6,260,689 issued; 7,224,489 and 6,083,689 outstanding		7,401			6,260
Additional paid-in capital		18,395,326			14,116,183
Treasury stock, at cost – 177,000		(369,335	)		(369,335	)
Retained earnings		207,166			113,346
Total stockholders’ equity		18,240,558			13,866,454
Total liabilities and stockholders’ equity	$	29,772,987		$	24,444,317

The accompanying notes are an integral part of these consolidated financial statements.

F-2

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015			2014		2015			2014
Interest income from loans	$	871,250		$	631,640	$	2,392,329		$	1,657,076
Origination fees		160,456			134,080		463,092			347,637
Total Revenue		1,031,706			765,720		2,855,421			2,004,713
Operating costs and expenses:
Interest and amortization of debt service costs		159,875			144,392		493,652			383,721
Referral fees		948			665		3,260			1,049
General and administrative expenses		229,873			202,822		696,464			554,631
Total operating costs and expenses		390,696			347,879		1,193,376			939,401
Income from operations		641,010			417,841		1,662,045			1,065,312
Other income (Note 4)		—			6,887		—			20,661
Loss on write-down of investment in privately held company (Note 5)		—			—		(15,000	)		—
Income before income tax (expense) benefit		641,010			424,728		1,647,045			1,085,973
Income tax (expense) benefit		(2,005	)		4,291		(2,005	)		(27,709	)
Net Income	$	639,005		$	429,019	$	1,645,040		$	1,058,264
Basic and diluted net income per common share outstanding:
– Basic	$	0.09		$	0.08	$	0.25		$	0.23
– Diluted	$	0.09		$	0.08	$	0.25		$	0.22
Weighted average number of common shares outstanding:
– Basic		7,223,043			5,487,494		6,597,987			4,680,340
– Diluted		7,263,017			5,526,798		6,637,755			4,727,966

The accompanying notes are an integral part of these consolidated financial statements.

F-3

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)

	Nine Months Ended September 30,
	2015			2014
Cash flows from operating activities:
Net Income	$	1,645,040		$	1,058,264
Adjustments to reconcile net income to net cash provided by operating activities –
Amortization of deferred financing costs		27,501			—
Depreciation		4,926			—
Non cash compensation expense		10,248			17,799
Loss on write-down of investment in privately held company (Note 5)		15,000			—
Changes in operating assets and liabilities:
Interest receivable on loans		(108,815	)		(21,850	)
Other current and non current assets		(27,377	)		(33,357	)
Accounts payable and accrued expenses		(74,031	)		(14,409	)
Deferred origination fees		4,360			149,550
Income taxes payable		—			(373,219	)
Net cash provided by operating activities		1,496,852			782,778
Cash flows from investing activities:
Issuance of short term loans		(15,346,500	)		(18,827,000	)
Collections received from loans		10,234,936			10,518,616
Purchase of fixed assets		(3,474	)		—
Net cash used in investing activities		(5,115,038	)		(8,308,384	)
Cash flows from financing activities:
Proceeds from loans and line of credit, net		1,024,238			2,650,000
Proceeds from public offering, net		4,237,199			4,288,765
Deferred financing costs		(111,400	)		—
Proceeds from exercise of stock options and warrants		32,838			55,230
Dividends paid		(1,551,221	)		(429,329	)
Net cash provided by financing activities		3,631,654			6,564,666
Net increase (decrease) in cash and cash equivalents		13,468			(960,940	)
Cash and cash equivalents, beginning of period		47,676			1,021,023
Cash and cash equivalents, end of period	$	61,144		$	60,083
Supplemental Cash Flow Information:
Taxes paid during the period	$	29		$	415,928
Interest paid during the period	$	423,650		$	383,721

The accompanying notes are an integral part of these consolidated financial statements.

F-4

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

1. THE COMPANY

The accompanying unaudited consolidated financial statements of Manhattan Bridge Capital, Inc. (“MBC”), a New York corporation, and its wholly-owned subsidiary DAG Funding Solutions, Inc. (“DAG Funding”) (collectively referred to herein as the “Company”) have been prepared by the Company in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. However, in the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto included in the Company’s Form 10-K for the year ended December 31, 2014. Results of consolidated operations for the interim period are not necessarily indicative of the operating results to be attained in the entire fiscal year.

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual amounts could differ from those estimates.

The consolidated financial statements include the accounts of MBC and DAG Funding. All significant intercompany balances and transactions have been eliminated in consolidation.

The Company offers short-term, secured, non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area.

The Company recognizes revenues in accordance with ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or services have been rendered, (iii) the sales price charged is fixed or determinable, and (iv) collectability is reasonably assured.

Interest income from commercial loans is recognized, as earned, over the loan period.

Origination fee revenue on commercial loans is amortized over the term of the respective note.

Costs incurred in connection with the Company’s line of credit are being amortized over three years, using the straight-line method.

2. RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS

In June 2014, the FASB issued ASU 2014-12, “Compensation-Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force).” The ASU clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under the ASU. The ASU is effective for all entities for reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

F-5

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

2. RECENT TECHNICAL ACCOUNTING PRONOUNCEMENTS - (continued)

In August 2014, the FASB issued ASU 2014-14, “Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” The ASU address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. The ASU is effective for public entities for fiscal years beginning after December 15, 2014, and interim periods therein. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, “Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates the separate presentation of extraordinary items but does not change the requirement to disclose material items that are unusual or infrequent in nature. The ASU is effective for fiscal years beginning after December 15, 2015, as well as interim periods within those fiscal years. The ASU may be applied retrospectively to all prior periods presented in the financial statements, and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, “Interest — Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. Under the ASU, an entity presents debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. Amortization of the costs is reported as interest expense. The ASU is effective for public entities for fiscal years beginning after December 15, 2015, and interim periods therein. For private companies and not-for-profit organizations, the ASU is effective for fiscal years beginning after December 15, 2015, and interim periods within fiscal years beginning after December 15, 2016. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In May 2015, the FASB issued ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) (a consensus of the Emerging Issues Task Force)”. The ASU provides reporting entities with an option to measure the fair value of certain investments using net asset value instead of fair value. The ASU is effective for public entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities, the ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

In August 2015, the FASB issued ASU 2015-15, “Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting”. The ASU incorporates the SEC staff’s announcement that clarifies the exclusion of line-of-credit arrangements from the scope of ASU 2015-03. Therefore, debt issuance costs related to line-of-credit arrangements can be deferred and presented as an asset that is subsequently amortized over the time of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The ASU should be adopted concurrent with adoption of ASU 2015-03. The adoption of this guidance is not expected to have a material impact on the Company’s consolidated financial statements.

Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on the Company’s consolidated financial statements.

F-6

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

3. COMMERCIAL LOANS

Short Term Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses. The loans are generally for a term of one year. The short term loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term. When a performing loan reaches its maturity and the borrower requests an extension we may extend the term of the loan beyond one year and reclassify it as part of long term loans receivable. Prior to granting an extension of any loan, we reevaluate the underlying collateral.

At September 30, 2015, we were committed to an additional $1,820,000 in construction loans that can be drawn by the borrower when certain conditions are met.

At September 30, 2015, no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding.

At September 30, 2015, four of the loans in the Company’s portfolio were jointly funded by the Company and unrelated entities, for aggregate loans of $2,270,000. The accompanying balance sheet includes the Company’s portion of the loans in the amount of $1,447,500.

Subsequent to the balance sheet date, $642,500 of the Company’s short term loans receivable outstanding at September 30, 2015 were paid off.

Long Term Loans Receivable

Long term loans receivable is comprised of the loans that were extended beyond the original maturity dates, unless it is clear that the loan will be paid back by September 30, 2016. At September 30, 2015, the Company’s loan portfolio consists of $15,633,990 short term loans receivable and $13,510,050 long term loans receivable.

At September 30, 2015, the Company’s long term loans receivable consists of loans in the amount of $179,050, $100,000, $350,000, $3,225,000 and $9,656,000, originally due in 2009, 2010, 2013, 2014 and earlier in 2015, respectively. In all instances the borrowers are currently paying their interest and, generally, the Company receives a fee in connection with the extension of the loans. Accordingly, at September 30, 2015, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations.

Credit Risk

Credit risk profile based on loan activity as of September 30, 2015 and 2014:

	Developers –  Residential		Developers –  Commercial		Developers Mixed Used		Other		Total outstanding loans
September 30, 2015	$	27,526,540	$	1,000,000	$	617,500	$	—	$	29,144,040
September 30, 2014	$	21,246,050	$	1,715,000	$	20,000	$	22,285	$	23,003,335

4. INVESTMENT IN REAL ESTATE

Other income for the three and nine month periods ended September 30, 2014 in the amount of $6,887 and $20,661, respectively, represents the aggregate monthly option fees paid to the Company by the option holder for the right to buy back the one remaining 2-family building located in the Bronx, New York then owned by the Company (the “Buy back Option”). On October 2, 2014, the option holder exercised the Buy Back Option at the exercise price of $146,821.

F-7

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

5. INVESTMENT IN PRIVATELY HELD COMPANY

The Company had an original investment in a privately held Israeli-based company in the amount of $100,000. The privately held company offers surgeons and radiologists the ability to detect cancer in real time. Due to the fact that the privately held company has experienced delays in executing its business plan, the Company determined to write down the value of its investment to $65,000 at December 31, 2013. The Company further wrote down the value of its investment to $50,000 at June 30, 2015, resulting in a charge to the statement of operations of $15,000 for the nine month period ended September 30, 2015.

6. EARNINGS PER SHARE OF COMMON STOCK

Basic and diluted earnings per share are calculated in accordance with ASC 260 “Earnings Per Share”. Under ASC 260, basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. The computation of diluted earnings per share is similar to basic earnings per share, except that the denominator is increased to include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method. The numerator in calculating both basic and diluted earnings per common share for each period is the reported net income.

The denominator is based on the following weighted average number of common shares:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Basic		7,223,043		5,487,494		6,597,987		4,680,340
Incremental shares for assumed conversion of options		39,974		39,304		39,768		47,626
Diluted		7,263,017		5,526,798		6,637,755		4,727,966

For the three and nine month periods ended September 30, 2015, 103,745 and 103,951, exercisable stock options and warrants were not included in the diluted earnings per share calculation, respectively, because their effect would have been anti-dilutive.

For the three and nine month periods ended September 30, 2014, 39,374 and 47,696, stock options were not included in the diluted earnings per share calculation, respectively, because their effect would have been anti-dilutive.

7. STOCK-BASED COMPENSATION

The Company measures and recognizes compensation awards for all stock option grants made to employees and directors, based on their fair value in accordance with ASC 718 “Compensation — Stock Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. A key provision of this statement is to measure the cost of employee services received in exchange for an award of equity instruments (including stock options) based on the grant-date fair value of the award. The cost will be recognized over the service period during which an employee is required to provide service in exchange for the award (i.e., the requisite service period or vesting period). The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 718 and ASC 505-50, “Equity Based Payment to Non-Employees”. All transactions with non-employees, in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more appropriately measurable.

Share based compensation expense recognized under ASC 718 for the three and nine months ended September 30, 2015 were $3,416 and $10,248, respectively. Share based compensation expense recognized under ASC 718 for the three and nine months ended September 30, 2014 were $10,967 and $17,799, respectively.

F-8

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

7. STOCK-BASED COMPENSATION - (continued)

The share based compensation expense included the amortization of the fair value of the restricted shares granted to the Company’s CEO on September 9, 2011, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value will be amortized over 15 years.

The exercise price of options granted under our stock option plan may not be less than the fair market value on the date of grant. The options may vest over a period not to exceed ten years. Stock options under our stock option plan may be awarded to officers, key-employees, consultants and non-employee directors of the Company. Under our stock option plan, generally, each non-employee director of the Company is granted an option for 7,000 common shares upon first taking office, and through and including the fiscal year ended December 31, 2014, an annual option grant for an additional 7,000 common shares for each additional year in office. The objectives of our stock option plan include attracting and retaining key personnel, providing for additional performance incentives and promoting the success of the Company by increasing the efforts of such officers, employees, consultants and directors. Our stock option plan is the only plan that the Company has adopted with stock options available for grant.

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average share assumptions used for grants in 2014: (1) expected life of 5 years; (2) annual dividend yield of 9.59%; (3) expected volatility 59.5%; (4) risk free interest rate of 1.71%.

The following summarizes stock option activity for the nine month period ended September 30, 2015:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2014		82,000		$	1.68
Granted		—			—
Exercised		(18,000	)		1.22
Forfeited or expired		(7,000	)		1.34
Outstanding at September 30, 2015		57,000		$	1.87		2.63	$	40,291
Vested and exercisable at September 30, 2015		56,000		$	1.88		2.66	$	39,692

The weighted-average fair value of options granted during the nine month period ended September 30, 2014, estimated as of the grant date using the Black-Scholes option valuation model, were $0.72 per option. There was no grant of options during the nine month period ended September 30, 2015.

On July 31, 2014, in connection with the Company’s public offering in July 2014, the Company issued warrants to purchase 87,719 common shares, with an exercise price of $3.5625 per common share, to the representative of the underwriters of the offering. The warrants are exercisable at any time, and from time to time, in whole or in part, commencing on July 28, 2015 and expire on July 28, 2019. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $42,224.

On May 29, 2015, in connection with the Company’s public offering in May 2015, the Company issued warrants to purchase 50,750 common shares, with an exercise price of $5.4875 per common share, to the representative of the underwriters of the offering. The warrants are exercisable at any time, and from time to time, in whole or in part, commencing on May 22, 2016 and expire on May 22, 2020. The fair value of these warrants, using the Black-Scholes option pricing model, on the date of issuance was $54,928.

F-9

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

8. LOANS AND LINE OF CREDIT

Short Term Loans

At September 30, 2015, the Company owed an aggregate of $1,095,620 under five separate short term loans, bearing interest at rates ranging from 8% to 12% per annum. Two of the loans in the aggregate amount of $335,000, bearing interest at the rate of 10% per annum, are from a parent of a former member of the board of directors. Interest expense on such loans amounted to $22,743 for the nine months ended September 30, 2015. The loans are secured by certain of the Company’s short term loans pursuant to a security agreement, and one of the loans is also personally guaranteed by the Company’s CEO.

Line of Credit

On February 27, 2015, the Company entered into a Line of Credit Agreement with Webster Business Credit Corporation (“Webster”) pursuant to which it may borrow up to $14 million until February 27, 2018 (the “Webster Credit Line”) against assignments of mortgages and other collateral. The Webster Credit Line provides for an interest rate of either LIBOR plus 4.75% or the base commercial lending rate of Webster plus 3.25% as chosen by the Company for each drawdown. The Webster Credit Line contains various covenants and restrictions, including limiting the amount that the Company can borrow relative to the value of the underlying collateral, maintaining various financial ratios and limitations on the terms of loans the Company makes to its customers. Mr. Ran has personally guaranteed all of the Company’s obligations to Webster. Total costs to establish the Webster Credit Line were approximately $144,000. These costs are being amortized over three years, using the straight-line method. The amortization costs for the nine month period ended September 30, 2015 were $27,501.

The Webster Credit Line replaced the $7.7 million credit facility (the “Sterling Credit Line”) with Sterling National Bank (“Sterling”). The Company paid off the entire balance due to Sterling with proceeds from the Webster Credit Line and terminated the Sterling Credit Line on February 27, 2015. In addition, the Company utilized the Webster Credit Line to repay in full loans from Mr. Ran in the aggregate amount of $1,100,000, as well as two short-term loans, outstanding at December 31, 2014, in the aggregate amount of $1,000,000, bearing interest at the rate of 12% per annum. At September 30, 2015, the outstanding amount under the Webster Credit Line was $10,098,083, then bearing interest at a rate of 4.943% per annum.

9. PUBLIC OFFERING

The Company completed a public offering of 1,015,000 common shares at a price to the public of $4.39 per share on May 29, 2015. The gross proceeds raised by the Company from the offering were approximately $4,460,000, before deducting underwriting discounts and commissions and other estimated offering expenses. The Company also granted the underwriter a 45-day option to purchase up to 152,250 additional common shares to cover over-allotments, if any.

In June 2015, the underwriter partially exercised its over-allotment option for an additional 105,000 common shares. The gross proceeds raised by the Company from the sale of the over-allotment option shares were approximately $460,000, resulting in total gross proceeds from the offering of approximately $4,920,000. The remaining over-allotment option of 47,250 shares expired unexercised in July 2015.

The total net proceeds from the offering, including the sale of the over-allotment option shares, were approximately $4,240,000, after deducting underwriting discounts and commissions and offering expenses payable by us.

F-10

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARY
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2015

10. COMMITMENTS AND CONTINGENCIES

Operating Lease

On June 9, 2011, the Company entered into a new lease agreement (the “Lease’) to relocate its corporate headquarters to 60 Cutter Mill Road, Great Neck, New York. The Lease is for a term of five years and two months commencing June 2011 and ending August 2016. The rent increases annually during the term and ranges from approximately $2,800 per month during the first year to approximately $3,200 per month during the fifth year.

F-11

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Manhattan Bridge Capital, Inc.

We have audited the accompanying consolidated balance sheet of Manhattan Bridge Capital, Inc. and Subsidiaries as of December 31, 2014, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended. Manhattan Bridge Capital, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Manhattan Bridge Capital, Inc. and Subsidiaries as of December 31, 2014, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Hoberman & Lesser, CPA’s, LLP

New York, New York
March 18, 2015

F-12

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
Manhattan Bridge Capital, Inc.

We have audited the accompanying consolidated balance sheet of Manhattan Bridge Capital, Inc. and Subsidiaries as of December 31, 2013, and the related consolidated statements of operations, stockholders’ equity and cash flows for the year then ended. Manhattan Bridge Capital, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Manhattan Bridge Capital, Inc. and Subsidiaries as of December 31, 2013, and the results of their operations and their cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

 

Hoberman, Goldstein & Lesser, CPA’s, P.C.

New York, New York
March 21, 2014

F-13

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED BALANCE SHEETS
December 31, 2014 and 2013

	2014			2013
Assets
Current assets:
Cash and cash equivalents	$	47,676		$	1,021,023
Short term loans receivable		19,138,426			10,697,950
Interest receivable on loans		213,766			171,483
Other current assets		26,995			18,540
Total current assets		19,426,863			11,908,996
Investment in real estate		—			146,821
Long term loans receivable		4,894,050			3,997,000
Property and equipment, net		19,088			—
Security deposit		6,816			6,637
Investment in privately held company		65,000			65,000
Deferred financing costs		32,500			—
Total assets	$	24,444,317		$	16,124,454
Liabilities and Stockholders’ Equity
Current liabilities:
Short term loans	$	2,469,465		$	1,319,465
Line of credit		7,700,000			5,350,000
Accounts payable and accrued expenses		163,622			57,066
Deferred origination fees		244,776			132,017
Income taxes payable		—			373,219
Total liabilities, all current		10,577,863			7,231,767
Commitments and contingencies
Stockholders’ equity:
Preferred shares – $.01 par value; 5,000,000 shares authorized; no shares issued		—			—
Common shares – $.001 par value; 25,000,000 authorized; 6,260,689 and 4,433,190 issued; 6,083,689 and 4,256,190 outstanding		6,260			4,433
Additional paid-in capital		14,116,183			9,745,249
Treasury stock, at cost – 177,000		(369,335	)		(369,335	)
Retained earnings (Accumulated deficit)		113,346			(487,660	)
Total stockholders’ equity		13,866,454			8,892,687
Total liabilities and stockholders’ equity	$	24,444,317		$	16,124,454

The accompanying notes are an integral part of these consolidated financial statements.

F-14

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED December 31, 2014 and 2013

	2014			2013
Interest income from loans	$	2,401,150		$	1,858,033
Origination fees		502,515			401,514
Total Revenue		2,903,665			2,259,547
Operating costs and expenses:
Interest and amortization of debt service costs		563,368			442,661
Referral fees		2,244			1,679
General and administrative expenses		876,906			837,788
Total operating costs and expenses		1,442,518			1,282,128
Income from operations		1,461,147			977,419
Other income (Note 5)		21,197			27,548
Loss on write-down of investment in privately held company (Note 6)		—			(35,000	)
Total other income (loss), net		21,197			(7,452	)
Income before income tax expense		1,482,344			969,967
Income tax expense		(27,839	)		(387,000	)
Net income	$	1,454,505		$	582,967
Basic and diluted net income per common share outstanding:
– Basic	$	0.29		$	0.14
– Diluted	$	0.29		$	0.14
Weighted average number of common shares outstanding:
– Basic		5,028,645			4,269,169
– Diluted		5,058,421			4,289,818

The accompanying notes are an integral part of these consolidated financial statements.

F-15

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED December 31, 2014 and 2013

	Common Stock				Additional Paid-in Capital			Treasury Stock					Accumulated Deficit/Retained Earnings			Totals
	Shares		Amount					Shares		Cost
Balance, January 1, 2013		4,405,190	$	4,405	$	9,687,159			107,131	$	(269,972	)	$	(942,607	)	$	8,478,985
Non cash compensation						35,578											35,578
Exercise of stock options		28,000		28		22,512											22,540
Purchase of treasury shares									69,869		(99,363	)					(99,363	)
Dividends paid														(128,020	)		(128,020	)
Net income for the year ended December 31, 2013														582,967			582,967
Balance, December 31, 2013		4,433,190		4,433		9,745,249			177,000		(369,335	)		(487,660	)		8,892,687
Non cash compensation						28,767											28,767
Exercise of stock options		66,887		67		55,163											55,230
Exercise of warrants		6,226		6		(6	)										0
Public offering		1,754,386		1,754		4,287,010											4,288,764
Dividends paid														(853,499	)		(853,499	)
Net income for the year ended December 31, 2014														1,454,505			1,454,505
Balance, December 31, 2014		6,260,689	$	6,260	$	14,116,183			177,000	$	(369,335	)	$	113,346		$	13,866,454

The accompanying notes are an integral part of these consolidated financial statements.

F-16

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED December 31, 2014 and 2013

	2014			2013
Cash flows from operating activities:
Net income	$	1,454,505		$	582,967
Adjustments to reconcile net income to net cash provided by operating activities –
Amortization of deferred financing costs		—			41,735
Non cash compensation expense		28,767			35,578
Loss on write-down of investment in privately held company (Note 6)		—			35,000
Changes in operating assets and liabilities
Interest receivable on loans		(42,283	)		(11,141	)
Other current and non current assets		(8,634	)		217
Accounts payable and accrued expenses		106,556			(13,337	)
Deferred origination fees		112,758			9,775
Income taxes payable		(373,219	)		104,963
Net cash provided by operating activities		1,278,450			785,757
Cash flows from investing activities:
Issuance of short term loans		(22,585,990	)		(15,159,450	)
Collections received from loans		13,248,464			14,088,866
Proceeds from exercise of option (Note 5)		146,821			—
Purchase of fixed assets		(19,088	)		—
Net cash used in investing activities		(9,209,793	)		(1,070,584	)
Cash flows from financing activities:
Proceeds from loans and line of credit, net		3,500,000			1,770,000
Purchase of treasury shares		—			(99,363	)
Repayment of senior secured notes		—			(500,000	)
Proceeds from exercise of stock options		55,230			22,540
Proceeds from public offering, net		4,288,765			—
Dividends paid		(853,499	)		(128,020	)
Deferred financing costs incurred		(32,500	)		—
Net cash provided by financing activities		6,957,996			1,065,157
Net (decrease) increase in cash and cash equivalents		(973,347	)		780,330
Cash and cash equivalents, beginning of year		1,021,023			240,693
Cash and cash equivalents, end of year	$	47,676		$	1,021,023
Supplemental Cash Flow Information:
Taxes paid during the year	$	416,083		$	283,084
Interest paid during the year	$	563,368		$	400,925

The accompanying notes are an integral part of these consolidated financial statements.

F-17

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

1. The Company

Manhattan Bridge Capital, Inc. (“MBC”) and its wholly-owned subsidiaries DAG Funding Solutions, Inc. and MBC Funding I, Inc. (collectively the “Company”), offer short-term, secured, non-banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area.

2. Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements include the accounts of Manhattan Bridge Capital, Inc., and its wholly-owned subsidiaries DAG Funding Solutions, Inc. (“DAG Funding”) and MBC Funding I, Inc. (“MBC Funding”). All significant intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Management will base the use of estimates on (a) a preset number of assumptions that consider past experience, (b) future projections, and (c) general financial market condition. Actual amounts could differ from those estimates.

Cash and Cash Equivalents

For the purposes of the statements of cash flows, the Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and marketable securities. The Company maintains its cash and cash equivalents with one major financial institution. Accounts at the financial institution are insured by the Federal Deposit Insurance Corporation up to $250,000.

Credit risks associated with short term commercial loans the Company makes to small businesses and related interest receivable are described in Note 4 entitled Commercial Loans.

Impairment of long-lived assets

The Company continually monitors events or changes in circumstances that could indicate carrying amounts of long lived assets, may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the undiscounted cash flows is less than the carrying amount of these assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. During the year ended December 31, 2013, the Company recognized an impairment loss on the write-down of its investment in a privately held company in the amount of $35,000 (See Note 6).

Income Taxes

The Company accounts for income taxes under the provisions of FASB ASC 740, “Income Taxes”. Under the provisions of FASB ASC 740, deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected

F-18

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

2. Significant Accounting Policies - (continued)

to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred taxes of a change in tax rate is recognized in income in the period that includes the enactment date.

Significant judgment is required in determining any valuation allowance recorded against deferred tax assets. In assessing the need for a valuation allowance, the Company considers all available evidence including past operating results, estimates of future taxable income, and the feasibility of tax planning strategies. In the event that the Company changes its determination as to the amount of deferred tax assets that can be realized, the Company will adjust its valuation allowance with a corresponding impact to the provision for income taxes in the period in which such determination is made.

The Company follows ASC 740 rules governing tax positions which provide guidance for recognition and measurement. This prescribes a threshold condition that a tax position must meet for any of the benefits of the uncertain tax position to be recognized in the financial statements. It also provides accounting guidance on derecognition, classification and disclosure of these uncertain tax positions.

The Company believes it currently satisfies all of the requirements to be taxed as a Real Estate Investment Trust and intends to elect REIT status beginning with the filing of its 2014 tax return. A REIT calculates taxable income similar to other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. The Company may be subject to federal excise tax and minimum state taxes.

Revenue Recognition

The Company recognizes revenues in accordance with ASC 605, which provides guidance on the recognition, presentation and disclosure of revenue in financial statements. ASC 605 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosure related to revenue recognition policies. In general, the Company recognizes revenue when (i) persuasive evidence of an arrangement exists, (ii) delivery of the product has occurred or services have been rendered, (iii) the sales price charged is fixed or determinable, and (iv) collectability is reasonably assured.

Interest income from commercial loans is recognized, as earned, over the loan period.

Origination fee revenue on commercial loans is amortized over the term of the respective note.

Deferred Financing Costs

Costs incurred in connection with the Company’s Sterling Credit Line, as discussed in Note 7, were amortized over one year, using the straight-line method. Costs incurred in connection with the Company’s Webster Credit Line, as discussed in Note 7, are being amortized over three years, using the straight-line method. Costs incurred in connection with the Company’s senior secured notes, as discussed in Note 8, were amortized over the term of the notes, using the straight-line method.

Earnings Per Share (“EPS”)

Basic and diluted earnings per share are calculated in accordance with ASC 260 “Earnings Per Share”. Under ASC 260, basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share include the potential dilution from the exercise of stock options and warrants for common shares using the treasury stock method.

F-19

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

2. Significant Accounting Policies - (continued)

The numerator in calculating both basic and diluted earnings per common share for each year is the reported net income. The denominator is based on the following weighted average number of common shares:

	Years ended December 31,
	2014		2013
Basic weighted average common shares outstanding		5,028,645		4,269,169
Incremental shares for assumed exercise of options		29,776		20,649
Diluted weighted average common shares outstanding		5,058,421		4,289,818

51,224 and 262,351 vested options were not included in the diluted earnings per share calculation for the years ended December 31, 2014 and 2013, respectively, either because their effect would have been anti-dilutive, or because they are being held in escrow (See Note 12).

Stock-Based Compensation

The Company measures and recognizes compensation awards for all stock option grants made to employees and directors, based on their fair value in accordance with ASC 718 “Compensation — Stock Compensation”, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. A key provision of this statement is to measure the cost of employee services received in exchange for an award of equity instruments (including stock options) based on the grant-date fair value of the award. The cost will be recognized over the service period during which an employee is required to provide service in exchange for the award (i.e., the requisite service period or vesting period). The Company accounts for equity instruments issued to non-employees in accordance with the provisions of ASC 718 and ASC 505-50, “Equity Based Payment to Non-Employees”. All transactions with non-employees, in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more appropriately measurable.

The stock based compensation expense for the years ended December 31, 2014 and 2013 also includes the amortization of the fair value of the restricted shares granted on September 9, 2011, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value will be amortized over 15 years (See Note 12).

Fair Value of Financial Instruments

For cash and cash equivalents, short term loans, the line of credit and accounts payable, as well as interest bearing commercial loans held by the Company, the carrying amount approximates fair value due to the relative short-term nature of such instruments.

Recent Accounting Pronouncements

In July 2013, the FASB issued ASU 2013-11, “Income Taxes (Topic 740): Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The objective of this guidance is to clarify the balance sheet presentation of an unrecognized tax benefit and to resolve the diversity in practice that had developed in the absence of any on-point GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. The ASU is effective for public entities for fiscal years beginning after December 15, 2013, and interim periods therein. The adoption of this guidance did not have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

In January 2014, the FASB issued ASU 2014-04, “Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure (A Consensus of the FASB Emerging Issues Task Force).” The purpose of the update

F-20

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

2. Significant Accounting Policies - (continued)

is to define an in substance repossession or foreclosure for purposes of determining whether or not an entity should derecognize a residential real estate collateralized consumer mortgage loan if the entity has foreclosed on the real estate. The ASU is effective for public entities for fiscal years beginning after December 15, 2014, and interim periods therein. The adoption of this guidance is not expected to have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

In May 2014, the FASB and IASB jointly issued ASU 2014-09, “Revenue from Contracts with Customers (Topic 606).” The intent of this guidance is to provide greater comparability for financial statement users by eliminating inconsistencies in current revenue recognition GAAP. Specifically, an entity should recognize revenue based on the transaction price, which is the amount of consideration the entity expects to be entitled to in exchange for transferring promised goods or services. A single principles-based, five-step revenue model must be applied to all contracts with customers. For public entities, the ASU is effective for annual and interim periods beginning after December 15, 2016. Early application is not permitted. The adoption of this guidance is not expected to have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

In June 2014, the FASB issued ASU 2014-12, “Compensation — Stock Compensation (Topic 718): Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force).” The ASU clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. Therefore, an entity would not record compensation expense (measured as of the grant date without taking into account the effect of the performance target) related to an award for which transfer to the employee is contingent on the entity’s satisfaction of a performance target until it becomes probable that the performance target will be met. No new disclosures are required under the ASU. The ASU is effective for all entities for reporting periods beginning after December 15, 2015. Early adoption is permitted. The adoption of this guidance is not expected to have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

In August 2014, the FASB issued ASU 2014-14, “Receivables — Troubled Debt Restructurings by Creditors (Subtopic 310-40): Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure (a consensus of the FASB Emerging Issues Task Force).” The ASU address a practice issue related to the classification of certain foreclosed residential and nonresidential mortgage loans that are either fully or partially guaranteed under government programs. The ASU is effective for public entities for fiscal years beginning after December 15, 2014, and interim periods therein. The adoption of this guidance is not expected to have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, “Income Statement — Extraordinary and Unusual Items (Subtopic 225-20): Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items.” This ASU eliminates the separate presentation of extraordinary items but does not change the requirement to disclose material items that are unusual or infrequent in nature. The ASU is effective for fiscal years beginning after December 15, 2015, as well as interim periods within those fiscal years. The ASU may be applied retrospectively to all prior periods presented in the financial statements, and early adoption is permitted provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance is not expected to have a material impact on Manhattan Bridge Capital’s consolidated financial statements.

Management does not believe that any other recently issued, but not yet effected, accounting standards if currently adopted would have a material effect on Manhattan Bridge Capital’s consolidated financial statements.

F-21

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

3. Cash and Cash Equivalents

Effective January 1, 2008, the Company adopted ASC 820, Fair Value Measurements, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. ASC 820-10 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1 — Quoted prices in active markets.

Level 2 — Observable inputs other than quoted prices in active markets that are either directly or indirectly observable.

Level 3 — Unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.

Cash equivalents and investment instruments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s Level 1 investments are valued using quoted market prices in active markets. The Company’s Level 2 investments are valued using an appraiser, broker or dealer quotations for similar assets and liabilities. As of December 31, 2014 and 2013 the Company’s Level 1 investments consisted of cash and money market accounts in the amount of approximately $48,000 and $1,021,000, respectively, and were recorded as cash and cash equivalents in the Company’s consolidated balance sheets. As of December 31, 2013, the Company’s Level 2 investments consisted of investments in real estate in the amount of approximately $147,000 in the Company’s consolidated balance sheets.

4. Commercial Loans

Short Term Loans Receivable

The Company offers short-term secured non–banking loans to real estate investors (also known as hard money) to fund their acquisition and construction of properties located in the New York Metropolitan area. The loans are principally secured by collateral consisting of real estate and, generally, accompanied by personal guarantees from the principals of the businesses. The loans are generally for a term of one year. The short term loans are initially recorded, and carried thereafter, in the financial statements at cost. Most of the loans provide for receipt of interest only during the term of the loan and a balloon payment at the end of the term. For the years ended December 31, 2014 and 2013 the total amounts of $22,585,990 and $15,159,450, respectively, have been lent, offset by collections received from borrowers, under the commercial loans in the amount of $13,248,464 and $14,088,866, respectively. Loans ranging in size from $30,000 to $1,300,000 were concluded at stated interest rates of 12% to 15%, but often at higher effective rates based upon points or other up-front fees.

The Company uses its own employees, outside lawyers and other independent professionals to verify titles and ownership, to file liens and to consummate the transactions. Outside appraisers are also used to assist the Company’s officials in evaluating the worth of collateral. To date, the Company has not experienced any defaults and none of the loans previously made have been non-collectable, although no assurances can be given that existing or future loans may not go into default or prove to be non-collectible in the future.

At December 31, 2014, the Company was committed to an additional $2,552,500 in construction loans that can be drawn by the borrower when certain conditions are met.

At December 31, 2013, the Company has made loans to eight different entities in the aggregate amount of $1,989,000, of which $899,000 is included in long-term loans receivable. One individual holds at least a fifty percent interest in each of the different entities. The Company also has made loans to six different entities in the aggregate amount of $1,761,950, of which $400,000 is included in long-term loans receivable. One

F-22

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

4. Commercial Loans - (continued)

individual holds at least a twenty-five percent interest in each of the borrowers. The aggregate loans to all these entities totaled $3,750,950 or 25.5% of our loan portfolio. All individuals have no relationship to any of the officers or directors of the Company.

At December 31, 2014 and 2013, no one entity has loans outstanding representing more than 10% of the total balance of the loans outstanding.

At December 31, 2014, eight of the loans in the Company’s portfolio were jointly funded by the Company and unrelated entities, for aggregate loans of $5,105,000. The accompanying 2014 balance sheet includes the Company’s portion of the loans in the amount of $2,665,000.

At December 31, 2013, three of the loans in the Company’s portfolio were jointly funded by the Company and unrelated entities, for aggregate loans of $2,400,000. The accompanying 2013 balance sheet includes the Company’s portion of the loans in the amount of $1,650,000.

The Company generally grants loans for a term of one year. In some cases, the Company has agreed to extend the term of the loans beyond one year. This was mainly due to the additional lending conditions generally imposed by traditional lenders and financial institutions as a result of the mortgage crisis, which has made it more difficult overall for borrowers, including the Company’s borrowers, to secure long term financing. Prior to the Company granting an extension of any loan, it reevaluates the underlying collateral.

Long Term Loans Receivable

Long term loans receivable comprise the loans that were extended beyond the original maturity dates, unless it is clear that the loan will be paid back by December 31, 2015. At December 31, 2014, the Company’s loan portfolio consists of approximately $19,138,000 short term loans receivable and approximately $4,894,000 long term loans receivable. At December 31, 2013, the Company’s loan portfolio consists of approximately $10,698,000 short term loans receivable and $3,997,000 long term loans receivable.

Credit Risk

Credit risk profile based on loan activity as of December 31, 2014 and 2013:

Performing loans	Developers –  Residential		Developers –  Commercial		Developers –  Mixed Used		Other		Total outstanding loans
December 31, 2014	$	22,360,040	$	1,635,000	$	20,000	$	17,436	$	24,032,476
December 31, 2013	$	12,467,950	$	1,750,000	$	477,000	$	—	$	14,694,950

At December 31, 2014, the Company’s commercial loans include loans in the amount of $179,050, $100,000, $120,000, $570,000 and $4,430,000, originally due in 2009, 2010, 2011, 2013 and 2014, respectively. At December 31, 2013, the Company’s commercial loans include loans in the amount of $290,000, $152,000, $150,000, $150,000 and $3,307,000, originally due in 2009, 2010, 2011, 2012 and 2013, respectively. In all instances the borrowers are currently paying their interest and, generally, the Company receives a fee in connection with the extension of the loans. Accordingly, at December 31, 2014 and 2013, no loan impairments exist and there are no provisions for impairments of loans or recoveries thereof included in operations for the years then ended.

Subsequent to the balance sheet date, $2,192,500 of commercial loans outstanding at December 31, 2014 were paid off.

F-23

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

5. Investment in Real Estate

On March 21, 2011, the Company purchased three 2-family buildings located in the Bronx, New York for $675,000, including related costs, and sold to the seller a one year option to buy back the properties for the same price (the “Buy Back Option”). The Buy Back Option was sold for $3,900, plus a monthly fee of $10,530 payable to the Company by the option holder for the life of the option.

On September 28, 2011, the option holder partially exercised the Buy Back Option with respect to one of the properties for $380,679. On October 1, 2011, the Company issued a new one year option for the two remaining properties at an aggregate exercise price of $294,321 with a monthly option fee of $4,591 (the “New Option”). On October 21, 2011, the option holder partially exercised the New Option to buy back one of the two remaining properties for $147,500 and had a continuing option, though October 1, 2012, to purchase the one remaining property at an exercise price of $146,821 with a monthly option fee of $2,296. Subsequently, the New Option’s expiration date was extended twice, on October 1, 2012, which extended the expiration date through March 30, 2013, and again on April 1, 2013, which extended the expiration date through September 30, 2013.

Since September 30, 2013, the expiration date of the New Option has been extended on a month to month basis with the payment of the monthly option fee. On October 2, 2014, the option holder exercised the New Option to buy back the one remaining property at the exercise price of $146,821.

Other income for the years ended December 31, 2014 and 2013 in the amount of $21,197 and $27,548, respectively, represents the fees generated from the seller buy back options.

6. Investment in Privately Held Company

The Company has an investment in privately held Israeli-based company that offers surgeons and radiologists the ability to detect cancer in real time.

Due to the fact that the privately held company experienced delays in executing its business plan, the Company determined to write down the value of its investment to $65,000 at December 31, 2013, resulting in a charge to the statement of operations of $35,000 during the year ended December 31, 2013.

7. Loans and Lines of Credit

Short Term Loans

At December 31, 2014, the Company owed an aggregate of $2,419,465 under eight separate short term loans, bearing interest at rates ranging from 8% to 12% per annum. One of the loans in the amount of $160,000, bearing interest at the rate of 10% per annum, is from a parent of a former member of the board of directors. Interest expense on this loan amounted to $16,000 for the year ended December 31, 2014. The loans are secured by certain of the Company’s short term loans pursuant to a security agreement, and two of the loans are also personally guaranteed by the Company’s CEO.

At December 31, 2013, the Company owed an aggregate of $1,319,465 under six separate short term loans, bearing interest at rates ranging from 8% to 10% per annum. One of the loans in the amount of $160,000, bearing interest at the rate of 10% per annum, is from a parent of a member of the board of directors. Interest expense on this loan amounted to $4,978 for the year ended December 31, 2013. The loans are secured by certain of the Company’s short term loans pursuant to a security agreement, and two of the loans are also personally guaranteed by the Company’s CEO.

During 2014, the Company received four separate short-term loans from three different entities in the aggregate amount of $2,100,000, bearing interest at rates ranging from 12% to 14%, per annum, and modified one of the short-term loans, bearing interest at the rate of 10% per annum, from $100,000 to $200,000. By the end of December 31, 2014, the Company repaid in full two of the loans in the aggregate amount of $1,100,000. In addition, Mr. Ran, our CEO, made seven separate loans to the Company in amounts ranging

F-24

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

7. Loans and Lines of Credit - (continued)

from $50,000 to $250,000, at an interest rate of 6% per annum. At December 31, 2014, the outstanding balance of such loans is $50,000. The aggregate interest expense for these loans was $5,867.

Subsequent to the balance sheet date, the Company received two separate short-term loans in the aggregate amount of $410,000, bearing interest at rates ranging from 10% to 12%, per annum. One of the loans in the amount of $175,000, bearing interest at the rate of 10% per annum, is from a parent of a former member of the board of directors. In addition, Mr. Ran, our CEO, made three loans in the aggregate amount of $1,050,000 to the Company, at an interest rate of 6% per annum. On February 27, 2015, the Company repaid in full loans from Mr. Ran in the aggregate amount of $1,100,000, as well as two short-term loans, outstanding at December 31, 2014, in the aggregate amount of $1,000,000, bearing interest at the rate of 12% per annum. During March 2015, the Company repaid in full three of its short-term loans in the aggregate amount of $733,845, outstanding at December 31, 2014, bearing interest at rates ranging from 8% to 10%, per annum.

Lines of Credit

On May 2, 2012, the Company entered into a one-year revolving Line of Credit Agreement with Sterling National Bank pursuant to which the Bank agreed to advance up to $3.5 million (the “Sterling Credit Line”) against assignments of mortgages and other collateral. The Sterling Credit Line was conditioned on an unlimited personal guarantee from Assaf Ran, the Company’s CEO, and requires the maintenance of certain non-financial covenants including limitations on the percentage of loans outstanding in excess of one year, loans made to affiliated groups and the extent of construction loans made by the Company. The interest rate on the Sterling Credit Line is 2% in excess of the Wall Street Journal prime rate (3.25% at December 31, 2014), but in no event less than 6%, per annum, on the money in use. Total initiation costs for the Sterling Credit Line were approximately $16,000. These costs are being amortized over one year, using the straight-line method. The amortization costs for the year ended December 31, 2013 were $5,341.

On January 31, 2013, the Company entered into an amendment to the Line of Credit Agreement with Sterling National Bank to increase the Sterling Credit Line from $3.5 million to $5 million, under the same terms as the original line of credit (the “Amendment”). In connection with the Amendment, Mr. Ran agreed to increase his personal guarantee to $5 million. On December 13, 2013, the Company entered into another amendment to the Line of Credit Agreement with Sterling National Bank to increase the Sterling Credit Line from $5 million to $7 million, under the same terms as the original line of credit (the “Second Amendment”). In connection with the Second Amendment, Mr. Ran agreed to increase his personal guarantee to $7 million. On November 14, 2014, the Company entered into another amendment to the Line of Credit Agreement with Sterling National Bank to increase the Sterling Credit Line from $7 million to $7.7 million for 30 days (the “Third Amendment”). At December 31, 2014, the outstanding balance of the Sterling Credit Line was $7,700,000.

Effective on May 1, 2013, July 1, 2013, June 24, 2014, October 29, 2014 and December 13, 2014, the term of the Sterling Credit Line was extended through July 1, 2013, July 1, 2014, October 29, 2014, December 13, 2014 and June 11, 2015, respectively. Effective on December 13, 2014, the term of the additional $700,000 revolving credit facility was extended through February 11, 2015.

On February 27, 2015, the Company repaid and terminated the Sterling Credit Line and simultaneously entered into a Line of Credit Agreement with Webster Business Credit Corporation pursuant to which it may borrow up to $14 million during the next three years (the “Webster Credit Line”) against assignments of mortgages and other collateral. The Webster Credit Line provides for an interest rate of either LIBOR plus 4.75% or the base commercial lending rate of Webster plus 3.25% as chosen by the Company for each drawdown. Mr. Ran has personally guaranteed all of our obligations to Webster. Total initiation costs through the closing for the Webster Credit Line were approximately $123,000. These costs are being amortized over three years, using the straight-line method.

F-25

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

7. Loans and Lines of Credit - (continued)

The Webster Credit Line replaced the Sterling Credit Line. In addition, the Company utilized the Webster Credit Line to repay in full loans from Mr. Ran in the aggregate amount of $1,100,000, as well as two short-term loans, outstanding at December 31, 2014, in the aggregate amount of $1,000,000, bearing interest at the rate of 12% per annum.

8. Senior Secured Notes

On December 28, 2010, MBC Funding completed a $500,000 private placement of three-year 6.63% senior secured notes. As collateral for these notes, MBC agreed to assign to MBC Funding the mortgages and related notes that it held as a creditor in the aggregate amount of no less than $750,000. MBC also guaranteed the repayment of the notes. The notes required quarterly payments of interest only through the expiration date, December 28, 2013.

Financing costs incurred in connection with the agreement totaled $109,183, including five year warrants (the “warrants”) to purchase 20,000 shares of Common Stock issued to the Placement Agent at $2.50 per share, which were valued at $11,683. These costs were amortized over the life of the senior secured notes. The amortization costs for the year ended December 31, 2013 were $36,395. In December 2013, the Company repaid all senior secured notes in full.

9. Income Taxes

Income tax expense consists of the following:

	2014		2013
Current Taxes:
Federal	$	8,539	$	306,900
State		19,300		80,100
		27,839		387,000
Deferred taxes:
Federal		—		—
State		—		—
Income tax expense	$	27,839	$	387,000

The income tax expense for the year ended December 31, 2014, represents the under accrual of the prior year’s income tax expense.

Deferred tax assets consist of the following:

	2013
Deferred tax assets:
Capital loss carryover	$	105,200
Compensation expense – other		8,766
Compensation expense – restricted stocks		78,388
Deferred tax assets		192,354
Less: valuation allowance		(192,354	)
	$	—

The Company has a capital loss carryover of $390,609, a portion of which it expects to utilize to offset its other income in the amount of $21,197, in connection with the filing of its income tax returns for the year ended December 31, 2014. The remaining capital loss carryover expires through 2015.

F-26

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

9. Income Taxes - (continued)

The 2013 income tax expense (benefit) differs from the amount computed using the federal statutory rate of 34% as a result of the following:

Year Ended December 31,	2013
Federal Statutory Rate		34	%
State and local income tax expense net of federal tax effect		6	%
Valuation allowance		—
State and local franchise taxes		—
Other		—
Income tax expense		40	%

The Company evaluates tax positions taken or expected to be taken in the course of preparing the Company’s tax returns to determine whether the tax positions are “more likely than not” of being sustained by the applicable tax authorities. Tax positions not deemed to meet the more likely than not threshold are recorded as tax benefits or expenses in the current year. Management has analyzed the Company’s tax positions taken on Federal, state and local tax returns for all open tax years, and has concluded that no provision for Federal income tax is required in the Company’s financial statements. The Company reports interest and penalties as income tax expense, which amounted to approximately $9,400 and $3,800 for the years ended December 31, 2014 and 2013, respectively.

The Company believes it currently satisfies all of the requirements to be taxed as a Real Estate Investment Trust and intends to elect REIT status beginning with the filing of its 2014 tax return. A REIT calculates taxable income similar to other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. The Company may be subject to federal excise tax and minimum state taxes.

The Company is no longer subject to U.S. federal and state and local income tax examinations by tax authorities for years prior to 2011, as these tax years are closed.

10. Simple IRA Plan

On October 26, 2000, the Board of Directors approved a Simple IRA Plan (the “IRA Plan”) for the purpose of attracting and retaining valuable executives. The IRA Plan was effective August 2000 with a trustee, which allows up to 100 eligible executives to participate. It is a “Matching Contribution” plan under which eligible executives may contribute up to 6% of their yearly salary, on a pre-tax basis (with a cap of $12,000), with the Company matching on a dollar-for-dollar basis up to 3% of the executives’ compensation (with a cap of $12,000). These thresholds are subject to change under notice by the trustee. The Company is not responsible for any other costs under this plan. For the years ended December 31, 2014 and 2013 the Company contributed $9,734 and $9,100, respectively, as matching contributions to the IRA Plan.

11. Stock-Based Compensation

On June 23, 2009 the Company adopted the 2009 Stock Option Plan (the “Plan”) and replaced the 1999 Stock Option Plan as amended (the “Prior Plan”), which expired in May of 2009. Options granted under the Prior Plan remain outstanding until expired, exercised or cancelled.

The purpose of the Plan is to align the interests of officers, other key employees, consultants and non-employee directors of the Company and its subsidiaries with those of the stockholders of the Company, to afford an incentive to such officers, employees, consultants and directors to continue as such, to increase their efforts on behalf of the Company and to promote the success of the Company’s business. The availability of

F-27

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

11. Stock-Based Compensation - (continued)

additional shares will enhance the Company’s ability to achieve these goals. The basis of participation in the Plan is upon discretionary grants of the Board. The Board may at any time, and from time to time, suspend or terminate the Plan in whole or in part or amend it from time to time.

The maximum number of Common Shares reserved for the grant of awards under the Plan is 400,000, subject to adjustment as provided in Section 9 of the Plan. As of December 31, 2014, 376,000 options were granted, 217,000 options were cancelled or expired, and 241,000 are available for grant under the 2009 stock option plan.

The exercise price of options granted under the Company’s stock option plan may not be less than the fair market value on the date of grant. Stock options under our stock option plan may be awarded to officers, key-employees, consultants and non-employee directors of the Company. Under our stock option plan, every non-employee director of the Company is granted 7,000 options upon first taking office, and then 7,000 upon each additional year in office. Generally, options outstanding vest over periods not exceeding four years and are exercisable for up to five years from the grant date.

Share based compensation expense recognized under ASC 718 for the years ended December 31, 2014 and 2013 were $28,767 and 35,578, respectively.

The stock based compensation expense for each of the years ended December 31, 2014 and 2013 includes $13,065 of amortization of the fair value of the 1,000,000 restricted shares granted to the Company’s Chief Executive Officer on September 9, 2011 of $195,968, after adjusting for the effect on the fair value of the stock options related to this transaction. The fair value will be amortized over 15 years (See Note 12).

The fair value of each option is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average share assumptions used for grants in 2014 and 2013, respectively: (1) expected life of 5 years; (2) annual dividend yield of 9.59% and 2.61%; (3) expected volatility 59.5% and 75.0%; and (4) risk free interest rate of 1.71% and 1.07%.

The following summarizes stock option activity for the years ended December 31, 2014 and 2013:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at January 1, 2013		355,000		$	0.92		1.62	$	173,006
Granted in 2013		28,000			1.53
Exercised in 2013		(28,000	)		0.81
Forfeited or expired in 2013		(70,000	)		1.01
Outstanding at December 31, 2013		285,000		$	0.97		1.43	$	147,656
Granted in 2014		21,000			2.92
Exercised in 2014		(77,000	)		1.18
Forfeited or expired in 2014		(147,000	)		0.75
Outstanding at December 31, 2014		82,000		$	1.68		2.68	$	59,115
Vested and exercisable at December 31, 2013		283,000		$	0.97		1.42	$	146,458
Vested and exercisable at December 31, 2014		81,000		$	1.69		2.69	$	58,515

The weighted-average fair value of each option granted during the years ended December 31, 2014 and 2013, estimated as of the grant date using the Black-Scholes option-pricing model, was $0.72 per option and $0.78 per option, respectively.

F-28

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

11. Stock-Based Compensation - (continued)

A summary of the status of the Company’s nonvested shares as of December 31, 2014 and 2013, and changes during the years then ended is as presented below:

	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)
Nonvested shares at January 1, 2013		3,000		$	1.01		3.88
Granted		28,000			1.53		4.50
Vested		(29,000	)		1.51		4.44
Nonvested shares at December 31, 2013		2,000		$	1.01		2.88
Granted		21,000			2.92		4.50
Vested		(22,000	)		2.83		4.38
Nonvested shares at December 31, 2014		1,000		$	1.01		1.88

The following table summarizes information about stock options outstanding at December 31, 2014:

	Stock Option Outstanding						Exercisable
Range of Exercise Prices	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Number of Shares		Weighted Average Exercise Price
$1.01 – $2.00		61,000	$	1.25		2.05		60,000	$	1.26
$2.01 – $3.00		21,000		2.92		4.50		21,000		2.92
		82,000	$	1.68		2.68		81,000	$	1.69

In connection with the Company’s private placement of senior secured notes (see Note 8, above), the Company issued 20,000 warrants, at an exercise price of $2.50 per warrant, to the Placement Agent on December 28, 2010. The warrants are exercisable into the same number of common shares and exercisable over a five-year period. In December 2014, the Placement Agent exercised the warrant for all 20,000 common shares using the cashless exercise option under the warrant in lieu of paying cash in satisfaction of the exercise price, pursuant to which the Placement Agent received a lesser number of common shares. As a result, the Company issued 6,226 common shares to the Placement Agent.

12. Restricted Stock Grant

On September 9, 2011, upon stockholders approval at the 2011 annual meeting of stockholders, the Company granted 1,000,000 shares of its restricted common stock (the “Restricted Shares”) to Mr. Ran, the Company’s chief executive officer. Under the terms of the restricted shares agreement (the “Restricted Shares Agreement”), Mr. Ran agreed to forfeit options held by him exercisable for an aggregate of 280,000 shares of common stock of the Company (“Common Stock”) with exercise prices above $1.21 per share and agreed not to exercise additional options held by him for an aggregate of 210,000 shares of Common Stock with exercise prices below $1.21 per share (the “Remaining Options”). Until their expiration, Mr. Ran will be required to forfeit approximately 4.76 Restricted Shares for each share of Common Stock issued upon any exercise of the Remaining Options. In addition, Mr. Ran may not sell, convey, transfer, pledge, encumber or otherwise dispose of the Restricted Shares until the earliest to occur of the following: (i) September 9, 2026, with respect to  1/3 of the Restricted Shares, September 9, 2027 with respect to an additional  1/3 of the Restricted Shares and September 9, 2028 with respect to the final  1/3 of the Restricted Shares; (ii) the date on which Mr. Ran’s employment is terminated by the Company for any reason other than for “Cause” (i.e., misconduct that is materially injurious to us monetarily or otherwise, including engaging in any conduct that constitutes a

F-29

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

12. Restricted Stock Grant - (continued)

felony under federal, state or local law); or (iii) the date on which Mr. Ran’s employment is terminated on account of (A) his death; or (B) his disability, which, in the opinion of his personal physician and a physician selected by the Company prevents him from being employed with the Company on a full-time basis (each such date being referred to as a “Risk Termination Date”). If at any time prior to a Risk Termination Date Mr. Ran’s employment is terminated by the Company for Cause or by Mr. Ran voluntarily for any reason other than death or disability, Mr. Ran will forfeit that portion of the Restricted Shares which have not previously vested. Mr. Ran will have the power to vote the Restricted Shares and will be entitled to all dividends payable with respect to the Restricted Shares from the date the Restricted Shares are issued.

In connection with the Compensation Committee’s approval of the foregoing grant of Restricted Shares, the Compensation Committee consulted with and obtained the concurrence of independent compensation experts and informed Mr. Ran that it had no present intention of continuing its prior practice of annually awarding stock options to Mr. Ran as CEO. Also Mr. Ran, advised the Compensation Committee that he would not seek future stock option grants.

The grant of Restricted Shares was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, as amended. The stock certificates for the Restricted Shares were imprinted with restrictive legends and are held in escrow until vesting occurs.

13. Stockholders’ Equity

On September 19, 2012, the Company adopted a stock buy-back program for the repurchase of up to 100,000 shares of the Company’s common stock. During 2013 the Company has purchased 69,869 common shares from this repurchase program, at an aggregate cost of approximately $99,000.

On July 31, 2014, the Company completed a public offering of 1,754,386 common shares at a price to the public of $2.85 per share (the “July 2014 Public Offering”), which raised gross proceeds of $5,000,000 and the net proceeds of approximately $4,289,000, after deducting the Company’s underwriting discounts and commissions and offering expenses payable in connection with the offering. The Company also granted the underwriters a 45-day option to purchase up to 263,157 additional common shares to cover over-allotments, if any. The option expired unexercised in September 2014.

As a result of the offering, the Company believes it currently satisfies all of the requirements to be taxed as a Real Estate Investment Trust (“REIT”) and intends to elect REIT status beginning with the filing of its 2014 tax return. A REIT calculates taxable income similar to other domestic corporations, with the major difference being a REIT is entitled to a deduction for dividends paid. A REIT is generally required to distribute each year at least 90% of its taxable income. If it chooses to retain the remaining 10% of taxable income, it may do so, but it will be subject to a corporate tax on such income. The Company may be subject to federal excise tax and minimum state taxes.

14. Commitments and Contingencies

Operating Leases

On June 9, 2011, the Company entered into a new lease agreement (the “Lease’) to relocate its corporate headquarters to 60 Cutter Mill Road, Great Neck, New York. The Lease is for a term of five years and two months commencing June 2011 and ending August 2016. The rent increases annually during the term and ranges from approximately $2,800 per month during the first year to approximately $3,200 per month during the fifth year.

F-30

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

14. Commitments and Contingencies - (continued)

At December 31, 2014, approximate future minimum rental, including utilities, payments under these commitments are as follows:

2015	$	41,400
2016		28,100
Total	$	69,500

Rent expense, including utilities, was approximately $42,000 and $39,000 in 2014 and 2013, respectively.

Employment Agreements

In March 1999, we entered into an employment agreement with Assaf Ran, our President and Chief Executive Officer pursuant to which: (i) Mr. Ran’s employment term renews automatically on June 30^th of each year for successive one-year periods unless either party gives to the other written notice at least 180 days prior to June 30^th of its intention to terminate the agreement; (ii) Mr. Ran receives an annual base salary of $225,000 and annual bonuses as determined by the Compensation Committee of the Board, in its sole and absolute discretion, and is eligible to participate in all executive benefit plans established and maintained by us; and (iii) Mr. Ran agreed to a one-year non-competition period following the termination of his employment.

Mr. Ran’s annual base compensation was $225,000 for each of the years 2014 and 2013, and a bonus of $35,000 and $65,000, respectively, for the years 2014 and 2013 which was approved by the Compensation Committee.

Derivative Action

The Company was sued in 2011 as a nominal defendant in a stockholder derivative action, Alan R. Kahn v. Assaf Ran, et al., Supreme Court of the State of New York, County of Nassau, filed against the members of its Board of Directors. The plaintiff, who asserted that he was a stockholder of the Company at all pertinent times, alleged wrongdoing by the Board in a transaction in which Director and Chief Executive Officer, Assaf Ran, was granted certain shares of the Company’s restricted stock in exchange for giving up his rights in certain options that he had held at the time of the transaction. Plaintiff contended that the Company was harmed by the transaction. The Directors disagreed with the plaintiff’s position that the transaction involved any wrongful conduct or that it harmed the Company in any way. The court dismissed the original complaint, but gave plaintiff leave to file an amended complaint, which the plaintiff did. The defendants moved to dismiss the amended complaint, but before the court ruled on that motion, the parties reached an agreement to settle the action, subject to approval of the court. The terms of the settlement include the Company’s agreement to continue utilizing certain corporate governance matters that the Company had already implemented before the lawsuit was filed and would continue to implement regardless of the settlement agreement, and to pay Plaintiff’s counsel’s fees and expenses in an amount to be determined by the court, which amount shall not exceed $80,000. In addition, Assaf Ran will reiterate his commitment to extend his personal guarantee to the Company for up to $5 million. This commitment was available to the Company prior to the settlement agreement. After the court preliminarily approved the settlement, the Company provided notice of the settlement to stockholders, in order to provide them with an opportunity to object to the settlement if they choose to do so. No stockholders submitted any objections to the settlement. At a final hearing to address the fairness and reasonableness of the settlement held on April 2, 2013, the court approved the settlement, dismissed the action, and awarded plaintiff $80,000 in fees and costs. The fee award has been paid by an officers’ and directors’ liability insurance policy, rather than by the Company. As a result of the court’s ruling, the litigation has been concluded.

F-31

MANHATTAN BRIDGE CAPITAL, INC. AND SUBSIDIARIES
 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2014 and 2013

14. Commitments and Contingencies - (continued)

Right to Rescind Share Purchase

With respect to the July 2014 Public Offering, the final prospectus may have been distributed and the offering consummated without distributing a preliminary prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended, although the Company believes that a previously distributed prospectus met those requirements. As a result, purchasers of common shares in the July 2014 Public Offering may be entitled to rescind their purchase and receive a refund of their original purchase price in that public offering. In order to receive a refund, a purchaser is required to notify the Company in writing of the purchaser’s election to rescind the transaction by July 28, 2015 and, if the notice is accepted, return all common shares purchased in the July 2014 Public Offering along with dividends received on such shares. If the rescission notice is not accepted by the Company, the purchaser may bring a rescission action against the Company by such date to compel such action. In the unlikely event a purchaser determines to rescind the purchase, the Company intends to contest the purchaser’s right to rescission whether initiated by notice or legal action.

15. Related Parties Transactions

In September 2013, the Company received a short-term loans in the amount of $160,000 from a parent of a former member of the Board bearing interest at the rate of 10% per annum. Interest expense on this loan amounted to $16,000 and $4,978, respectively, for years ended December 31, 2014 and 2013.

In 2013, Mr. Ran made five separate loans to the Company in amounts ranging from $50,000 to $100,000, bearing interest at the rate of 6% per annum. All of these loans were repaid by the Company as of December 31, 2013. The aggregate interest expense for these loans was $1,124.

In 2014, Mr. Ran made seven separate loans to the Company in amounts ranging from $50,000 to $250,000, bearing interest at the rate of 6% per annum. At December 31, 2014, the outstanding balance of such loans is $50,000. The aggregate interest expense for these loans was $5,867.

In January 2015, Mr. Ran made three separate loans to the Company in the aggregate amount of $1,050,000, at an interest rate of 6% per annum. All the loans from Mr. Ran were repaid in full on February 27, 2015. The aggregate interest expense for these loans was $8,817.

In February 2015, the Company received a short-term loans in the aggregate amount of $175,000 from a parent of a former member of the Board bearing interest at the rate of 10% per annum.

F-32

 

$    
  % Senior Secured Notes
Due            , 2026
  

 

MBC Funding II Corp
  
  
  
  
  

 

PROSPECTUS

 

Aegis Capital Corp

            , 2016

 

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following sets forth the estimated expenses in connection with the issuance and distribution of the securities being registered hereby, other than underwriting discounts and commissions, all of which will be borne by Funding:

SEC registration fee	$	1,006.00
Printing and engraving expenses	$		*
Legal fees and expenses	$		*
Accounting fees and expenses	$		*
Miscellaneous	$		*
Total	$		*

* To be supplied by amendment.

Item 15. Indemnification of Directors and Officers.

Sections 722 and 723 of the New York Business Corporation Law grant a corporation the power to indemnify its officers and directors as follows:

(a) A corporation may indemnify any person made, or threatened to be made, a party to an action or proceeding (other than one by or in the right of the corporation to procure a judgment in its favor), whether civil or criminal, including an action by or in the right of any other corporation of any type or kind, domestic or foreign, or any partnership, joint venture, trust, employee benefit plan or other enterprise, which any director or officer of the corporation served in any capacity at the request of the corporation, by reason of the fact that he, his testator or intestate, was a director or officer of the corporation, or served such other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity, against judgments, fines, amounts paid in settlement and reasonable expenses, including attorney’s fees actually and necessarily incurred as a result of such action or proceeding, or any appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation and, in criminal actions or proceedings, in addition, had no reasonable cause to believe that his conduct was unlawful.

(b) The termination of any such civil or criminal action or proceeding by judgment, settlement, conviction or upon a plea of nolo contendere, or its equivalent, shall not in itself create a presumption that any such director or officer did not act, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation or that he had reasonable cause to believe that his conduct was unlawful.

(c) A corporation may indemnify any person made, or threatened to be made, a party to an action by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he, his testator or intestate, is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director or officer of any other corporation of any type or kind, domestic or foreign, of any partnership, joint venture, trust, employee benefit plan or other enterprise, against amounts paid in settlement and reasonable expenses, including attorneys’ fees, actually and necessarily incurred by him in connection with the defense or settlement of such action, or in connection with an appeal therein, if such director or officer acted, in good faith, for a purpose which he reasonably believed to be in, or, in the case of service for any other corporation or any partnership, joint venture, trust, employee benefit plan or other enterprise, not opposed to, the best interests of the corporation, except that no indemnification under this paragraph shall be made in respect of (1) a threatened action, or a pending action which is settled or otherwise disposed of, or (2) any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the court on which the action was brought, or, if no action was brought, any court of competent jurisdiction, determines upon application that, in view of all the

II-1

circumstances of the case, the person is fairly and reasonably entitled to indemnity for such portion of the settlement amount and expenses as the court deems proper.

(d) For the purpose of this section, a corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to applicable law shall be considered fines; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such person’s duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation.

Payment of indemnification other than by court award is as follows:

(a) A person who has been successful, on the merits or otherwise, in the defense of a civil or criminal action or proceeding of the character described in section 722 shall be entitled to indemnification as authorized in such section.

(b) Except as provided in paragraph (a), any indemnification under section 722 or otherwise permitted by section 721, unless ordered by a court under section 724 (Indemnification of directors and officers by a court), shall be made by the corporation, only if authorized in the specific case:

(1) By the board acting by a quorum consisting of directors who are not parties to such action or proceeding upon a finding that the director or officer has met the standard of conduct set forth in section 722 or established pursuant to section 721, as the case may be, or,

(2) If a quorum under subparagraph (1) is not obtainable or, even if obtainable, a quorum of disinterested directors so directs;

(A) By the board upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the applicable standard of conduct set forth in such sections has been met by such director or officer, or

(B) By the shareholders upon a finding that the director or officer has met the applicable standard of conduct set forth in such sections.

(C) Expenses incurred in defending a civil or criminal action or proceeding may be paid by the corporation in advance of the final disposition of such action or proceeding upon receipt of an undertaking by or on behalf of such director or officer to repay such amounts as, and to the extent, required by paragraph (a) of section 725.

Manhattan Bridge Capital’s Restated Certificate of Incorporation and Funding’s certificate of incorporation each provides as follows:

“TENTH: (a) Right to Indemnification.  Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigation (hereinafter a “Proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Business Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall incur to the

II-2

benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that if the Business Corporation Law requires, the payment of such expenses incurred by a director or officer (in his or her capacity as a director or officer and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a Proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

(b) Right of Claimant to Bring Suit.  If a claim under paragraph (a) of this Section is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Business Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Business Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard or conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c) Non-Exclusivity of Rights.  The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Article TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Restated Certificate of Incorporation, by-law, agreement, vote of shareholders or disinterested directors or otherwise.

(d) Insurance.  The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Business Corporation Law.

ELEVENTH:  A director of the corporation shall not be personally liable to the corporation or its shareholders for damages for any breach of duty in such capacity, except for the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the New York Business Corporation Law.”

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Item 16. Exhibits.

The following is a complete list of exhibits filed as part of this registration statement. Some of the following exhibits were filed as exhibits to registration statements filed by the Registrant under the Securities Act of 1933, as amended, and reports filed under the Securities and Exchange Act of 1934, as amended, and are hereby incorporated by reference.

Exhibit No.
1.1	Form of Underwriting Agreement**
3.1	Restated Certificate of Incorporation of the Company(1)
3.2	By-laws of the Company, effective May 2014(2)
3.3	Certificate of Incorporation of MBC Funding II Corp*
3.4	Bylaws of MBC Funding II Corp*
4.4	Form of Note**
4.5	Form of Indenture*
5.1	Form of Legal Opinion*
8.1	Form of Tax Opinion*
10.1	Employment Agreement dated as of March 1, 1999 by and between Assaf Ran and DAG Media, Inc.(4)****
10.2	Manhattan Bridge Capital, Inc. 2009 Stock Option Plan, as amended(5)
10.3	Web Site Company Formation Development and Services Agreement, dated December 5, 2005, by and between Manhattan Bridge Capital, Inc. and Ocean-7 Development, Inc.(6)
10.4	Credit and Security Agreement, dated as of February 27, 2015, between Manhattan Bridge Capital Inc. as Borrower, and Webster Business Credit Corporation, as Lender(7)
10.5	Revolving Line of Credit Loan Agreement, dated May 2, 2012, between Manhattan Bridge Capital, Inc., as Borrower, and Sterling National Bank, as Lender(8)
10.6	Amendment Agreement, dated January 31, 2013, among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(9)
10.7	Note Extension Agreement, dated as of May 1, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(10)
10.8	Note Extension Agreement, dated as of July 1, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(11)
10.9	Second Amendment Agreement, dated December 13, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(12)
10.10	Third Note Extension Agreement, dated as of June 24, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(13)
10.11	Third Amendment Agreement, dated July 15, 2014, among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(14)
10.12	Balloon Note, dated July 14, 2014, in the original principal amount of $200,000 made by Manhattan Bridge Capital, Inc. in favor of Assaf Ran(15)
10.13	Balloon Note, dated July 15, 2014, in the original principal amount of $700,000 made by the Registrant in favor of SJO International Inc.(16)
10.14	Fourth Note Extension Agreement, dated as of October 29, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(17)
10.15	Fifth Note Extension Agreement, dated as of December 13, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(18)
23.1	Consent of Hoberman, & Lesser, LLP, dated January 26, 2016*
23.2	Consent of Hoberman, Goldstein & Lesser, P.C., dated January 26, 2016*

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Exhibit No.
23.3	Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1)*
24.1	Power of Attorney of the officers and directors of Manhattan Bridge Capital, Inc.***
24.2	Power of Attorney of the officers and directors of MBC Funding II Corp. (included on signature page)*

(1) Previously filed as Exhibit 3.1 to Form 10-Q for the three and six month periods ended June 30, 2014 on August 13, 2014 and incorporated herein by reference.

(2) Previously filed as Exhibit 3.2 to Form 10-Q for the three and six month periods ended June 30, 2014 on August 13, 2014 and incorporated herein by reference.

(3) Previously filed as Exhibit 4.1 to Form SB-2 on April 23, 1999 and incorporated herein by reference.

(4) Previously filed as Exhibit 10.2 to the Registration Statement on Form SB-2/A, File No. 333-74203 filed by DAG Media, Inc. on March 10, 1999 and incorporated herein by reference.

(5) Previously filed as Appendix A to our definitive proxy materials filed on August 5, 2011 and incorporated herein by reference.

(6) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 5, 2005 and incorporated herein by reference.

(7) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on March 3, 2015 and incorporated herein by reference.

(8) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on May 7, 2012 and incorporated herein by reference.

(9) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on February 19, 2013 and incorporated herein by reference.

(10) Previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q filed by Manhattan Bridge Capital, Inc. on July 31, 2013 for the three and six month periods ended June 30, 2013 and incorporated herein by reference.

(11) Previously filed as Exhibit 10.2 to Quarterly Report on Form 10-Q filed by Manhattan Bridge Capital, Inc. on July 31, 2013 for the three and six month periods ended June 30, 2013 and incorporated herein by reference.

(12) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 16, 2013 and incorporated herein by reference.

(13) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on June 26, 2014 and incorporated herein by reference.

(14) Previously filed as Exhibit 10.9 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(15) Previously filed as Exhibit 10.10 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(16) Previously filed as Exhibit 10.11 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(17) Previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q filed on October 30, 2014 and incorporated herein by reference.

(18) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 12, 2014 and incorporated herein by reference.

* Filed herewith.

** To be filed by amendment.

*** Previously filed.

**** Compensation arrangement.

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Item 17. Undertakings.

(a) The undersigned registrant hereby undertakes:

(1) to file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii) to reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii) to include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4) That, for the purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities: the undersigned registrant hereby undertakes that in a primary offering of securities of such undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, such undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i) Any preliminary prospectus or prospectus of such undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii) Any free writing prospectus relating to the offering prepared by or on behalf of such undersigned registrant or used or referred to by such undersigned registrant;

(iii) The portion of any other free writing prospectus relating to the offering containing material information about an undersigned registrant or its securities provided by or on behalf of such undersigned registrant; and

(iv) Any other communication that is an offer in the offering made by such registrant to the purchaser.

(b) The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the undersigned registrant pursuant to the foregoing provisions, or otherwise, the undersigned registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore,

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unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by such registrant of expenses incurred or paid by a director, officer or controlling person of such registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, such registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

(d) The undersigned Registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

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SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 1 to Registration Statement No. 333-208894 to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Great Neck, State of New York, on January 26, 2016.

MBC Funding II Corp.

By: /s/ Assaf Ran

Assaf Ran, Chief Executive Officer

We, the undersigned officers and directors of MBC Funding II Corp., hereby severally constitute and appoint Assaf Ran, our true and lawful attorneys-in-fact and agent, with full power of substitution and resubstitution in each of them for him and in his name, place and stead, and in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, and any other registration statement for the same offering pursuant to Rule 462(b) under the Securities Act of 1933, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises, as full to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

Signature	Date	Title
/s/ Assaf Ran ASSAF RAN	January 26, 2016	President, Chief Executive Officer (Principal Executive Officer) and Director
/s/ Vanessa Kao VANESSA KAO	January 26, 2016	Chief Financial Officer (Principal Financial and Accounting Officer)

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SIGNATURES AND POWER OF ATTORNEY

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-11 and has duly caused this Amendment No. 1 to Registration Statement No. 333-208894 to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Great Neck, State of New York, on January 26, 2016.

Manhattan Bridge Capital, Inc.

By: /s/ Assaf Ran

Assaf Ran, Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.

Signature	Date	Title
/s/ Assaf Ran ASSAF RAN	January 26, 2016	President, Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)
/s/ Vanessa Kao* VANESSA KAO	January 26, 2016	Chief Financial Officer (Principal Financial and Accounting Officer)
/s/ Eran Goldshmit* ERAN GOLDSHMIT	January 26, 2016	Director
/s/ Michael Jackson* MICHAEL JACKSON	January 26, 2016	Director
/s/ Mark Alhadeff* MARK ALHADEFF	January 26, 2016	Director
/s/ Lyron Bentovim* LYRON BENTOVIM	January 26, 2016	Director

*By:	/s/ Assaf Ran ASSAF RAN Attorney-in-Fact

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INDEX TO EXHIBITS

Exhibit No.
1.1	Form of Underwriting Agreement**
3.1	Restated Certificate of Incorporation of the Company(1)
3.2	By-laws of the Company, effective May 2014(2)
3.3	Certificate of Incorporation of MBC Funding II Corp.*
3.4	Bylaws of MBC Funding II Corp.*
4.4	Form of Note**
4.5	Form of Indenture*
5.1	Form of Legal Opinion*
8.1	Form of Tax Opinion*
10.1	Employment Agreement dated as of March 1, 1999 by and between Assaf Ran and DAG Media, Inc.(4)****
10.2	Manhattan Bridge Capital, Inc. 2009 Stock Option Plan, as amended(5)
10.3	Web Site Company Formation Development and Services Agreement, dated December 5, 2005, by and between Manhattan Bridge Capital, Inc. and Ocean-7 Development, Inc.(6)
10.4	Credit and Security Agreement, dated as of February 27, 2015, between Manhattan Bridge Capital Inc. as Borrower, and Webster Business Credit Corporation, as Lender(7)
10.5	Revolving Line of Credit Loan Agreement, dated May 2, 2012, between Manhattan Bridge Capital, Inc., as Borrower, and Sterling National Bank, as Lender(8)
10.6	Amendment Agreement, dated January 31, 2013, among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(9)
10.7	Note Extension Agreement, dated as of May 1, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(10)
10.8	Note Extension Agreement, dated as of July 1, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(11)
10.9	Second Amendment Agreement, dated December 13, 2013, between Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(12)
10.10	Third Note Extension Agreement, dated as of June 24, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(13)
10.11	Third Amendment Agreement, dated July 15, 2014, among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(14)
10.12	Balloon Note, dated July 14, 2014, in the original principal amount of $200,000 made by Manhattan Bridge Capital, Inc. in favor of Assaf Ran(15)
10.13	Balloon Note, dated July 15, 2014, in the original principal amount of $700,000 made by the Registrant in favor of SJO International Inc.(16)
10.14	Fourth Note Extension Agreement, dated as of October 29, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(17)
10.15	Fifth Note Extension Agreement, dated as of December 13, 2014 among Manhattan Bridge Capital, Inc., Assaf Ran and Sterling National Bank(18)
23.1	Consent of Hoberman, & Lesser, LLP, dated January 26, 2016*
23.2	Consent of Hoberman, Goldstein & Lesser, P.C., dated January 26, 2016*
23.3	Consent of Morse, Zelnick, Rose & Lander, LLP (included in Exhibit 5.1)*
24.1	Power of Attorney of the officers and directors of Manhattan Bridge Capital, Inc.***
24.2	Power of Attorney of the officers and directors of MBC Funding II Corp. (included on signature page)*

(1) Previously filed as Exhibit 3.1 to Form 10-Q for the three and six month periods ended June 30, 2014 on August 13, 2014 and incorporated herein by reference.

(2) Previously filed as Exhibit 3.2 to Form 10-Q for the three and six month periods ended June 30, 2014 on August 13, 2014 and incorporated herein by reference.

(3) Previously filed as Exhibit 4.1 to Form SB-2 on April 23, 1999 and incorporated herein by reference.

(4) Previously filed as Exhibit 10.2 to the Registration Statement on Form SB-2/A, File No. 333-74203 filed by DAG Media, Inc. on March 10, 1999 and incorporated herein by reference.

(5) Previously filed as Appendix A to our definitive proxy materials filed on August 5, 2011 and incorporated herein by reference.

(6) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 5, 2005 and incorporated herein by reference.

(7) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on March 3, 2015 and incorporated herein by reference.

(8) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on May 7, 2012 and incorporated herein by reference.

(9) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on February 19, 2013 and incorporated herein by reference.

(10) Previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q filed by Manhattan Bridge Capital, Inc. on July 31, 2013 for the three and six month periods ended June 30, 2013 and incorporated herein by reference.

(11) Previously filed as Exhibit 10.2 to Quarterly Report on Form 10-Q filed by Manhattan Bridge Capital, Inc. on July 31, 2013 for the three and six month periods ended June 30, 2013 and incorporated herein by reference.

(12) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 16, 2013 and incorporated herein by reference.

(13) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on June 26, 2014 and incorporated herein by reference.

(14) Previously filed as Exhibit 10.9 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(15) Previously filed as Exhibit 10.10 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(16) Previously filed as Exhibit 10.11 to Amendment No. 2 to the Registration Statement on Form S-11, File No. 333-196167 filed on July 22, 2014 and incorporated herein by reference.

(17) Previously filed as Exhibit 10.1 to Quarterly Report on Form 10-Q filed on October 30, 2014 and incorporated herein by reference.

(18) Previously filed as Exhibit 10.1 to Current Report on Form 8-K filed on December 12, 2014 and incorporated herein by reference.

* Filed herewith.

** To be filed by amendment.

*** Previously filed.

**** Compensation Arrangement.

EX-3.3 2 v429688_ex3-3.htm EXHIBIT 3.3

Exhibit 3.3

CERTIFICATE OF INCORPORATION

OF

MBC FUNDING II CORP.

(Pursuant to Section 402 of the Business Corporation Law)

FIRST:                 The name of the corporation is MBC Funding II Corp.

SECOND:            The corporation is formed for the following purpose or purposes:

To engage in any lawful act or activity for which corporations may be organized under the Business Corporation Law, including, without limitation or obligation, engaging in business as a real estate investment trust, or REIT, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”), as now or hereafter in force, provided that the corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained.

To have, in furtherance of the corporate purposes, all of the powers conferred upon corporations organized under the Business Corporation Law subject to any limitations thereof contained in this certificate of incorporation or in the laws of the State of New York.

If the corporation elects to qualify for U.S. Federal income tax treatment as a REIT, the Board of Directors, in its sole and absolute discretion, shall take such actions as it determines are necessary or appropriate to preserve the status of the corporation as a REIT; provided, however, if the Board of Directors determines, in its sole and absolute discretion, that it is no longer in the best interests of the corporation to attempt to, or continue to, qualify as a REIT, the Board of Directors may revoke or otherwise terminate the corporation’s REIT election pursuant to Section 856(g) of the Code. The Board of Directors also may determine, in its sole and absolute discretion that compliance with any restriction or limitation on stock ownership and transfers set forth in Article TWELFTH is no longer required.

THIRD:               The office of the corporation is to be located in the County of Nassau, State of New York.

FOURTH:           The corporation shall have the authority to issue one class of shares consisting of 100 common shares, par value $.001 per share (the “Common Shares”).

FIFTH:                The Secretary of State is designated as the agent of the corporation upon whom process against the corporation may be served. The post office address within the State of New York to which the Secretary of State shall mail a copy of any process against the corporation served upon him is: Morse, Zelnick, Rose & Lander, LLP, 825 Third Avenue, New York, New York 10022, Attn: Stephen A. Zelnick, Esq.

SIXTH:                The duration of the corporation is perpetual.

SEVENTH:         Any action required or permitted to be taken by the Board of Directors of the corporation or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at the meeting.

EIGHTH:             Whenever under the Business Corporation Law shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

NINTH:               No holder of any of the shares of any class of the capital stock of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the capital stock of the corporation that the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights to subscribe for, purchase, or otherwise acquire shares of any class of capital stock of the corporation; and any and all of such shares, bonds, securities or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, and any and all of such rights and options may be granted by the Board of Directors to such persons, firms, corporations and associations, and for such lawful consideration, and on such terms, as the Board of Directors, in its sole and absolute discretion may determine, without first offering the same, or any thereof, to any said holder. Without limiting the generality of the foregoing stated denial of any and all preemptive rights, no holder of shares of any class of the capital stock of the corporation shall have any preemptive rights in respect of the matters, proceedings, or transaction specified in subparagraphs (1) to (6), inclusive, of paragraph (e) of Section 622 of the Business Corporation Law.

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TENTH:              (a)        Right to Indemnification.         Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigation (hereinafter a “Proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Business Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall incur to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that if the Business Corporation Law requires, the payment of such expenses incurred by a director or officer (in his or her capacity as a director or officer and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a Proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

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(b)        Right of Claimant to Bring Suit.         If a claim under paragraph (a) of this Section is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Business Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Business Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard or conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c)        Non-Exclusivity of Rights.         The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Article TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, by-law, agreement, vote of shareholders or disinterested directors or otherwise.

(d)        Insurance.         The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Business Corporation Law.

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ELEVENTH: A director of the corporation shall not be personally liable to the corporation or its shareholders for damages for any breach of duty in such capacity, except for the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the New York Business Corporation Law.

TWELFTH: RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES OF CAPITAL STOCK

Section12.1.          Definitions.   For the purpose of this Article TWELFTH, the following terms shall have the following meanings:

Aggregate Stock Ownership Limit.  The term “Aggregate Stock Ownership Limit” shall mean four (4.0%) percent in value or number, whichever is more restrictive, of the aggregate of the outstanding shares of Capital Stock, or such other percentage determined by the Board of Directors in accordance with Section 12.2.8 of this Certificate of Incorporation. The value of the outstanding shares of Capital Stock shall be determined by the Board of Directors, which determination shall be final and conclusive for all purposes hereof. For purposes of determining the percentage ownership of Capital Stock by any Person, shares of Capital Stock that may be acquired upon conversion, exchange or exercise of any securities of the corporation directly or constructively held by such Person, but not shares of Capital Stock issuable with respect to the conversion, exchange or exercise of securities of the corporation held by other Persons, shall be deemed to be outstanding prior to conversion, exchange or exercise.

Beneficial Ownership.  The term “Beneficial Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

Business Day.  The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is not a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law, regulation or executive order to close.

Capital Stock.   The term “Capital Stock” shall mean all classes or series of stock of the corporation, including, without limitation, Common Shares.

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Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Trust as determined pursuant to Section 12.3.6 of this Certificate of Incorporation, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Common Stock Ownership Limit.  The term “Common Stock Ownership Limit” shall mean four (4.0%) percent (in value or in number of Common Shares, whichever is more restrictive) of the aggregate of the outstanding Common Shares, or such other percentage determined by the Board of Directors in accordance with Section 12.2.8 of this Certificate of Incorporation. The number and value of the outstanding Common Shares of the corporation shall be determined by the Board of Directors, which determination shall be final and conclusive for all purposes hereof. For purposes of determining the percentage ownership of Common Shares by any Person, Common Shares that may be acquired upon conversion, exchange or exercise of any securities of the corporation directly or constructively held by such Person, but not Common Shares issuable with respect to the conversion, exchange or exercise of securities of the corporation held by other Persons, shall be deemed to be outstanding prior to conversion, exchange or exercise.

Constructive Ownership.  The term “Constructive Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

Excepted Holder.  The term “Excepted Holder” shall mean Assaf Ran and any other shareholder of the corporation for whom an Excepted Holder Limit is created by this Article TWELFTH or by the Board of Directors pursuant to Section 12.2.7.

Excepted Holder Limit.  The term “Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Directors pursuant to Section 12.2.7 of this Certificate of Incorporation and subject to adjustment pursuant to Sections 12.2.7 of this Certificate of Incorporation and 12.2.8 of this Certificate of Incorporation, the percentage limit established by the Board of Directors pursuant to Section 12.2.7 of this Certificate of Incorporation.

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Initial Date.   The term “Initial Date” shall mean the date of the closing of the issuance of Common Shares pursuant to the S-11 Registration Statement, SEC File No. 333-196167, filed with the Securities and Exchange Commission on May 22, 2014.

Market Price.  The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on such date. The “Closing Price” on any date shall mean the last sale price for such Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Capital Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on Nasdaq or, if such Capital Stock is not listed or admitted to trading on Nasdaq, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Capital Stock is listed or admitted to trading or, if such Capital Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Capital Stock selected by the Board of Directors or, in the event that no trading price is available for such Capital Stock, the fair market value of the Capital Stock, as determined by the Board of Directors.

Nasdaq.  The term “Nasdaq” shall mean any of the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market.

Person.   The term “Person” shall mean an individual, corporation, partnership, limited liability company, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit applies.

Prohibited Owner.  The term “Prohibited Owner” shall mean, with respect to any purported Transfer, any Person who, but for the provisions of this Article TWELFTH, would Beneficially Own or Constructively Own shares of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation, and if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the Prohibited Owner would have so owned.

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Restriction Termination Date.  The term “Restriction Termination Date” shall mean the first day after the Initial Date on which the Board of Directors determines, in its sole and absolute discretion, that it is no longer in the best interests of the corporation to attempt to, or continue to, qualify as a REIT or that compliance with any or all of the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required.

Transfer.  The term “Transfer” shall mean any issuance, sale, transfer, redemption, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire or possess Beneficial Ownership or Constructive Ownership, or any agreement to take any such action or cause any such event, of Capital Stock or the right to vote or receive dividends on Capital Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Capital Stock or any interest in Capital Stock or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms “Transferring” and “Transferred” shall have the correlative meanings.

Trust.  The term “Trust” shall mean any trust provided for in Section 12.3.1 of this Certificate of Incorporation.

Trustee.  The term “Trustee” shall mean a Person unaffiliated with the corporation and a Prohibited Owner that is appointed by the corporation to serve as trustee of the Trust.

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Section12.2.        Capital Stock.

Section12.2.1.     Ownership Limitations. During the period commencing on the Initial Date and prior to the Restriction Termination Date, but subject to Section 12.4 of this Certificate of Incorporation:

(a) Basic Restrictions.

(i) No

(1) Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit;

(2) Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Common Stock in excess of the Common Stock Ownership Limit; and

(3) Excepted Holder shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

(ii)          No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such Beneficial Ownership or Constructive Ownership of Capital Stock would result in the corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or Constructive Ownership that would result in the corporation owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

(iii)        Any Transfer of shares of Capital Stock that, if effective, would result in the Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

(iv)        No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such Beneficial Ownership or Constructive Ownership of Capital Stock could result in the corporation failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code.

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(b)          Transfer in Trust.         If any Transfer of shares of Capital Stock occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Capital Stock in violation of Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation, then that number of shares of the Capital Stock the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation (rounded up to the nearest whole share) shall be automatically transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 12.3, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such shares; provided, however, if the transfer to the Trust described in first clause of this first sentence of this Section 12.2.1(b) would not be effective for any reason to prevent the violation of Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation, then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock. To the extent that, upon a transfer of shares of Capital Stock to a Trust pursuant to this Section 12.2.1(b), a violation of any provision of this Article TWELFTH would nonetheless be continuing (for example where the ownership of shares of Capital Stock by a single Trust would violate the 100 stockholder requirement applicable to REITs), then shares of Capital Stock shall be transferred to that number of Trusts, each having a distinct Trustee and a Charitable Beneficiary or Charitable Beneficiaries that are distinct from those of each other Trust, such that there is no violation of any provision of this Article TWELFTH.

Section 12.2.2.          Remedies for Breach.  If the Board of Directors shall at any time determine that a Transfer or other event has taken place that results in a violation of Section 12.2.1 of this Certificate of Incorporation or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the corporation to redeem shares, refusing to give effect to such Transfer on the books of the corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 12.2.1 of this Certificate of Incorporation shall automatically result in the transfer to the Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors.

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Section 12.2.3.          Notice of Restricted Transfer.  Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that will or may violate Section 12.2.1(a) of this Certificate of Incorporation or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Trust pursuant to the provisions of Section 12.2.1(b) of this Certificate of Incorporation shall immediately give written notice to the corporation of such event or, in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the corporation such other information as the corporation may request in order to determine the effect, if any, of such Transfer on the corporation’s status as a REIT.

Section12.2.4.          Owners Required To Provide Information.  From the Initial Date until prior to the Restriction Termination Date:

(a)          every owner of four (4.0%) percent or more (or such lower percentage as required by the Code or the U.S. Treasury Department regulations promulgated thereunder) of the outstanding shares of Capital Stock, within thirty (30) days after the end of each taxable year, shall give written notice to the corporation stating the name and address of such owner, the number of shares of Capital Stock Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall provide to the corporation such additional information as the corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the corporation’s status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit; and

(b)          each Person who is a Beneficial Owner or Constructive Owner of Capital Stock and each Person (including the shareholder of record) who is holding Capital Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the corporation may request, in order to determine the Corporation’s status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit.

Section 12.2.5.          Remedies Not Limited.  Nothing contained in this Article TWELFTH shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the corporation in preserving the corporation’s status as a REIT.

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Section 12.2.6.          Ambiguity.  In the case of an ambiguity in the application of any of the provisions of Section 12.2, Section 12.3 or any definition contained in Section 12.1 of this Certificate of Incorporation, the Board of Directors may determine the application of the provisions of such Section 12.2 or Section 12.3 or any such definition with respect to any situation based on the facts known to it. In the event Section 12.2 or Section 12.3 of this Certificate of Incorporation requires an action by the Board of Directors and this Certificate of Incorporation fails to provide specific guidance with respect to such action, the Board of Directors may determine the action to be taken so long as such action is not contrary to the provisions of Sections 12.1, 12.2 or 12.3 of this Certificate of Incorporation. Absent a decision to the contrary by the Board of Directors (which the Board of Directors may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section12.2.2 of this Certificate of Incorporation) acquired Beneficial Ownership or Constructive Ownership of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation, such remedies (as applicable) shall apply first to the shares of Capital Stock that, but for such remedies, would have been actually owned by such Person, and second to shares of Capital Stock that, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such shares of Capital Stock based upon the relative number of the shares of Capital Stock held by each such Person.

Section 12.2.7.          Exceptions.

(a)          Subject to Section 12.2.1(a)(ii) of this Certificate of Incorporation, the Board of Directors, in its sole and absolute discretion, may, but is not required to, exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if the corporation obtains such representations and undertakings from such Person as are reasonably necessary for the Board of Directors to determine that:

(i)          no Person’s Beneficial or Constructive Ownership of such shares of Capital Stock will violate Section 12.2.1(a)(ii) of this Certificate of Incorporation at the time the Board makes the determination; and

(ii)         such Person does not and will not own, actually or Constructively, an interest in a tenant of the corporation (or a tenant of any entity owned or controlled by the corporation ) that would cause the corporation to own, actually or Constructively, a 10% or more interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (for this purpose, a tenant shall not be treated as a tenant of the corporation if the corporation (or an entity owned or controlled by the corporation ) derives (and is expected to continue to derive) a sufficiently small amount of revenue from such tenant such that, in the determination of the Board of Directors, rent from such tenant would not, individually or in the aggregate with other revenues of the corporation , adversely affect the corporation ’s ability to qualify as a REIT).

Any violation or attempted violation of any such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 12.2.1 through 12.2.6 of this Certificate of Incorporation) will result in shares of Capital Stock being automatically transferred to a Trust in accordance with Sections 12.2.1(b) and 12.3 of this Certificate of Incorporation.

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(b)          Prior to granting any exception pursuant to Section 12.2.7(a) of this Certificate of Incorporation, the Board of Directors may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole and absolute discretion, as it may deem necessary or advisable in order to determine or ensure the corporation’s status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.

(c)          Subject to Section 12.2.1(a)(ii) of this Certificate of Incorporation, an underwriter or placement agent that participates in a public offering or a private placement of Capital Stock (or securities convertible into or exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent necessary to facilitate such public offering or private placement.

(d)          The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Aggregate Stock Ownership Limit or the Common Stock Ownership Limit, as the case may be.

Section 12.2.8.          Increase or Decrease in Aggregate Stock Ownership and Common Stock Ownership Limits.   Subject to Section 12.2.1(a)(ii) and this Section 12.2.8 of this Certificate of Incorporation, the Board of Directors may, in its sole and absolute discretion, from time to time increase the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit for one or more Persons and decrease the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit for all other Persons. No decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit will be effective for any Person whose percentage ownership of Capital Stock is in excess of such decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable, until such time as such Person’s percentage ownership of Capital Stock equals or falls below the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable; provided, however, any further acquisition of Capital Stock by any such Person (other than a Person for whom an exemption has been granted pursuant to Section 12.2.7(a) of this Certificate of Incorporation or an Excepted Holder) in excess of the Capital Stock owned by such person on the date the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable, became effective will be in violation of the Common Stock Ownership Limit or Aggregate Stock Ownership Limit. No increase to the Common Stock Ownership Limit or Aggregate Stock Ownership Limit may be approved if the new Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit would allow five or fewer Persons to Beneficially Own, in the aggregate more than 49.9% in value of the outstanding Capital Stock.

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Section 12.2.9.          Legend.    Each certificate for shares of Capital Stock, if certificated, or the notice in lieu of a certificate, if any, shall bear substantially the following legend:

The shares [represented by this certificate] are subject to restrictions on Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the corporation’s maintenance of its status as a Real Estate Investment Trust under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the corporation’s Certificate of Incorporation, (i) no Person may Beneficially Own or Constructively Own shares of the corporation’s Common Stock in excess of the Common Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own shares of Capital Stock of the corporation in excess of the Aggregate Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own Capital Stock that would result in the corporation being “closely held” under Section 856(h) of the Code or otherwise cause the corporation to fail to qualify as a REIT; (iv) no Person may Transfer shares of Capital Stock if such Transfer would result in the Capital Stock of the corporation being owned by fewer than 100 Persons; and (v) no Person may Beneficially Own or Constructively Own shares of Capital Stock that could result in the corporation failing to qualify as a “domestically controlled qualified investment entity” under Section 897(h)(4)(B) of the Code. Any Person who Beneficially Owns or Constructively Owns or attempts or intends to Beneficially Own or Constructively Own shares of Capital Stock which cause or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the corporation. If any of the restrictions on transfer or ownership provided in (i), (ii), (iii) or (v) above are violated, the shares of Capital Stock in excess or in violation of the above limitations will be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. In addition, the corporation may redeem shares upon the terms and conditions specified by the Board of Directors in its sole and absolute discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, if the ownership restriction provided in (iv) above would be violated, or upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio. All capitalized terms in this legend have the meanings given to them in the Certificate of Incorporation of the corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of shares of Capital Stock of the Corporation on request and without charge. Requests for such a copy may be directed to the Secretary of the corporation at its principal office.

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Instead of the foregoing legend, the certificate or notice may state that the corporation will furnish a full statement about certain restrictions on ownership and transferability to a shareholder on request and without charge.

Section 12.3.          Transfer of Capital Stock in Trust.

Section 12.3.1.          Ownership in Trust.    Upon any purported Transfer or other event described in Section 12.2.1(b) of this Certificate of Incorporation that would result in a transfer of shares of Capital Stock to a Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Trust pursuant to Section 12.2.1(b) of this Certificate of Incorporation. The Trustee shall be appointed by the corporation and shall be a Person unaffiliated with the corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the corporation as provided in Section 12.3.6 of this Certificate of Incorporation.

Section 12.3.2.          Status of Shares Held by the Trustee.   Shares of Capital Stock held by the Trustee shall be issued and outstanding shares of Capital Stock of the corporation. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Trust.

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Section 12.3.3.          Dividend and Voting Rights.  The Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to the discovery by the corporation that the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Trustee upon demand, and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares of Capital Stock held in the Trust and, subject to New York law, effective as of the date that the shares of Capital Stock have been transferred to the Trust, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the corporation that the shares of Capital Stock have been transferred to the Trust and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the corporation has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article TWELFTH, until the corporation has received notification that shares of Capital Stock have been transferred into a Trust, the corporation shall be entitled to rely on its stock transfer and other stockholder records for purposes of preparing lists of shareholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes and determining the other rights of shareholders.

Section 12.3.4.          Sale of Shares by Trustee.  Within twenty (20) days of receiving notice from the corporation that shares of Capital Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in Section 12.2.1(a) of this Certificate of Incorporation. Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 12.3.4 of this Certificate of Incorporation. The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be held in the Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee (net of any commissions and other expenses of sale) from the sale or other disposition of the shares held in the Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 12.3.3 of this Certificate of Incorporation of this Article TWELFTH. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be retained by or immediately paid to the Charitable Beneficiary. If, prior to the discovery by the corporation that shares of Capital Stock have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 12.3.4, such excess shall be paid to the Trustee upon demand.

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Section 12.3.5.          Purchase Right in Stock Transferred to the Trustee.   Shares of Capital Stock transferred to the Trustee shall be deemed to have been offered for sale to the corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the corporation, or its designee, accepts such offer. The corporation may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 12.3.3 of this Article TWELFTH. The corporation may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The corporation shall have the right to accept such offer until the Trustee has sold the shares held in the Trust pursuant to Section 12.3.4. Upon such a sale to the corporation, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

Section 12.3.6.          Designation of Charitable Beneficiaries.  By written notice to the Trustee, the corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary or Charitable Beneficiaries of the interest in the Trust such that the shares of Capital Stock held in the Trust would not violate the restrictions set forth in Section 12.2.1(a) of this Certificate of Incorporation in the hands of such Charitable Beneficiary or Charitable Beneficiaries. Neither the failure of the corporation to make such designation nor the failure of the corporation to appoint the Trustee before the automatic transfer provided in Section 12.2.1(b) shall make such transfer ineffective, provided that the corporation thereafter makes such designation and appointment.

Section 12.4.          Nasdaq Transactions.  Nothing in this Article TWELFTH shall preclude the settlement of any transaction entered into through the facilities of Nasdaq or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article TWELFTH and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article TWELFTH.

Section 12.5.          Enforcement.   The corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article TWELFTH.

Section 12.6.          Non-Waiver.   No delay or failure on the part of the corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

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IN WITNESS WHEREOF, I hereto sign my name and affirm that the statements made herein are true under the penalties of perjury, this 3rd day of December 2015.

MBC Funding II Corp.
By:	/s/ Assaf Ran
	Assaf Ran, Incorporator
	60 Cutter Mill Road, Great Neck, New York 11021

18

CERTIFICATE OF INCORPORATION

OF

MBC FUNDING II CORP.

(Pursuant to Section 402 of the Business Corporation Law)

Filer:

John C. Hui, Esq.

Morse, Zelnick, Rose & Lander LLP

825 Third Ave

New York, New York 10022

EX-3.4 3 v429688_ex3-4.htm EXHIBIT 3.4

Exhibit 3.4

B Y L A W S

of

MBC FUNDING II CORP.

ARTICLE I

OFFICES

Section 1. Principal Office - The principal office of the Corporation shall be as set forth in its Certificate of Incorporation.

Section 2. Additional Offices - The Corporation may have such additional offices at such other place within or without the State of New York as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE II

SHAREHOLDERS' MEETING

Section 1. Annual Meeting - An annual meeting of shareholders shall be held annually on such day during the period from May 1 through October 31, other than a Saturday, Sunday or a legal holiday in the state of New York, at the time and place (either within or without the State of New York) as shall be fixed by the Board of Directors and specified in the notice of meeting for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

Section 2. Special Meeting - A special meeting of shareholders may be called at any time by the President and shall be called by the President at the request in writing of a majority of the Board of Directors then in office or at the request in writing filed with the Secretary by the holders of a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote at such meeting. Any such request shall state the purpose or purposes of the proposed meeting. Special meetings shall be held at such time and place (either within or without the State of New York) as shall be specified in the notice thereof. Business transacted at any special meeting of shareholders shall be confined to the purposes set forth in the notice thereof.

Section 3. Notice of Meetings - Written notice of the time, and place and purpose of every meeting of shareholders (and, if other than an annual meeting, indicating the person or persons at whose discretion the meeting is being convoked), shall be given by the President, a Vice-President or by the Secretary to each shareholder of record entitled to vote at such meeting and to each shareholder who, by reason of any action proposed at such meeting, would be entitled to have his stock appraised if such action were taken, not less than ten nor more than fifty days prior to the date set for the meeting, either personally or by mailing said notice by first class mail to each shareholder at his address appearing on the stock book of the Corporation or at such other address supplied by him in writing to the Secretary of the Corporation for the purpose of receiving notice. Notice by mail shall be deemed to be given when deposited, postage prepaid, in a post office or official depository under the exclusive care and custody of the United States Post Office Department. The record date for determining the shareholders entitled to such notice shall be determined by the Board of Directors in accordance with Section 6 of ARTICLE SIXTH of these Bylaws.

If the directors shall adopt, amend or repeal a by-law regulating an impending election of directors, the notice of the next meeting of shareholders for the election of directors shall set forth the by-law so adopted, amended or repealed together with a concise statement of the changes made as required by Section 601(b) of the Business Corporation Law. If any action is proposed to be taken which would, if taken, entitle shareholders to receive payment for their shares, the notice of meeting shall include a statement to such effect.

A written waiver of notice setting forth the purposes of the meeting for which notice is waived, signed by the person or persons entitled to such notice, whether before or after the time of the meeting stated therein, shall be deemed equivalent to the giving of such notice. The attendance by a shareholder at a meeting either in person or by proxy without protesting the lack of notice thereof shall constitute a waiver of notice of such shareholder.

All notice given with respect to an original meeting shall extend to any and all adjournments thereof and such business as might have been transacted at the original meeting may be transacted at any adjournment thereof; no notice of any adjourned meeting need be given if an announcement of the time and place of the adjourned meeting is made at the original meeting.

Section 4. Quorum - The holders of a majority of the shares of stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of shareholders for the transaction of business except as otherwise provided by statute or the Certificate of Incorporation. If, however, a quorum shall not be present or represented at any meeting of shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. When a quorum is once present to organize a meeting, such quorum is not deemed broken by the subsequent withdrawal of any shareholders.

Section 5. Voting - Every shareholder entitled to vote at any meeting shall be entitled to one vote for each share of stock entitled to vote and held by him of record on the date fixed as the record date for said meeting and may so vote in person or by proxy. At all elections of directors when a quorum is present, a plurality of the votes cast by the holders of shares entitled to vote shall elect and any other corporate action, when a quorum is present, shall be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon except as may otherwise be provided by statute or the Certificate of Incorporation.

Section 6. Proxies - Every proxy must be signed by the shareholder entitled to vote or by his duly authorized attorney-in-fact and shall be valid only if filed with the Secretary of the Corporation or with the Secretary of the meeting prior to the commencement of voting on the matter in regard to which said proxy is to be voted. No proxy shall be valid after the expiration of eleven months from the date of its execution unless otherwise expressly provided in the proxy. Every proxy shall be revocable at the pleasure of the person executing it except as otherwise provided by Section 609 of the Business Corporation Law. Unless the proxy by its terms provides for a specific revocation date and except as otherwise provided by statute, revocation of a proxy shall not be effective unless and until such revocation is executed in writing by the shareholder who executed such proxy and the revocation is filed with the Secretary of the Corporation or with the Secretary of the Meeting prior to the voting of the proxy.

Section 7. Shareholders' List - A list of shareholders as of the record date, certified by the Secretary of the Corporation or by a transfer agent appointed by the Board of Directors shall be prepared for every meeting of shareholders and shall be produced by the Secretary or some other officer of the Corporation thereat.

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Section 8. Inspectors at Meetings - In advance of any shareholders' meeting, the Board of Directors may appoint one or more inspectors to act at the meeting or at any adjournment thereof and if not so appointed the person presiding at any such meeting may, and at the request of any shareholder entitled to vote thereat shall, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties as set forth in Section 611 of the Business Corporation Law, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability.

Section 9. Conduct of Meeting - All meetings of shareholders shall be presided over by the President, or if he is not present, by a Vice-President, or if neither the President nor any Vice-President is present, by a chairman thereby chosen by the shareholders at the meeting. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting but if neither the Secretary nor the Assistant Secretary is present, the chairman of the meeting shall appoint any person present to act as secretary of the meeting.

ARTICLE III

BOARD OF DIRECTORS

Section 1. Function and Definition - The business and property of the Corporation shall be managed by its Board of Directors who may exercise all the powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

Section 2. Number and Qualification - The number of directors constituting the entire Board shall be one. The phrase "entire Board" as used herein means the total number of directors which the Corporation would have if there were no vacancies. Unless and until a different number shall be so fixed by resolution of the Board of Directors, provided that any such action of the Board shall require the vote of a majority of the entire Board, or by the shareholders entitled to vote for the election of directors, the Board shall consist of one director. The term of any incumbent director shall not be shortened by any such action by the Board of Directors or by the shareholders.

Each director shall be at least twenty-one years of age. A director need not be a shareholder, a citizen of the United States or a resident of the State of New York.

Section 3. Election Term and Vacancies - Except as otherwise provided in this Section, all directors shall be elected at the annual meeting of shareholders and all directors who are so elected or who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified.

In the interim between annual meetings of shareholders, newly-created directorships resulting from an increase in the number of directors or from vacancies occurring in the Board, but not, except as hereinafter provided, in the case of a vacancy occurring by reason of removal of a director by the shareholders, may be filled by the vote of a majority of the directors, then remaining in office, although less than a quorum may exist.

In the case of a vacancy occurring in the Board of Directors by reason of the removal of one or more directors by action of the shareholders, such vacancy may be filled by the shareholders at a special meeting duly called for such purpose.

In the event a vacancy is not filled by such election by shareholders, whether or not the vacancy resulted from the removal of a director with or without cause, a majority of the directors then remaining in office, although less than a quorum, may fill any such vacancy.

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Section 4. Removal - The Board of Directors may, at any time, with cause, remove any director.

The shareholders entitled to vote for the election of directors may, at any time, remove any or all of the directors with cause.

Section 5. Meetings - The annual meeting of the Board of Directors for the election of officers and the transaction of such other business as may come before the meeting, shall be held, without notice, immediately following the annual meeting of shareholders, at the same place at which such shareholders' meeting is held.

Regular meetings of the Board of Directors shall be held at such time and place, within or outside the State of New York, as may be fixed by resolution of the Board, and when so fixed, no further notice thereof need be given. Regular meetings not fixed by resolution of the Board may be held on notice at such time and place as shall be determined by the Board.

Special meetings of the Board of Directors may be called on notice at any time by the President, and shall be called by the President at the written request of a majority of the directors then in office.

Section 6. Notice of Meetings - No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice.

Section 7. Conduct of Meetings - The President, if present, shall preside at all meetings of directors. At all meetings at which the President is not present any other director chosen by the Board shall preside.

Section 8. Quorum, Adjournment, Voting - Except as otherwise provided by the Certificate of Incorporation, a majority of the entire Board shall be requisite and shall constitute a quorum at all meetings of the Board of Directors for the transaction of business. Where a vacancy or vacancies prevents such majority, a majority of the directors then in office shall constitute a quorum.

A majority of the directors present at any meeting, whether or not a quorum is present, may adjourn the meeting to another time and place without further notice other than an announcement at the meeting.

Except as otherwise provided by the Certificate of Incorporation, when a quorum is present at any meeting, a majority of the directors present shall decide any questions brought before such meeting and the act of such majority shall be the act of the Board.

Section 9. Action Without Meeting - Any action required or permitted to be taken by the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action.

Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at the meeting.

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Section 10. Compensation of Directors - Directors, as such, shall not receive any stated salary for their services, but, by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at any meeting of the Board of Directors or of any committee thereof. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving reasonable compensation therefor.

Section 11. Committees - The Board of Directors, by resolution of a majority of the directors present at a meeting or of all of the directors if acting by written consent, may designate from among its members one or more committees, each consisting of one or more directors, and each of which, to the extent provided in such resolution, shall have all the authority of the Board except that no such committee shall have authority as to any of the following matters:

(a)       the submission to stockholders of any action as to which stockholders' authorization or approval is required by statute, the Certificate of Incorporation or by these Bylaws;

(b)       the filing of vacancies in the Board of Directors or in any committee thereof;

(c)       the fixing of compensation of the directors for serving on the Board or on any committee thereof;

(d)       the amendment or repeal of these Bylaws or the adoption of new Bylaws; and

(e)       the amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable.

The Board may designate one or more directors as alternate members of any such committee who may replace any absent member or members at any meeting of such committee.

Each such committee shall serve at the pleasure of the Board. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to discharge any such committee. Committees shall keep minutes of their proceedings and shall report the same to the Board of Directors at the meeting of the Board next succeeding, and any action by the committee shall be subject to revision and alteration by the Board of Directors, provided that no rights of a third party shall be affected in any such revision or alteration.

ARTICLE IV

OFFICES

Section 1. Executive Officers - The Officers of the Corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary and such Assistant Treasurers and Assistant Secretaries and other officers as the Board of Directors may determine. Any two or more offices may be held by the same person, except the offices of President and Secretary, unless all of the issued and outstanding shares of capital stock of the Corporation are owned by one person, in which event such person may hold all or any combination of offices.

Section 2. Election - The President, one or more Vice-Presidents, the Treasurer and Secretary shall be elected by the Board of Directors to hold office until the meeting of the Board held immediately following the next annual meeting of shareholders and shall hold office for the term for which elected and until their successors have been elected and qualified. The Board of Directors may from time to time appoint all such other officers as it may determine and such officers shall hold office from the time of their appointment and qualifications until the time at which their successors are appointed and qualified. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors.

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Section 3. Removal - Any officer may be removed from office by the Board at any time with or without cause.

Section 4. Delegation of Powers - The Board of Directors may from time to time delegate the power or duties of any officer of the Corporation, in the event of his absence or failure to act otherwise, to any other officer or director or person whom they may select.

Section 5. Compensation - The compensation of each officer shall be such as the Board of Directors may from time to time determine.

Section 6. Chief Executive Officer - The Board of Directors shall designate the President as the chief executive officer of the Corporation who shall have general charge of the business and affairs of the Corporation, subject, however, to the right of the Board of Directors to confer specified powers on officers and subject generally to the direction of the Board.

Unless otherwise ordered by the Board of Directors, the Chief Executive Officer, or in the event of his inability to act, any other officer designated by the Board, shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of security holders of corporations in which the Corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities, and which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

Section 7. President The President, if not designated as Chief Executive Officer, shall have such duties as the Board may prescribe.

Section 8. Vice-President - The Vice-President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe. In the absence or inability of the Chief Executive Officer to perform his duties or exercise his powers, the Vice-President or, if there be more than one, a Vice-President designated by the Board, shall exercise the powers and perform the duties of the President subject to the direction of the Board of Directors.

Section 9. Secretary - The Secretary shall keep the minutes of all meetings and record all votes of shareholders, the Board of Directors and committees in a book to be kept for that purpose. He shall give or cause to be given any required notice of meetings of shareholders, the Board of Directors or any committee, and shall be responsible for preparing or obtaining from a transfer agent appointed by the Board, the list of shareholders required by Article II, Section 7 thereof. He shall be the custodian of the seal of the Corporation and shall affix or cause to be affixed the seal to any instrument requiring it and attest the same and exercise the powers and perform the duties incident to the office of Secretary subject to the direction of the Board of Directors.

Section 10. Treasurer - Subject to the direction of the Board of Directors, the Treasurer shall have charge of the general supervision of the funds and securities of the Corporation and the books of account of the Corporation and shall exercise the powers and perform the duties incident to the office of the Treasurer. If required by the Board of Directors, he shall give to the Corporation a bond in such sum and with such sureties as may be satisfactory to the Board of Directors for the faithful discharge of his duties.

Section 11. Other Officers - All other officers, if any, shall have such authority and shall perform such duties as may be specified from time to time by the Board of Directors.

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ARTICLE V

RESIGNATIONS

Any director or officer of the Corporation or any member of any committee of the Board of Directors of the Corporation may resign at any time by giving written notice to the Board of Directors, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time is not specified therein, upon the receipt thereof, irrespective of whether any such resignation shall have been accepted.

ARTICLE VI

CERTIFICATES REPRESENTING SHARES

Section 1. Form of Certificates - Each shareholder shall be entitled to a certificate or certificates in such form as prescribed by the Business Corporation Law and by any other applicable statutes, which Certificate shall represent and certify the number, kind and class of shares owned by him in the Corporation. The Certificates shall be numbered and registered in the order in which they are issued and upon issuance the name in which each Certificate has been issued together with the number of shares represented thereby and the date of issuance shall be entered in the stock book of the Corporation by the Secretary or by the transfer agent of the Corporation. Each certificate shall be signed by the President or a Vice-President and countersigned by the Secretary or Assistant Secretary and shall be sealed with the Corporate Seal or a facsimile thereof. The signature of the officers upon a certificate may also be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before the certificate is issued, such certificate may be issued by the Corporation with the same effect as if the officer had not ceased to be such at the time of its issue.

Section 2. Consideration - A certificate representing shares shall not be issued until the full amount of consideration therefor has been paid to the Corporation, except if otherwise permitted by Section 504 of the Business Corporation Law.

Section 3. Lost Certificates - The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, mutilated, stolen or destroyed, upon the making of an affidavit of that fact by the person so claiming and upon delivery to the Corporation, if the Board of Directors shall so require, of a bond in such form and with such surety or sureties as the Board may direct, sufficient in amount to indemnify the Corporation and its transfer agent against any claim which may be made against it or them on account of the alleged loss, destruction, theft or mutilation of any such certificate or the issuance of any such new certificate.

Section 4. Fractional Share Interests - The Corporation may issue certificates for fractions of a share where necessary to effect transactions authorized by the Business Corporation Law; or it may pay in cash the fair market value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a shareholder except as therein provided.

Section 5. Share Transfers - Upon compliance with provisions restricting the transferability of shares, if any, transfers of shares of the Corporation shall be made only on the share record of the Corporation by the registered holder thereof, or by his duly authorized attorney, upon the surrender of the certificate or certificates for such shares properly endorsed with payment of all taxes thereon.

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Section 6. Record Date for Shareholders - For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or to express consent or dissent from any proposal without a meeting, or for the purpose of determining the shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty nor less than ten days before the date of any meeting nor more than fifty days prior to any action taken without a meeting, the payment of any dividend or the allotment of any rights, or any other action. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, unless the Board fixes a new record date under this Section for the adjourned meeting.

Section 7. Shareholders of Record - The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of New York.

ARTICLE VII

STATUTORY NOTICES

The Board of Directors may appoint the Treasurer or any other officer of the Corporation to cause to be prepared and furnished to shareholders entitled thereto any special financial notice and/or statement which may be required by Sections 510, 511, 515, 516, 517, 519 and 520 of the Business Corporation Law or by any other applicable statute.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the Corporation shall be fixed, and shall be subject to change from time to time, by the Board of Directors.

ARTICLE IX

CORPORATE SEAL

The Corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words "Corporate Seal" and "New York" and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The Corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said Corporate seal.

ARTICLE X

BOOKS AND RECORDS

There shall be maintained at the principal office of the Corporation books of account of all the Corporation's business and transactions.

There shall be maintained at the principal office of the corporation or at the office of the Corporation's transfer agent a record containing the names and addresses of all shareholders, the number and class of shares held by such and the dates when they respectively became the owners of record thereof.

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ARTICLE XI

INDEMNIFICATION OF DIRECTORS, OFFICERS,

EMPLOYEES AND AGENTS

Any person made or threatened to be made a party to an action or proceeding, whether civil or criminal, by reason of the fact that he, his testator or intestate, then is or was a director, officer, employee or agent of the Corporation, or then serves or has served any other corporation in any capacity at the request of the Corporation, shall be indemnified by the Corporation against reasonable expenses, judgments, fines and amounts actually and necessarily incurred in connection with the defense of such action or proceeding or in connection with an appeal therein, to the fullest extent permissible by the laws of the State of New York. Such right of indemnification shall not be deemed exclusive of any other rights to which such person may be entitled.

ARTICLE XII

AMENDMENTS

The shareholders entitled at the time to vote in the election of directors and the Board of Directors by vote of a majority of the entire Board, shall have the power to amend or repeal these By-Laws and to adopt new By-Laws, provided, however, that any by-law adopted, amended or repealed by the Board of Directors may be amended or repealed by the shareholders entitled to vote thereon as herein provided.

EFFECTIVE: December 7, 2015

EX-4.5 4 v429688_ex4-5.htm EXHIBIT 4.5

Exhibit 4.5

INDENTURE

Dated as of ________________ __, 2016

___________________

BETWEEN

MBC FUNDING II CORP.,

as Issuer,

MANHATTAN BRIDGE CAPITAL, INC.

and

[TRUSTEE TBD],

as Indenture Trustee

Senior Secured Notes

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION		2
Section 1.01	Definitions	2
Section 1.02	Rules of Construction	22
ARTICLE II THE NOTES		23
Section 2.01	Forms; Denominations	23
Section 2.02	Execution, Authentication, Delivery and Dating	24
Section 2.03	Certification of Receipt of the Collateral	25
Section 2.04	Repurchase or Transfer and Exchange of Mortgage Loans for Document Defects and Breaches of Representations and Warranties	26
Section 2.05	The Notes Generally	27
Section 2.06	Registrar and Paying Agent	28
Section 2.07	Registration of Transfer and Exchange of Notes	28
Section 2.08	CUSIP Number	29
Section 2.09	Deposit of Moneys	30
Section 2.10	Book-Entry Notes	30
Section 2.11	Mutilated, Destroyed, Lost or Stolen Notes	31
Section 2.12	Noteholder Lists	32
Section 2.13	Persons Deemed Owners	32
Section 2.14	Payment Account	32
Section 2.15	Payments on the Notes	33
Section 2.16	Final Payment Notice	35
Section 2.17	Compliance with Withholding Requirements	35
Section 2.18	Cancellation	36
Section 2.19	Tax Treatment of the Notes and the Issuer	36
Section 2.20	Representations and Warranties with Respect to the Issuer	36
Section 2.21	Representations and Warranties With Respect to Mortgaged Properties and Mortgage Loans	39
ARTICLE III SATISFACTION AND DISCHARGE		46
Section 3.01	Satisfaction and Discharge of Indenture	46
Section 3.02	Application of Trust Money	47
ARTICLE IV EVENTS OF DEFAULT; REMEDIES		47
Section 4.01	Events of Default	47
Section 4.02	Acceleration of Maturity; Rescission and Annulment	49
Section 4.03	Collection of Indebtedness and Suits for Enforcement by Indenture Trustee	50
Section 4.04	Remedies	52
Section 4.05	Application of Money Collected	53
Section 4.06	Limitation on Suits,	53

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Section 4.07	Unconditional Right of Noteholders to Receive Principal and Interest	54
Section 4.08	Restoration of Rights and Remedies	54
Section 4.09	Rights and Remedies Cumulative	54
Section 4.10	Delay or Omission Not Waiver	54
Section 4.11	Control by Requisite Majority	55
Section 4.12	Waiver of Past Defaults	55
Section 4.13	Undertaking for Costs	55
Section 4.14	Waiver of Stay or Extension Laws	56
Section 4.15	Sale of Collateral	56
Section 4.16	Action on Notes	57
ARTICLE V THE INDENTURE TRUSTEE		57
Section 5.01	Certain Duties and Responsibilities	57
Section 5.02	Notice of Defaults	61
Section 5.03	Certain Rights of Indenture Trustee	61
Section 5.04	Compensation; Reimbursement; Indemnification	63
Section 5.05	Corporate Indenture Trustee Required; Eligibility	65
Section 5.06	Authorization of Indenture Trustee	65
Section 5.07	Merger, Conversion, Consolidation or Succession to Business	65
Section 5.08	Resignation and Removal; Appointment of Successor	66
Section 5.09	Acceptance of Appointment by Successor	67
Section 5.10	Unclaimed Funds	68
Section 5.11	Illegal Acts	68
Section 5.12	Communications by the Indenture Trustee	68
Section 5.13	Separate Indenture Trustees and Co-Trustees	68
ARTICLE VI REPORTS TO NOTEHOLDERS		70
Section 6.01	Reports to Noteholders and Others	70
Section 6.02	Access to Certain Information	70
ARTICLE VII REDEMPTION		71
Section 7.01	Optional Redemption	71
Section 7.02	Purchase of Notes at Holders’ Option	73
ARTICLE VIII SUPPLEMENTAL INDENTURES; AMENDMENTS		75
Section 8.01	Supplemental Indentures or Amendments Without Consent of Noteholders	75
Section 8.02	Supplemental Indentures With Consent	76
Section 8.03	Delivery of Supplements and Amendments	77
Section 8.04	Execution of Supplemental Indentures, Etc.	77
ARTICLE IX COVENANTS; WARRANTIES		78
Section 9.01	Maintenance of Office or Agency	78
Section 9.02	Existence and Good Standing	78
Section 9.03	Payment of Taxes and Other Claims	78

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Section 9.04	Title to the Collateral; Lien	79
Section 9.05	Protection of Collateral Pool	79
Section 9.06	Limitation on Sales of Assets	80
Section 9.07	Repurchase at the Option of Holders upon Change of Control	83
Section 9.08	Covenants	84
Section 9.09	Statement as to Compliance	85
Section 9.10	Reports by Independent Public Accountants	86
Section 9.11	Reports to the Indenture Trustee	86
Section 9.12	Mergers and Consolidations	88
Section 9.13	Litigation	88
Section 9.14	Notice of Default	88
Section 9.15	Cooperate in Legal Proceedings	88
Section 9.16	Insurance Benefits	88
Section 9.17	Costs of Enforcement	88
Section 9.18	Performance of Issuer’s Duties by MBC	89
Section 9.19	Payment of Debts	89
Section 9.20	Capitalization of the Issuer	89
Section 9.21	Employees	89
Section 9.22	Performance by the Issuer	89
Section 9.23	Use of Proceeds	90
Section 9.24	Other Rights, Etc.	90
Section 9.25	Books and Records	90
Section 9.26	Overhead Expenses	90
ARTICLE X COVENANTS REGARDING MORTGAGE LOANS		90
Section 10.01	Collection of Mortgage Loan Payments; Collection Account; Release Account	90
Section 10.02	Withdrawals From the Collection Account	91
Section 10.03	Investment of Funds in the Collection Account	92
Section 10.04	Mortgage Loans	93
Section 10.05	Compliance With Laws	94
Section 10.06	Other Rights, Etc.	94
Section 10.07	Right to Release Any Portion of the Collateral Pool	94
Section 10.08	Mortgage Loan Matters	95
Section 10.09	Perfection of Security Interest	96
ARTICLE XI TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS		97
Section 11.01	Exchange of Mortgage Loans	97
Section 11.02	Release of Mortgaged Property by the Issuer	98
Section 11.03	Mortgage Loan Substitution	98
Section 11.04	Release, Sale and Exchange of Defaulted Mortgage Loans	99
Section 11.05	Servicing Agent	100
Section 11.06	Servicing	102
Section 11.07	Termination of Servicing Duties	103

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ARTICLE XII COSTS		103
Section 12.01	Performance at the Issuer’s Expense	103
ARTICLE XIII MISCELLANEOUS		104
Section 13.01	Execution Counterparts	104
Section 13.02	Compliance Certificates and Opinions, Etc.	104
Section 13.03	Form of Documents Delivered to Indenture Trustee	104
Section 13.04	No Oral Change	105
Section 13.05	Acts of Noteholders	105
Section 13.06	Computation of Percentage of Noteholders	106
Section 13.07	Notice to the Indenture Trustee, the Issuer and Certain Other Persons	106
Section 13.08	Notices to Noteholders; Notification Requirements and Waiver	106
Section 13.09	Successors and Assigns	106
Section 13.10	Interest Charges; Waivers	107
Section 13.11	Severability Clause	107
Section 13.12	Governing Law	107
Section 13.13	Effect of Headings and Table of Contents	107
Section 13.14	Benefits of Indenture	107
Section 13.15	Trust Obligation	108
Section 13.16	Inspection	108
Section 13.17	Method of Payment	108
Section 13.18	Trust Indenture Act Controls	108

Exhibits

Exhibit A	Mortgage Loan Schedule
Exhibit B-1	Form of Global Senior Secured Note
Exhibit B-2	Form of Definitive Global Senior Secured Note
Exhibit C	Form of Interim Receipt
Exhibit D	Form of Receipt of Collateral
Exhibit E	Form of Transferor Certificate
Exhibit F	List of Authorized Signatories
Exhibit G	Form of Trustee Report
Exhibit H	Form of Issuer Exception Report
Exhibit I	Form of Servicer Notice

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INDENTURE, dated as of ________________ __, 2016, between MBC FUNDING II CORP., a New York corporation, as issuer, MANHATTAN BRIDGE CAPITAL, INC., a New York corporation, and [Trustee TBD], a [type of organization], not in its individual capacity, but solely as Indenture Trustee under this Indenture.

PRELIMINARY STATEMENT

The Issuer (as defined herein) has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Senior Secured Notes (collectively, the “Notes”), to be issued pursuant to this Indenture.

All things necessary to make the Notes, when the Notes are executed by the Issuer, authenticated by the Authenticating Agent and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the valid and legally binding obligations of the Issuer enforceable in accordance with their terms, and to make this Indenture a valid and legally binding agreement of the Issuer enforceable in accordance with its terms, have been done.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee on the Closing Date or Transfer Date, as applicable, for the benefit of the Indenture Trustee and the Noteholders, all of the Issuer’s right, title and interest in and to the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”), including, without limitation, (a) all Receivables; (b) all general intangibles; (c) all contract rights, rights of payment which have been earned under a contract right, instruments, investment property, documents, chattel paper, warehouse receipts, deposit accounts, money and securities; (d) all Mortgage Loan Collateral and all payments required thereunder on and after the Closing Date or Transfer Date, as applicable; (e) all Securities; (f) all Leasehold Interests; (g) all commercial tort claims; (h) any guarantees of and security for the Mortgagor Customers’ obligations under the Mortgage Loans, including any security deposits thereunder; (i) all of the Issuer’s rights (but none of its obligations) under the Asset Transfer Agreements; (j) the Collection Account, the Payment Account and any other accounts established under the Transaction Documents for purposes of receiving, retaining and distributing amounts received in respect of the Collateral Pool and making payments to the Holders of the Notes and making distributions to the Holders of the Notes, and all funds as may from time to time be deposited therein; (k) all present and future claims, demands and causes of action in respect of the foregoing; (l) all additional amounts due to the Issuer from any Mortgagor Customer relating to the Receivables, (m)  if and when obtained by the Issuer, all real and personal property of third parties in which the Issuer has been granted a lien or security interest as security for the payment or enforcement of Receivables, (n) all supporting obligations that secure payment or performance of any account, chattel paper, document, general intangible, instrument or investment property, (o) all Extraordinary Receipts, (p) any other goods, personal property or real property now owned or hereafter acquired in which the Issuer has expressly granted a security interest or may in the future grant a security interest to the Indenture Trustee hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between the Indenture Trustee and the Issuer and (q) any and all indebtedness owing to the Issuer and any and all Collateral securing such indebtedness; (r) all of the Issuer’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by the Issuer or in which it has an interest), computer programs, tapes, disks and documents relating to clauses (a) through (q) hereof; and (s) all proceeds of the foregoing of every kind and nature whatsoever, including, without limitation, all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment of any and every kind and other forms of obligations and receivables, insurance proceeds (including hazard, flood and credit insurance), security agreements, documents, eminent domain proceeds, condemnation proceeds, tort claim proceeds, instruments and other property that at any time constitute all or part of or are included in the proceeds of the foregoing.  

The foregoing Grants are made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture.

GENERAL COVENANT

IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be authenticated by the Authenticating Agent and delivered by the Indenture Trustee on the Closing Date, that the Collateral is to be held by or on behalf of the Indenture Trustee and that moneys in or from the Collateral Pool are to be applied by the Indenture Trustee for the benefit of the Noteholders, subject to the further covenants, conditions and trusts hereinafter set forth, and the Issuer does hereby represent and warrant, and covenant and agree, to and with the Indenture Trustee, for the equal and proportionate benefit and security of each Noteholder, as follows:

ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

Section 1.01         Definitions.

Whenever used in this Indenture, including in the Preliminary Statement, the Granting Clause and the General Covenant hereinabove set forth, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Section 1.01.

“1933 Act”:  The Securities Act of 1933, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“1939 Act”:  The Trust Indenture Act of 1939, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“1940 Act”:  The Investment Company Act of 1940, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“Account Control Agreement”: An agreement with respect to a deposit account or a securities account, in form and substance satisfactory to the Indenture Trustee, pursuant to which the institution at which such account is maintained agrees to follow the instructions or entitlement orders, as the case may be, of the Indenture Trustee with respect thereto.

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“Accrual Period”:  With respect to the Notes and any Payment Date, the period from and including the immediately preceding Payment Date (or, with respect to the initial Accrual Period, from and including the __________ __, 2016¹) to, but excluding, such Payment Date.

“Act”:  As defined in Section 13.05.

“Affiliate”:  With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ALTA”:  The American Land Title Association.

“Applicable Laws”:  As defined in Section 10.05(a).

“Appraised Value”:  With respect to a Mortgaged Property, the value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as the value of such Mortgaged Property.

“Asset Sale”:  Any direct or indirect sale, conveyance, transfer, lease (that has the effect of a disposition) or other disposition (including, without limitation, any merger, consolidation or sale/leaseback transaction or upon any condemnation, eminent domain or similar proceedings) to any Person other than the Issuer, MBC or their respective wholly-owned subsidiaries, in one transaction or a series of related transactions, of:

(i)          any Capital Stock of any subsidiary;

(ii)         any assets of the Issuer or MBC or any of their respective subsidiaries which constitute substantially all of an operating unit or line of business of the applicable transferor; or

(iii)        any other assets or asset (including, without limitation, any Mortgage Loans or intellectual property) of the Issuer or MBC;

in each case, other than:

(1)         sales of property or equipment that, in the reasonable determination of the Issuer, MBC or any such subsidiary, as the case may be, has become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of the Issuer, MBC or such subsidiary;

¹ TBD (3 months after the Closing Date).

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(2)         with respect to MBC, any transaction between or among MBC and one or more of its subsidiaries, but not including a sale of assets by the Issuer to MBC; or

(3)         any transaction constituting a Change of Control.

“Asset Transfer Agreement”:  The Asset Transfer Agreement dated as of the Closing Date between MBC and the Issuer, pursuant to which MBC shall transfer (whether by sale or contribution) to the Issuer Eligible Mortgage Loans on the Closing Date and may from time to time transfer (whether by sale or contribution) to the Issuer Eligible Mortgage Loans after the Closing Date.

“Authenticating Agent”:  As defined in Section 2.02(b).

“Authorized Officer”:  With respect to the Issuer, any Person who is authorized to act for the Issuer and who is identified on the list delivered by the Issuer to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter).  

“Authorized Persons”: As defined in Section 5.03(q).

“Available Amount”: The Available Amount for any Payment Date will consist of (a) all amounts received in respect of the Collateral Pool during the related Collection Period, (b) all amounts on deposit in the Collection Account on the related Determination Date, including amounts earned, if any, on the investment of funds on deposit in the Collection Account and the Release Account during the related Collection Period, (c) Unscheduled Proceeds, (d) amounts received on account of payments under any Mortgage Loan Guaranties, and (e) amounts received on account of payments under the Guaranty, which amounts Indenture Trustee shall promptly deposit into the Collection Account to the extent received from the Guarantor under the Guaranty, and amounts received in connection with a Redemption Payment; provided, however, that the following amounts will be excluded from Available Amount:  (i) amounts on deposit in the Release Account and not transferred to the Collection Account for such Payment Date and (ii) amounts withdrawn from the Collection Account to reimburse the Indenture Trustee for any unreimbursed expenses.

“Best’s”:  Best’s Key Rating Guide, as the same shall be amended from time to time.

“Board of Directors”:  With respect to any Person, (a) in the case of any corporation, the board of directors of such Person, (b) in the case of any limited liability company, the board of managers, if any, of such Person, (c) in the case of any partnership, the Board of Directors of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.

“Book-Entry Custodian”:  Initially, the Indenture Trustee and thereafter, such other bank or trust company as the Indenture Trustee shall appoint pursuant to Section 2.10(a).

“Book-Entry Note”:  Any Note registered in the name of the Depository or its nominee.

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“Business Day”:  Any day other than a Saturday, a Sunday or a day on which banking institutions are authorized or obligated by law or executive order to remain closed in New York, New York or any other city in which the principal office of the Issuer or the Indenture Trustee’s Office is located.

“Capital Stock”:  Any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock or other equity participations, including partnership interests, whether general or limited, in any Person, including any Capital Stock which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over Capital Stock of any other class in such Person and any right or interest which is classified as equity in accordance with GAAP, but excluding any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash”:  Coin or currency of the United States or immediately available federal funds, including such funds delivered by wire transfer.

“Change of Control” means the occurrence of any of the following events:

(a)          any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Issuer, MBC or any of its subsidiaries; or

(b)          the Issuer or MBC consolidates with, or merges with or into, another Person (other than with or into the Issuer, MBC or a wholly-owned subsidiary of the Issuer or MBC) other than any such transaction where immediately after such transaction the Person or Persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction, directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Issuer, MBC or any of its subsidiaries “beneficially own or owns” (as so determined), directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the surviving Person;

(c)          MBC, directly or indirectly through its subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets (determined on a consolidated basis) to any Person (other than the Issuer, MBC or a wholly owned subsidiary of the Issuer or MBC), other than any such transaction where immediately after such transaction the Person or Persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction, directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Company, “beneficially own or owns” (as so determined), directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the transferee Person; or

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(d)          during any consecutive two-year period, the Continuing Directors cease for any reason to constitute a majority of the Board of Directors of the Issuer, MBC or any such subsidiary; or

(e)          the adoption of a plan of liquidation or dissolution of the Issuer or MBC.

“Change of Control Date”:  As defined in Section 9.07(a).

“Change of Control Offer”:  As defined in Section 9.07(a).

“Change of Control Purchase Date”:  As defined in Section 9.07(a).

“Change of Control Purchase Price”:  As defined in Section 9.07(b).

“Closing Date”:  ________________ __, 2016.

“Code”:  The Internal Revenue Code of 1986, as amended.

“Collateral”:  As defined in the Granting Clause hereto.

“Collateral Assignment”:  A collateral assignment by a Mortgagor Customer to the Issuer of all rents, issues and profits of the related Mortgaged Property.

“Collateral Defect”:  As defined in Section 2.04(a).

“Collateral Pool”:  As defined in the Granting Clause hereto.

“Collateral Transfer”:  Any voluntary or involuntary sale, transfer, exchange, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record).

“Collection Account”: The segregated account or accounts created and maintained by the Issuer pursuant to Section 10.01(b) and, in each case, pledged to the Indenture Trustee for the benefit of the Noteholders, which shall be entitled “[MBC Funding II Corp., Blocked Collection Account]”.

“Collection Period”: With respect to any Payment Date, the period commencing on the day immediately following the preceding Determination Date (or, in the case of the initial Payment Date, commencing immediately following the Closing Date) and ending on and including the related Determination Date.

“Condemnation Proceeds”: All proceeds received in connection with any condemnation or eminent domain proceeding with respect to any Mortgaged Property other than proceeds applied to the restoration of such Mortgaged Property or released to the related Mortgagor Customer.

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“Continuing Directors”:  As of any date of determination with respect to any Person, any member of the Board of Directors of such Person who was (a) a member of such Board of Directors on the Closing Date or (b) nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

“Control Person”:  With respect to any Person, any other Person that constitutes a “controlling person” within the meaning of Section 15 of the 1933 Act.

“Default”:  Any event which is, or after notice, or direction of the Requisite Majority or lapse of time would become, an Event of Default with respect to the Notes.

“Defaulted Mortgage Loan”:  A Mortgage Loan with respect to which a Mortgage Loan Payment is overdue for more than 90 consecutive days (without taking into account the required giving of notices under such Mortgage Loan).

“Definitive Note”:  As defined in Section 2.10(a).

“Department of Labor Regulations”:  Regulations at 29 C.F.R. 2510.3-101.

“Depository”:  The Depository Trust Company or any successor depository hereafter named as contemplated by Section 2.08.  The nominee of the initial Depository, for purposes of registering such Notes that are Book-Entry Notes, is Cede & Co.  The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(4) of the Uniform Commercial Code of the State of New York and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

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

“Designated Participation Loan”:  Any Mortgage Loan (a) with respect to which participations have been sold or which the Issuer own less than 100% and (b) in aggregate principal amount of not more than $[4,000,000] as of the Closing Date.

“Determination Date”:  As to any Payment Date, the 4^th Business Day preceding such Payment Date.

“Determination Date Report”: As defined in Section 9.11(a).

“Document Defect”:  As defined in Section 2.03(e).

“Early Amortization Period”:  An Early Amortization Period will commence as of any Determination Date if an Event of Default, after giving effect to any grace period, shall have occurred and shall not have been cured or waived in accordance with the terms hereof.

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“Eligible Account”:  Any of (a) a segregated account maintained with a federal- or state-chartered depository institution or trust company, the long-term deposit or long-term unsecured debt obligations of which (or of such institution’s parent holding company) are rated “AA-” or better by S&P, if the deposits are to be held in the account for more than 30 days, or the short-term deposit or short-term unsecured debt obligations of which (or of such institution’s parent holding company) are rated “A-1” by S&P if the deposits are to be held in the account for 30 days or less, in any event at any time funds are on deposit therein, or (b) a segregated trust account maintained with a federal- or state-chartered depository institution or trust company acting in its fiduciary capacity, which, in the case of a state-chartered depository institution or trust company is subject to regulations regarding fiduciary funds on deposit therein substantially similar to 12 C.F.R. § 9.10(b), and which, in either case, has a combined capital and surplus of at least $50,000,000 and is subject to supervision or examination by federal or state authority; provided, that in the event that any of the accounts no longer qualifies as an Eligible Account under this definition, the Issuer shall promptly, and in no event later than thirty (30) calendar days following such account failing to qualify as an Eligible Account, direct the Indenture Trustee to remit all funds in such account to a specified Eligible Account.  Eligible Accounts may bear interest.

“Eligible Mortgage Loans”:  Mortgage Loans secured by a first mortgage lien on real property, (a) as to which the representations and warranties in Section 2.21 are correct, and (b) as to which the Mortgage Loan File has been delivered to Indenture Trustee; provided that, in no event shall (i) any Eligible Mortgage Loan be a security for purposes of any securities or blue-sky laws, and (ii) any Defaulted Mortgage Loan or Designated Participation Loan be an Eligible Mortgage Loan.

“Embargoed Person”:  As defined in Section 2.20(n).

“Environmental Laws”:  Any and all local, state, federal or other governmental authority, statute, ordinance, code, order, decree, law, rule or regulation pertaining to or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource Conservation and Recovery Act, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, as amended, the Hazardous Substances Transportation Act, as amended, the Solid Waste Disposal Act, as amended, the Clean Water Act, as amended, the Clean Air Act, as amended, the Toxic Substance Control Act, as amended, the Safe Drinking Water Act, as amended, the Occupational Safety and Health Act, as amended, any state super-lien and environmental statutes and all rules and regulations adopted in respect to the foregoing laws whether presently in force or coming into being and/or effectiveness hereafter.

“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended.

“Event of Default”:  As defined in Section 4.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

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“Exchanged Loan” or “Exchanged Loans”:  A Mortgage Loan or Mortgage Loans that are exchanged for a Qualified Substitute Loan or Qualified Substitute Loans, in each case, in a transaction with a third party or MBC and subject to the conditions and limitations described in this Indenture.

“Extraordinary Receipts”:  Any cash proceeds received by the Issuer not in the ordinary course of business, including, without limitation, (a) foreign, United States, state or local tax refunds, (b) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (c) condemnation awards (and payments in lieu thereof), (d) indemnity payments and (e) any adjustment received in connection with any purchase price in respect of an acquisition.

“Fair Market Value”:  At any time, with respect to any Mortgage Loan, a price determined by Issuer in accordance with the Servicing Standard to be the most probable price which such Mortgage Loan should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and the seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.  In making any such determination, the Issuer may obtain an MAI appraisal of the related Mortgaged Property and shall assume the consummation of a sale as of a specified date and the passing of title from the seller to the buyer under conditions whereby:  (a) the buyer and the seller are typically motivated; (b) both parties are well informed or well advised, and acting in what they consider their best interests; (c) payment is made in terms of cash in United States dollars or in financial arrangements comparable thereto; and (d) the price represents the normal consideration for such Mortgaged Property unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

“FDIC”:  Federal Deposit Insurance Corporation or any successor.

“FHLMC”:  The Federal Home Loan Mortgage Corporation, or any successor thereto.

“Final Payment Date”:  With respect to the Notes, the Payment Date on which the final payment on the Notes is made hereunder by reason of all principal, interest and other amounts due and payable on the Notes having been paid.

“FNMA”:  The Federal National Mortgage Association, or any successor thereto.

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“Foreclosure Proceeding”:  Any proceeding, non-judicial sale or power of sale or other proceeding (judicial or non-judicial) for the foreclosure, sale or assignment of any Mortgaged Property or Mortgage Loan or any other Collateral under any Mortgage.

“GAAP”:  Such accounting principles as are generally accepted in the United States.

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof or any entity exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.

“Grant”:  To mortgage, pledge, bargain, sell, warrant, alienate, demise, convey, assign, transfer, create and grant a security interest in and right of set-off against, deposit, set over and confirm.  A Grant of Collateral shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including, without limitation, the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of such Collateral and all other moneys and proceeds payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything which the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Issuer’s obligations under this Indenture, the Notes or any other Transaction Document.

“Guaranty” shall mean any guaranty of the payment or performance of the whole or any part of Issuer’s obligations under this Indenture, the Notes or any other Transaction Document, in whole or in part, executed at any time by a Guarantor in favor of the Indenture Trustee for the ratable benefit of the Noteholders.

“Hazardous Substances”:  Any hazardous and/or toxic, dangerous and/or regulated, substances, wastes, materials, raw materials which include hazardous constituents, pollutants or contaminants including without limitation, petroleum, tremolite, anthlophylie, actinolite or polychlorinated biphenyls and any other substances or materials which are included under or regulated by Environmental Laws or which are considered by scientific opinion to be otherwise dangerous in terms of the health, safety and welfare of humans.

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

“Indenture Trustee”:  [Trustee TBD], a [type of organization], in its capacity as trustee under this Indenture, or its successor in interest, or any successor trustee appointed as provided in this Indenture.

“Indenture Trustee Fee”:  With respect to any Determination Date, an amount on a monthly basis equal to [TBD].

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“Indenture Trustee’s Office”:  The corporate trust office of the Indenture Trustee at which at any particular time this Indenture shall be administered, which office at the date of the execution of this Indenture is located at (a) solely for purposes of the transfer, surrender or exchange of Notes, [address], and (b) for all other purposes, [address], Attention: Agency and Trust — MBC Funding II Corp., or at such other address as the Indenture Trustee or Note Registrar may designate from time to time.

“Independent”:  When used with respect to any specified Person, any such Person who (a) is in fact independent of the Indenture Trustee, the Issuer and any and all Affiliates thereof, (b) does not have any direct financial interest in or any material indirect financial interest in any of the Indenture Trustee, the Issuer or any Affiliate thereof, and (c) is not connected with the Indenture Trustee, the Issuer or any Affiliate thereof as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, however, that a Person shall not fail to be Independent of the Indenture Trustee or the Issuer or any Affiliate thereof merely because such Person is the beneficial owner of 2% or less of any class of securities issued by the Indenture Trustee, the Issuer or any Affiliate thereof, as the case may be.  The Indenture Trustee may rely, in the performance of any duty hereunder, upon the statement of any Person contained in any certificate or opinion that such Person is Independent according to this definition.

“Initial Principal Balance”:  $___________________.

“Insurance Proceeds”:  Proceeds paid under any Property Insurance Policy, to the extent such proceeds are not applied to the restoration of the related Mortgaged Property in accordance with the related Mortgage Loan.

“Interested Person”:  The Issuer, MBC or an Affiliate of any such Person.

“Issuer”:   MBC Funding II Corp., a New York corporation.

“Issuer Order”:  A written order signed in the name of the Issuer by a Responsible Officer.

“Issuer Request”:  A written request signed in the name of the Issuer by a Responsible Officer.

“Issuer’s Office”:  The principal office of the Issuer, located at 60 Cutter Mill Road, Suite 205, Great Neck, New York  11021, or at such other address as the Issuer may designate from time to time.

“Leasehold Interests” shall mean all of the Issuer’s right, title and interest in and to any real property owned by a Person other than the Issuer, whether as tenant, lessee, licensee, operator or otherwise.

“Legal Requirements”: With respect to each Mortgaged Property, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting such Mortgaged Property or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto.

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“Letter of Representations”:  With respect to the Notes, the Letter of Representations, dated the Closing Date, among the Depository, the Indenture Trustee and the Issuer.

“Liquidation Proceeds”:  All net proceeds realized by the Issuer in respect of the purchase or sale of a Mortgage Loan.

“LTV”:  With respect to any Mortgage Loan, the ratio of the original outstanding principal amount of such Mortgage Loan to (a) in the case of a Mortgage Loan the proceeds of which were used to acquire the related Mortgaged Property, the lesser of (i) the Appraised Value of the related Mortgaged Property at origination or (ii) if such Mortgaged Property was purchased within 12 months of the origination of such Mortgage Loan, the purchase price of such Mortgaged Property and (b) in the case of a Mortgage Loan the proceeds of which were used to finance construction of the related Mortgaged Property, the related construction costs.

“MAI”: A designation signifying that the designee is a Member of the Appraisal Institute.

“Mandatory Principal Payment”:  With respect to each Payment Date, an amount equal to the result of (a) 120% of the Outstanding Principal Balance as of the last Business Day of the most recently completed calendar month preceding such Payment Date, minus (b) the sum of the aggregate principal amount of Eligible Mortgage Loans plus amounts on deposit in the Collection Account and other deposit accounts of the Issuer subject to Account Control Agreements, in each case as of such last Business Day; provided that if such result is less than zero, the Mandatory Principal Payment for such Payment Date shall be zero.

“Maturity”:  With respect to any Note, the date as of which the principal of and interest on such Note has become due and payable as herein provided, whether on the Final Payment Date, by acceleration or otherwise.

“MBC”:  Manhattan Bridge Capital, Inc., a New York corporation.

“Mortgage”:  With respect to any Mortgaged Property, a mortgage (or deed of trust or deed to secure debt), assignment of Mortgage Loans and rents, security agreement and fixture filing or similar document executed by a Mortgagor Customer pursuant to which such Mortgagor Customer grants a lien on its interest in such Mortgaged Property in favor of the Issuer (whether as assignee of MBC or otherwise).

“Mortgage Interest Rate”:  With respect to a Mortgage Note, the annual rate of interest borne on such Mortgage Note.

“Mortgage Loan”:  A mortgage loan provided to a Mortgagor Customer and which mortgage loan includes, without limitation, (a) a Mortgage Note, the related Mortgage and all other Mortgage Loan Documents and (b) all right, title and interest of the Issuer in and to the Mortgaged Property covered by such Mortgage.

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“Mortgage Loan Collateral”:  All of the Issuer’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located:

(a)          all Mortgage Loans;

(b)          all Mortgage Loan Documents, including without limitation all promissory notes, and all Servicing Records (as defined in Section 11.06(b)), servicing agreements and any other collateral pledged or otherwise relating to such Mortgage Loans, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, computer storage media, accounting records and other books and records relating thereto;

(c)          all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate or other document evidencing such mortgage guaranties or insurance relating to any Mortgage Loan and all claims and payments thereunder;

(d)          all other insurance policies and insurance proceeds relating to any Mortgage Loan or the related Mortgaged Property;

(e)          all interest rate protection agreements, relating to or constituting any and all of the foregoing;

(f)          all deposit accounts or collection accounts to which payments on account of any Mortgage Loan are deposited or remitted and all monies from time to time on deposit therein;

(g)          all “general intangibles”, “accounts” and “chattel paper” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing; and

(h)          any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.

“Mortgage Loan Documents”:  With respect to a Mortgage Loan, the documents comprising the Mortgage Loan File for such Mortgage Loan.

“Mortgage Loan File”:  For any Mortgage Loan, (a) the original Mortgage Note bearing all intervening endorsements, duly endorsed to the Indenture Trustee, (b) the original Mortgage(s) securing each Mortgage Note with evidence of recording thereon or copies certified by the related recording office, (c) the Collateral Assignment, if any, executed in connection with such Mortgage(s), (d) any original stock certificates (accompanied by applicable stock powers), instruments, chattel paper or other collateral securing any Mortgage Loan in which the perfection of the Issuer’s lien is based upon the Issuer’s possession thereof, (e) the valuation or appraisal, if any, of the subject Mortgaged Property prepared by a third party valuation or appraisal service, (f) the Related Title Policy, (g) the evidence of liability and property/casualty coverage relating to the Mortgaged Property, and (h) an opinion, if any, of counsel, addressed to the Issuer (or its predecessor in interest) that the Mortgage Note, the Mortgage(s) and the Collateral Assignments, if any, are the valid and binding obligations of the parties thereto enforceable in accordance with their terms and have been duly and validly endorsed or assigned to the Issuer (or its predecessor in interest).

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“Mortgage Loan Guarantor”: Any guarantor under any Mortgage Loan Guaranty.

“Mortgage Loan Guaranty”:  With respect to any Mortgage Loan, the guaranty related to such Mortgage Loan executed by an Affiliate or parent of the related Mortgagor Customer in favor of MBC or the Issuer.

“Mortgage Loan Payment”:  With respect to a Mortgage Loan, the scheduled payment of principal and/or interest on such Mortgage Loan required to be made pursuant to the provisions of the related Mortgage Note.

“Mortgage Loan Schedule”:  The list of Mortgage Loans attached as Exhibit A hereto setting forth the following information with respect to each Mortgage Loan:

(i)          the Mortgagor Customer;

(ii)         the termination or maturity date for such Mortgage Loan;

(iii)        the street address (including city, state and zip code) of the Mortgaged Property;

(iv)        the applicable Mortgaged Property number as it appears on the tax maps of the municipality in which such Mortgaged Property is situated;

(v)         the Appraised Value, if available, of such Mortgaged Property;

(vi)        the initial principal amount and the then current outstanding principal amount of such Mortgage Loan;

(vii)       the Mortgage Interest Rate at which such Mortgage Loan accrues interest; and

(viii)      the monthly interest payment with respect to such Mortgage Loan.

“Mortgage Note”:  The original executed promissory note or other evidence of the indebtedness of a Mortgagor Customer with respect to a Mortgage Loan.

“Mortgaged Property”:  The real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the debt evidenced by a Mortgage Note.

“Mortgagor Customer”:  With respect to each Mortgage Loan, the obligor on the related Mortgage Note.

“Net Cash Proceeds”:  The aggregate proceeds in the form of cash or Permitted Investments received by the Issuer, MBC or their respective subsidiaries in respect of any Asset Sale, including all cash or Permitted Investments received upon any sale, liquidation or other exchange of proceeds of Asset Sales received in a form other than cash or Permitted Investments, net of:

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(i)          the direct costs relating to such Asset Sale (including, without limitation, reasonable legal, accounting and investment banking fees, brokerage fees and sales commissions) and any relocation expenses incurred as a result thereof;

(ii)         taxes paid or payable directly as a result thereof;

(iii)        with respect to an Asset Sale by MBC, amounts required to be applied to the repayment of indebtedness secured by a lien on the asset or assets that were the subject of such Asset Sale; and

(iv)        amounts deemed, in good faith, by the Board of Directors of the Issuer or MBC, as the case may be (or a duly authorized committee thereof), to be set aside as a reserve, in accordance with GAAP, against any liabilities associated with such assets which are the subject of such Asset Sale; provided that the amount of any such reserves shall be deemed to constitute Net Cash Proceeds at the time such reserves shall have been released or are not otherwise required to be retained as a reserve.

“Net Investment Earnings”: The amount by which the aggregate of all interest and other income realized during such Collection Period on funds held in the Collection Account, Release Account and any other accounts established from time to time, if any, exceeds the aggregate of all losses, if any, incurred during such Collection Period in connection with the investment of such funds in accordance with Section 10.03.

“Net Proceeds Offer”:  As defined in Section 9.06(e).

“Net Proceeds Offer Payment Date”:  As defined in Section 9.06(e).

“Net Proceeds Trigger Date”:  As defined in Section 9.06(e).

“Note”:  Any of the Issuer’s Senior Secured Notes, executed, authenticated and delivered hereunder, substantially in the forms attached as Exhibit B hereto.

“Note Interest”:  On any Payment Date, the interest accrued during the related Accrual Period at the Note Rate, applied to the Outstanding Principal Balance of the Notes before giving effect to any payments of principal on such Payment Date.  The Note Interest with respect to the Notes will be calculated on an actual/360 basis.

“Note Owner”:  With respect to a Book-Entry Note, the Person who is the beneficial owner of such Note as reflected on the books of the Depository, a Depository Participant or an indirect participating brokerage firm for which a Depository Participant acts as agent.  With respect to a Definitive Note, the Person who is the holder of such Note as reflected on the Note Register.

“Note Rate”:  With respect to the Notes, ____ percent (__%) per annum.

“Note Register”:  As defined in Section 2.06(a).

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“Note Registrar”:  Initially, the Indenture Trustee and thereafter, such other bank or trust company as the Indenture Trustee shall appoint pursuant to Section 2.06(a).

“Noteholder” or “Holder”:  With respect to any Note, the Person in whose name such Note is registered on the Note Register maintained pursuant to Section 2.06.  All references herein to “Noteholders” shall reflect the rights of Note Owners as they may indirectly exercise such rights through the Depository and the Depository Participants, except as otherwise specified herein; provided, however, that the parties hereto shall be required to recognize as a “Noteholder” or “Holder” only the Person in whose name a Note is registered in the Note Register as of the related Record Date.

“Notice of Default”:  As defined in Section 5.02.

“Officer’s Certificate”:  A certificate signed by any Responsible Officer of the Issuer or of the Indenture Trustee, as the case may be.

“Opinion of Counsel”:  A written opinion of counsel (which shall be rendered by counsel that is Independent) in form and substance reasonably acceptable to and delivered to the addressees thereof.

“Outstanding”:  When used with respect to Notes, means, as of any date of determination, any Note theretofore authenticated and delivered under this Indenture, except:

(i)          Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for cancellation (other than any Note as to which any amount that has become due and payable in respect thereof has not been paid in full); and

(ii)         Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Note Registrar proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Issuer;

provided, however, that in determining whether the Holders of the requisite amount or percentage have given any request, demand, authorization, vote, direction, notice, consent or waiver hereunder, Notes owned by an Interested Person shall be disregarded and deemed not to be Outstanding (other than with respect to a request for consent pursuant to Section 8.02 or unless any such Person or Persons owns all such Notes), except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Note Registrar knows to be so owned shall be so disregarded.  Notes owned by an Interested Person which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Note Registrar in its sole discretion the pledgee’s right to act with respect to such Notes and that the pledgee is not an Interested Person.

“Outstanding Principal Balance”:  With respect to the Notes and any date of determination, the Initial Principal Balance less the sum of all principal payments actually distributed to the Holders of the Notes as of such date of determination.

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“Ownership Interest”:  As to any Note, any ownership or security interest in such Note as held by the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee.

“Patriot Act”  The USA Patriot Act Title III of 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of the United States government and its various executive departments, agencies and 150 offices, related to the subject matter thereof, including Executive Order 13224 effective September 24, 2001.

“Payment Account”:  The segregated account established in the name of the Indenture Trustee pursuant to Section 2.14(a).

“Payment Date”:  The 15^th day of each calendar month, commencing on ___________ 15, 2016; provided that if such 15th day is not a Business Day, the Payment Date shall be the next succeeding Business Day.

“Paying Agent”:  As defined in Section 2.06(b).

“Payoff Amount”: With respect to any Released Loan, an amount equal to the then current unpaid principal amount thereof, plus interest thereon, related to such Released Loan.

“Permitted Encumbrances”:  As defined in Section 2.21(i).

“Permitted Investments”:  Any one or more of the following obligations or securities:

(i)          direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States of America and have a predetermined, fixed amount of principal due at maturity (that cannot vary or change) and that each such obligation has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread;

(ii)         obligations of agencies or instrumentalities of the United States of America that are not backed by the full faith and credit of the United States of America, provided that such obligations have a predetermined, fixed amount of principal due at maturity (that cannot vary or change), do not have an “r” highlight attached to any rating and that each such obligation has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread;

(iii)        uncertificated certificates of deposit, time deposits, bankers’ acceptances and repurchase agreements having maturities of not more than 365 days, of any bank or trust company organized under the laws of the United States of America or any state thereof, provided that such items are rated in the highest short-term debt rating category of the applicable Rating Agencies (or, if not rated by the applicable Rating Agency, have a comparable rating from another nationally recognized statistical rating organization), do not have an “r” highlight affixed to its rating and have a predetermined fixed amount of principal due at maturity (that cannot vary or change);

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(iv)        commercial paper (having original maturities of not more than 365 days) of any corporation incorporated under the laws of the United States of America or any state thereof (or of any corporation not so incorporated, provided that the commercial paper is denominated in United States dollars and amounts payable thereunder are not subject to any withholding imposed by any non-United States jurisdiction) that is rated in the highest short-term debt rating category of the applicable Rating Agencies, does not have an “r” highlight affixed to its rating, has a predetermined fixed amount of principal due at maturity (that cannot vary or change) and has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread, or any demand notes that constitute vehicles for commercial paper rated in the highest unsecured commercial or finance company paper rating category of the applicable Rating Agencies;

(v)         units of money market funds that have as one of their investment objectives the maintenance of a constant net asset value and that are rated in the highest applicable rating category of the applicable Rating Agencies; and

(vi)        repurchase agreements collateralized by United States Treasury securities or securities guaranteed by FNMA or FHLMC with any registered broker/dealer subject to SIPC jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated by the applicable Rating Agencies in their highest short-term category.

“Person”:  Any individual, corporation, partnership, limited liability company, joint venture, joint-stock company, estate, trust, association, unincorporated organization, or any federal, state, county or municipal government or any political subdivision thereof.

“Plan”:  Any one of:  (a) (i) an “employee benefit plan”, as defined in Section 3(3) of ERISA that is subject to the provisions of Title I of ERISA, or (ii) a “plan”, as defined in Section 4975 of the Code, that is subject to the provisions of Section 4975 of the Code; (b) an entity whose underlying assets include assets of any such employee benefit plan or plan as set forth in clause (a) of this definition by reason of an investment in such entity by such employee benefit plan or plan; or (c) a governmental or church plan that is subject to any federal, state or local law that is materially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.

“Prime Rate”:  The “prime rate” published in the “Money Rates” section of The Wall Street Journal, as such “prime rate” may change from time to time.  If The Wall Street Journal ceases to publish the “prime rate,” then the Indenture Trustee shall select an equivalent publication that publishes such “prime rate”; and if such “prime rate” is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then the Indenture Trustee shall select a comparable interest rate index.  In either case, such selection shall be made by the Indenture Trustee in its sole discretion and the Indenture Trustee shall notify the Issuer in writing of its selection.

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

“Property Insurance Policy”: With respect to any Mortgaged Property, any hazard insurance policy, flood insurance policy, or other insurance policy that is maintained from time to time in respect of such Mortgaged Property (including, without limitation, any blanket insurance policy maintained by or on behalf of the applicable Mortgagor Customer).

“Prospectus”:  Collectively, the preliminary Prospectus dated ____________ __, 2016 and the final Prospectus dated ____________ __, 2016, in each case with respect to the Notes.

“Put Right Purchase Date”:  As defined in Section 7.02(a)(a).

“Put Right Purchase Price”:  As defined in Section 7.02(a)(a).

“Qualified Insurer”:  With respect to any Mortgaged Property, an insurance company duly qualified as such under the laws of the states in which such Mortgaged Property is located, duly authorized and licensed in such states to transact the applicable insurance business and to write the insurance provided, and approved as an insurer by FNMA and FHLMC and whose claims paying ability is rated in the two highest rating categories by any of the rating agencies with respect to primary mortgage insurance and in the two highest rating categories by Best’s with respect to hazard and flood insurance.

“Qualified Substitute Loan”:  (a) A Mortgage Loan acquired by the Issuer in substitution for any Exchanged Loan that, on the date of such substitution, (i) has an Outstanding Principal Balance that, when combined with the Outstanding Principal Balance of all other Qualified Substitute Loans to be acquired by the Issuer on such date of substitution, is at least equal to the Outstanding Principal Balance of all Exchanged Loans on the date of substitution, (ii) complies, in all material respects, with all of the representations and warranties made with respect to Mortgage Loans under this Indenture (with each date therein referring to the date of substitution), and (iii) has the same or greater Mortgage Interest Rate as the Exchanged Loans, or (b) a Mortgage Loan acquired by the Issuer with proceeds deposited in the Release Account that, on the date of such acquisition, complies, in all material respects, with all of the representations  and warranties made with respect to Mortgage Loans under this Indenture (with each date therein referring to the date of acquisition).

“Rating Agency”:  S&P, any other nationally recognized statistical rating organization and their respective successors in interest.

“Receivables” shall mean and include, as to the Issuer, all of the Issuer’s accounts, contract rights, instruments (including those evidencing indebtedness owed to the Issuer by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances (including payment intangibles), and all other forms of obligations owing to the Issuer arising out of or in connection with a Mortgage Loan, all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically assigned to the Indenture Trustee hereunder.

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“Record Date”:  As to any Payment Date with respect to Book-Entry Notes, the Business Day immediately preceding such Payment Date.  As to any Payment Date with respect to Definitive Notes, the last Business Day of the prior calendar month or, in the case of the initial Payment Date, the Closing Date.

“Redemption Date”:  As defined in Section 7.01.

“Redemption Payment”:  A Mandatory Principal Payment, Voluntary Prepayment, Change of Control Purchase Price or payment in connection with a Net Proceeds Offer.

“Related Business” means those businesses in which the Issuer or MBC is engaged on the Closing Date, or that are reasonably related, ancillary, incidental or complementary thereto, as determined by the Issuer’s or MBC’s, as the case may be, board of directors.

“Related Title Policy”:  with respect to a Mortgaged Property, a policy of title insurance insuring the first priority of a Mortgage, in the form described in Section 2.21(n).

“Release Account”: The segregated account established and maintained by the Indenture Trustee on behalf of the Noteholders and the Issuer for the deposit of cash proceeds from the sale of any Mortgage Loan.

“Release Price”: With respect to any Mortgage Loan, an amount equal to (a) with respect to any Defaulted Mortgage Loan or any Released Loan, the greater of (i) the Fair Market Value of such Mortgage Loan and (ii) the outstanding principal amount of such Mortgage Loan, (b) the Payoff Amount with respect to any Mortgaged Property released due to a Collateral Defect, or (c) the Fair Market Value for any Released Loan sold to a third party; provided that the Release Price for a Mortgage Loan that has been paid in full shall be zero if all payments on account of such Mortgage Loan have been deposited to the Collection Account.

“Released Loan”:  As defined in Section 11.02(a).

“Remittance Date”: The Business Day preceding each Payment Date.

“Removed Mortgage Loan”:  A Released Loan or Exchanged Loan that has either been released or substituted that is removed from the Collateral pursuant to Section 2.04 and ARTICLE XI.

“Required Conditions”:  With respect to any proposed substitution, release, exchange or lease transfer of a Mortgage Loan, the Required Conditions will be satisfied if the Issuer shall submit to the Indenture Trustee, not less than ten (10) days prior to the date of such release, a release of lien of the Mortgage for such Mortgage Loan for execution by the Indenture Trustee.  Such release shall be in a form appropriate in each jurisdiction in which the Mortgage Loan is located.  In addition, the Issuer shall provide all other documentation that is reasonably required to be delivered by any party hereto in connection with such substitution, release, exchange or lease transfer, together with an Officer’s Certificate certifying that such documentation (a) is in compliance with all Legal Requirements, and (b) will effect such release in accordance with the terms of this Indenture.

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“Requisite Majority”:  The Noteholders representing more than 50% of the Outstanding Principal Balance; provided that Interested Persons shall not be considered Noteholders and the Outstanding Principal Balance shall be reduced by the principal amount of Notes owned by Interested Persons in each case for purposes of this definition.

“Resolution”:  With respect to the Issuer, a copy of a resolution certified by an Authorized Officer to have been duly adopted by the Issuer and to be in full force and effect on the date of such certification.

“Responsible Officer”:  With respect to the Indenture Trustee, any officer of the Indenture Trustee assigned to its [Corporate Trust Services Group], customarily performing functions with respect to corporate trust matters and having direct responsibility for the administration of this Indenture and, with respect to a particular corporate trust matter under this Indenture, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, in each case, having direct responsibility for the administration of this Indenture; and, with respect to the Issuer, any officer or number of officers or other Person or number of Persons duly authorized to perform the indicated action on behalf of the Issuer.

“S&P”:  Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“SEC”:  The Securities and Exchange Commission.

“Securities”:  All marketable securities and investment property owned by the Issuer, whether now existing or hereafter created, including any held by any intermediary in any “street” name, pursuant to any custody arrangement or otherwise.

“Servicing Standard”:  To service the Mortgage Loans  in the same manner in which, and with the same care, skill, prudence and diligence with which, MBC or the Issuer, as the case may be, services and administers similar Mortgage Loans for their own account and the account of their Affiliates or any third-party portfolios, to the extent applicable, in material compliance with all applicable laws, but without regard to (i) any known relationship that MBC or the Issuer, an Affiliate of MBC or the Issuer may have with any Mortgagor Customer, any of their respective Affiliates or any other party to the Transaction Documents or (ii) the ownership, or servicing or management for others, by MBC of any other Mortgage Loans or real properties.

“Taxes”:  As defined in Section 9.03(a).

“Transaction Documents”:  This Indenture, the Asset Transfer Agreements, the organizational documents of the Issuer, each Account Control Agreement, each Guaranty, the Webster Guaranty and any related supplements or amendments to the Transaction Documents, and any and all other agreements, documents and instruments executed and delivered by or on behalf or in support of the Issuer with respect to the issuance and sale of the Notes, as the same may from time to time be amended, modified, supplemented or renewed.

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“Transfer”:  Any direct or indirect transfer, sale, pledge, hypothecation or other form of assignment of any Ownership Interest in a Note.

“Transfer Date”:  The date on which a Mortgaged Property is acquired by the Issuer.

“Treasury Regulations”:  Temporary, final or proposed regulations (to the extent that by reason of their proposed effective date such proposed regulations would apply to the Issuer) of the United States Department of the Treasury.

“Trustee Report”:  As defined in Section 6.01(a).

“UCC”:  The Uniform Commercial Code as in effect in any applicable jurisdiction.

“UCC Financing Statement”:  A financing statement executed and in form sufficient for filing pursuant to the UCC, as in effect in the relevant jurisdiction.

“Underwriter”:  Aegis Capital Corp.

“Unscheduled Principal Payment”:  On any Payment Date, the Unscheduled Proceeds deposited into the Collection Account for such Payment Date.

“Unscheduled Proceeds”: Collectively, without duplication, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceed, and Payoff Amounts received in connection with releases and sales of Mortgage Loans and related Mortgaged Properties.

“Unutilized Net Cash Proceeds”:  As defined in Section 9.06(e).

“Voluntary Prepayment”:  Any voluntary prepayment of the Notes, in whole or in part, in accordance with the procedures set forth in Section 7.01.

“Voting Stock”:  Capital Stock in a corporation or other Person with voting power under ordinary circumstances entitling the holders thereof to elect the Board of Directors or other comparable governing body of such corporation or Person.

“Webster Credit Agreement”:  The Credit and Security Agreement dated as of February 27, 2015 between MBC and Webster Business Credit Corporation.

“Webster Guaranty”:  The guaranty made by the Issuer for the benefit of Webster Business Credit Corporation with respect the obligations of MBC under the Webster Credit Agreement.

Section 1.02         Rules of Construction.

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

(a)          the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

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(b)          all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP, and, except as otherwise herein expressly provided, the terms “generally accepted accounting principles” or “GAAP” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted in the United States;

(c)          the word “including” shall be construed to be followed by the words “without limitation”;

(d)          article and section headings are for the convenience of the reader and shall not be considered in interpreting this Indenture or the intent of the parties hereto;

(e)          the definition of or any reference to any agreement, document or instrument herein shall be construed as referring to such agreement, document or instrument as from time to time amended, restated, supplemented or otherwise modified;

(f)          references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof, shall refer to such law, constitution, statute, treaty, regulation, rule or ordinance as amended from time to time, and shall include any successor thereto;

(g)          references herein to any Person shall be construed to include such Person’s successors and permitted assigns;

(h)          the words “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; and

(i)          the pronouns used herein are used in the masculine and neuter genders but shall be construed as feminine, masculine or neuter, as the context requires.

ARTICLE II
THE NOTES

Section 2.01         Forms; Denominations.

(a)          The Notes shall be designated as the “Senior Secured Notes”.  The Notes may be issued with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon consistent herewith, as determined by the officers executing the Notes, as evidenced by their execution thereof.  Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The number of Notes which may be created by this Indenture is not limited.

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Section 2.02         Execution, Authentication, Delivery and Dating.

(a)          The Notes shall be executed by manual or facsimile signature on behalf of the Issuer by any Authorized Officers of the Issuer.  Notes bearing the manual or facsimile signatures of individuals who were at any time the Authorized Officers of the Issuer shall be entitled to all benefits under this Indenture, subject to the following sentence, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.  No Note shall be entitled to any benefit under this Indenture, or be valid for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Indenture Trustee by manual signature, and such certificate of authentication upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.  All Notes shall be dated the respective dates of their authentication.

(b)          At the election of the Indenture Trustee, the Indenture Trustee may appoint one or more agents (each, an “Authenticating Agent”) with power to act on its behalf and subject to its direction in the authentication of Notes in connection with transfers and exchanges under Section 2.06 and Section 2.11, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized under those Sections to authenticate the Notes.  For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent shall be deemed to be the authentication of such Notes “by the Indenture Trustee.”  The Indenture Trustee shall be the initial Authenticating Agent.

Any corporation, bank, trust company or association into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation, bank, trust company or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation, bank, trust company or association succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation, bank, trust company or association.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture Trustee and the Issuer.  The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer.  Upon receiving such notice of resignation or upon such a termination, the Indenture Trustee may promptly appoint a successor Authenticating Agent, and give written notice of such appointment to the Issuer and to the Noteholders.  Upon the resignation or termination of the Authenticating Agent and prior to the appointment of a successor, the Indenture Trustee shall act as Authenticating Agent.

Each Authenticating Agent shall be entitled to all limitations on liability, rights of reimbursement and indemnities that the Indenture Trustee is entitled to hereunder as if it were the Indenture Trustee.

(c)          The Indenture Trustee shall upon Issuer Request authenticate and deliver Notes for original issue in an aggregate amount equal to the Initial Principal Balance.

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Section 2.03         Certification of Receipt of the Collateral.

(a)          The Indenture Trustee, by its execution and delivery of this Indenture, acknowledges receipt by it of all assets Granted to it and included in the Collateral Pool, in good faith and without notice of any adverse claim, and declares that it holds and will hold such assets on behalf of the present and future Noteholders.

(b)          In addition, with respect to the Notes, the Indenture Trustee hereby certifies to the Issuer and the Noteholders that, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached to the Interim Receipt (in the form attached as Schedule D hereto, (i) the Mortgage Loan Files of each related Mortgage Loan are in its possession and (ii) such Mortgage Loan Files appear regular on their face and appear to relate to the Mortgage Properties included in the Collateral.  Not later than the 15^th day following the Closing Date, the Indenture Trustee shall deliver to the Issuer an executed certificate in the form of Exhibit D to the effect that, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached as a schedule thereto, and other than any Mortgage Loan that has become a Liquidated Mortgage Loan or any Mortgage Loan specifically identified in any exception report annexed thereto as not being covered by such certification, (i) the original or a physical or electronic copy (certified to be true, correct and complete by the Issuer) of each Mortgage Loan is in its possession and (ii) such Mortgage Loan has been reviewed by it, appears regular on its face and appear to relate to such Mortgage Loan.  Not later than the 75^th day following the Closing Date (and if any exceptions are noted, again not later than the first anniversary of the Closing Date), the Indenture Trustee shall deliver to the Issuer an executed certificate in the form of Exhibit D to the effect that, as to each Mortgage Loan listed on the Mortgage Loan Schedule, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached as a schedule thereto, and other than any Mortgage Loan specifically identified in any exception report annexed thereto as not being covered by such certification, (i) all documents specified in the definition of “Mortgage Loan File” are in its possession, (ii) all such documents received by it with respect to such Mortgage Loan have been reviewed by it, appear to be regular on their face and appear to relate to such Mortgage Loan, and (iii) based on the examinations referred to in this Section 2.03 and only as to the foregoing documents, the information set forth in such Mortgage Loan Schedule accurately reflects the information set forth in the Mortgage Loan File.

(c)          The Indenture Trustee shall not be under any duty or obligation to inspect, review or examine any of the documents, instruments, certificates or other papers relating to the Mortgage Loans delivered to it to determine that the same are valid, legal, effective, genuine, enforceable, in recordable form, sufficient or appropriate for the represented purpose or that they are other than what they purport to be on their face.

(d)          The Indenture Trustee shall not assign, sell, dispose of or transfer any interest in the Mortgaged Properties or Mortgage Loans or any other asset (except as expressly provided herein) or knowingly permit the Mortgaged Properties or Mortgage Loans or any other asset included in the Collateral to be subjected to any lien, claim or encumbrance arising by, through or under the Indenture Trustee or any Person claiming by, through or under the Indenture Trustee other than the liens created pursuant to the Mortgages and this Indenture.

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(e)          If any party hereto discovers that any document constituting a part of a Mortgage Loan File has not been properly executed, is missing, contains information that does not conform in any respect with the corresponding information set forth in the Mortgage Loan Schedule (and the terms of such document have not been modified by written instrument contained in the Mortgage Loan File) or does not appear to be regular on its face (each, a “Document Defect”), such party shall give prompt written notice thereof to the other parties thereto. If the Issuer does not correct any Document Defect within 90 days of its receipt of such notice and such Document Defect materially and adversely affects the value of, or the interests of the Issuer in, the related Mortgage Loan or Mortgaged Property, the Issuer shall, subject to the provisions of Section 2.04 (to the same extent as if such Document Defect were a Collateral Defect), exercise such rights and remedies as the Issuer has under Section 2.04 with respect to such Document Defect. Notwithstanding the foregoing, the delivery of a commitment to issue a policy of owner’s title insurance in lieu of the delivery of the actual policy of owner’s title insurance shall not be considered a Document Defect with respect to any Mortgage Loan File if such actual policy of insurance is delivered to the Indenture Trustee not later than 270 days after the Closing Date or Transfer Date, as applicable.

Section 2.04         Repurchase or Transfer and Exchange of Mortgage Loans for Document Defects and Breaches of Representations and Warranties.

(a)          If any party hereto discovers or receives notice that any required document is missing or of a breach of any representation or warranty relating to any Mortgage Loan or Mortgaged Property set forth in Section 2.21 that materially and adversely affects (i) the interests of the Issuer in, or the value of, such Mortgage Loan or the related Mortgaged Property or (ii) the collectability or enforceability of such Mortgage Loan (a “Collateral Defect”), the party discovering such Collateral Defect shall give prompt written notice thereof to the other parties hereto. Promptly upon becoming aware of any such Collateral Defect, the Issuer, not later than 60 days from the receipt by the Issuer of such notice or the Issuer’s knowledge of such Collateral Defects, as applicable, shall (1) cure such Collateral Defect in all material respects, (2) cause such Mortgage Loan to be released from the Collateral in accordance with Section 11.02, or (3) substitute one or more Qualified Substitute Loans for the subject Mortgage Loan in accordance with the procedures set forth in Section 11.01; provided that if (A) such Collateral Defect is capable of being cured but not within such 60-day period, (B) the Issuer has commenced and is diligently proceeding with the cure of such Collateral Defect within such 60-day period, and (C) the Issuer shall have delivered to the Indenture Trustee a certification executed on behalf of Issuer by an officer thereof setting forth the reason such Collateral Defect is not reasonably capable of being cured within an initial 60-day period and what actions the Issuer is pursuing in connection with the cure thereof and stating that the Issuer anticipates that such Collateral Defect will be cured within an additional period not to exceed 60 more days, then Issuer shall have up to an additional 60 days commencing on the 61st day from receipt by Issuer of such request to complete such cure.

(b)          If the Issuer has elected to release or to substitute one or more of the Mortgage Loans and the Issuer has delivered the Officer’s Certificates referenced in Section 11.01 and Section 11.02, respectively, the Issuer shall prepare, execute and deliver the endorsements, assignments and other documents contemplated by Section 11.01 or Section 11.02 necessary to effectuate an exchange or release pursuant to Section 2.04(a). In connection with any such release or substitution by the Issuer, the Indenture Trustee shall concurrently deliver the related Mortgage Loan File to the Issuer.

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Section 2.05         The Notes Generally.

(a)          Each Note shall rank pari passu with each other Note and be equally and ratably secured by the Collateral included in the Collateral Pool. All Notes shall be substantially identical except as to denominations and as expressly permitted in this Indenture.

(b)          This Indenture, together with the related Mortgages, shall evidence a continuing lien on and security interest in the Collateral Granted hereunder or subsequently included in the Collateral Pool to secure the full payment of the principal, interest and other amounts on the Notes, which shall in all respects be equally and ratably secured hereby for payment as provided herein, and without preference, priority or distinction on account of the actual time or times of the authentication and delivery of the Notes, all in accordance with the terms and provisions of this Indenture.

(c)          The issuance of the Notes shall be subject to the satisfaction of the following conditions:

(i)          receipt by the Indenture Trustee of the Issuer Order authorizing the execution and authentication of the Notes;

(ii)         receipt by the Indenture Trustee of the Transaction Documents duly executed and delivered by the parties thereto and being in full force and effect, free of any breach or waiver;

(iii)        all Mortgage Loan Files with respect to the Collateral Pool, as set forth herein, shall have been delivered to the Indenture Trustee or a custodian on its behalf together with all UCC Financing Statements, documents of similar import in other jurisdictions, and other documents reasonably necessary to perfect the Indenture Trustee’s security interest in such Collateral for the benefit of the Noteholders;

(iv)        receipt by the Indenture Trustee of Opinions of Counsel relating to (1) corporate and enforceability matters, as well as securities law matters, reasonably acceptable to the Underwriter and its counsel and (2) the creation and perfection of the Indenture Trustee’s security interest;

(v)         the Issuer has delivered a certificate of the Issuer to the Indenture Trustee, dated the Closing Date, to the effect that the Issuer is solvent; and

(vi)        receipt by the Indenture Trustee of an Officer’s Certificate from the Issuer, upon which the Indenture Trustee shall be permitted to fully rely and shall not have any liability for so relying, stating that the conditions precedent to such issuance have been fulfilled.

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Section 2.06         Registrar and Paying Agent.

(a)          At all times during the term of this Indenture, there shall be maintained at the office of the Note Registrar a “Note Register” in which, subject to such reasonable regulations as the Note Registrar may prescribe, the Note Registrar shall provide for the registration of Notes and of transfers and exchanges of Notes as herein provided. The offices of the Note Registrar shall be initially located (as of the Closing Date) at [Trustee TBD], [address] Attention: __________________. The Indenture Trustee is hereby initially appointed (and hereby agrees to act in accordance with the terms hereof) as “Note Registrar” for the purpose of registering Notes and transfers and exchanges of Notes as herein provided. The Indenture Trustee may appoint, by a written instrument delivered to the Issuer, any other bank or trust company to act as Note Registrar under such conditions as the predecessor Indenture Trustee may prescribe; provided, that the Indenture Trustee shall not be relieved of any of its duties or responsibilities hereunder by reason of such appointment. If the Indenture Trustee resigns or is removed in accordance with the terms hereof, the successor trustee shall immediately succeed to its predecessor’s duties as Note Registrar. The Issuer and the Indenture Trustee shall have the right to inspect the Note Register or to obtain a copy thereof at all reasonable times, and to rely conclusively upon a certificate of the Note Registrar as to the information set forth in the Note Register. Upon written request of any Noteholder made for purposes of communicating with other Noteholders with respect to their rights under this Indenture, the Note Registrar shall promptly furnish such Noteholder with a list of the other Noteholders of record identified in the Note Register at the time of the request.

(b)          The Issuer shall maintain an office or agency where Notes may be presented for payment (the “Paying Agent”) and an office or agency where notices and demands to or upon the Issuer, if any, in respect of the Notes and this Indenture may be served. The Issuer may have one or more additional Paying Agents. The term “Paying Agent” includes any additional Paying Agent. Neither the Issuer nor any Affiliate thereof may act as Paying Agent. The Issuer may change the Paying Agent without prior notice to the Holders. The Company initially appoints the Indenture Trustee as Paying Agent and agent for service of notices and demands in connection with the Notes and this Indenture.

(c)          The Issuer shall enter into an appropriate agency agreement, which shall incorporate the provisions of the 1939 Act, with any Agent that is not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with this Indenture.

Section 2.07         Registration of Transfer and Exchange of Notes.

(a)          A Noteholder or Note Owner may Transfer a Book-Entry Note or Ownership Interest therein only in accordance with the rules and procedures of the Depository and the Depository Participants.

(b)          If any Transfer of a Note or an Ownership Interest therein is to be held by the related transferee in the form of a Definitive Note, then the Note Registrar shall refuse to register such Transfer unless it receives (and, upon receipt, may conclusively rely upon) an executed transferor certificate from the transferor substantially in the form attached as Exhibit E (subject to Section 13.03).

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(c)          Subject to the preceding provisions of this Section 2.07, upon surrender for registration of transfer of any Note at the offices of the Note Registrar maintained for such purpose, the Issuer shall execute, and the Indenture Trustee shall cause to be authenticated and delivered, in the name of the designated transferee or transferees, one or more new Notes.

(d)          Every Note presented or surrendered for transfer or exchange shall (if so required by the Note Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing.

(e)          No service charge shall be imposed for any transfer or exchange of Notes, but the Indenture Trustee or the Note Registrar 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 Notes.

(f)          All Notes surrendered for transfer and exchange shall be physically canceled by the Note Registrar, and the Note Registrar shall dispose of such canceled Notes in accordance with its customary procedures.

(g)          The Note Registrar or the Indenture Trustee shall provide to the Issuer upon reasonable written request and at the expense of the requesting party a current copy of the Note Register.

(h)          Each transferee of a Note or an Ownership Interest therein will be deemed to have represented, warranted and agreed (or, in the case of Definitive Notes, shall represent, warrant and agree) that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii) (1) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (2) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

Section 2.08         CUSIP Number.

The Issuer in issuing the Notes may use one or more “CUSIP” numbers, and if so, such CUSIP numbers shall be included in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuer shall promptly notify the Indenture Trustee of any such CUSIP numbers used by the Issuer in connection with the issuance of the Notes and of any change in the CUSIP numbers.

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Section 2.09         Deposit of Moneys.

Prior to 10:00 a.m., New York City time, on each Payment Date, the Issuer shall have deposited to such account as directed by the Paying Agent immediately available funds in an amount sufficient to make cash payments, if any, due on such Payment Date. The principal and interest on Book-Entry Notes shall be payable to the Depository or its nominee, as the case may be, as the sole registered owner and the sole Holder of the Book-Entry Notes represented thereby. The principal and interest on Definitive Notes shall be payable, either in person or by mail, at the office of the Paying Agent.

Section 2.10         Book-Entry Notes.

(a)          The Book-Entry Notes shall be delivered as one or more Notes held by the Book-Entry Custodian or, if appointed to hold such Notes as provided below, the Depository, and registered in the name of the Depository or its nominee and, except as otherwise provided in Section 2.10(c), transfer of such Notes may not be registered by the Note Registrar unless such transfer is to a successor Depository that agrees to hold such Notes for the respective Note Owners with Ownership Interests therein. Except as provided in Section 2.10(c), such Note Owners shall hold and transfer their respective Ownership Interests in and to such Notes through the book-entry facilities of the Depository and, except as provided in Section 2.10(c), shall not be entitled to definitive, fully registered Notes (“Definitive Notes”) in respect of such Ownership Interests. All transfers by Note Owners of their respective Ownership Interests in the Book-Entry Notes to be held by the related transferees as Book-Entry Notes shall be made in accordance with the procedures established by the Depository Participant or brokerage firm representing each such Note Owner. Each Depository Participant shall only transfer the Ownership Interests in the Book-Entry Notes of Note Owners it represents or of brokerage firms for which it acts as agent in accordance with the Depository’s normal procedures. The Indenture Trustee is hereby initially appointed as the Book-Entry Custodian and hereby agrees to act as such in accordance herewith and in accordance with the agreement that it has with the Depository authorizing it to act as such. Neither the Indenture Trustee nor the Note Registrar shall have any responsibility to monitor or restrict the transfer of any Book-Entry Note transferable through the book-entry facilities of the Depository. The Book-Entry Custodian may, and, if it is no longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a written instrument delivered to the Issuer, and, if the Indenture Trustee is not the Book-Entry Custodian, the Indenture Trustee, any other transfer agent (including the Depository or any successor Depository) to act as Book-Entry Custodian under such conditions as the predecessor Book-Entry Custodian and the Depository or any successor Depository may prescribe; provided, that the predecessor Book-Entry Custodian shall not be relieved of any of its duties or responsibilities by reason of any such appointment other than with respect to an appointment of the Depository. If the Indenture Trustee resigns or is removed in accordance with the terms hereof, the successor trustee or, if it so elects, the Depository shall immediately succeed to its predecessor’s duties as Book-Entry Custodian. The Issuer shall have the right to inspect, and to obtain copies of, any Notes held as Book-Entry Notes by the Book-Entry Custodian.

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(b)          The Issuer, the Indenture Trustee and the Note Registrar may for all purposes, including the making of payments due on the Book-Entry Notes, deal with the Depository as the Noteholder and the authorized representative of the Note Owners with respect to such Notes for the purposes of exercising the rights of Noteholders hereunder. The rights of Note Owners with respect to the Book-Entry Notes shall be limited to those established by law and agreements between such Note Owners and the Depository Participants and brokerage firms representing such Note Owners. Multiple requests and directions from, and votes of, the Depository as holder of the Book-Entry Notes with respect to any particular matter shall not be deemed inconsistent if they are made with respect to different Note Owners. The Indenture Trustee may establish a reasonable record date in connection with solicitations of consents from or voting by Noteholders and shall give notice to the Depository of such record date.

(c)          If (i) the Issuer advises the Indenture Trustee and the Note Registrar in writing that the Depository is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Notes (or any portion thereof), and (ii) the Issuer is unable to locate a qualified successor, the Note Registrar shall notify all affected Note Owners, through the Depository, of the occurrence of any such event and of the availability of Definitive Notes to such Note Owners requesting the same. Upon surrender to the Note Registrar of the Book-Entry Notes (or any portion thereof) by the Book-Entry Custodian or the Depository, as applicable, and the delivery of registration instructions from the Depository for registration of transfer, the Issuer shall execute, and the Indenture Trustee shall cause to be authenticated and delivered, the Definitive Notes in respect of such Notes to the Note Owners identified in such instructions. None of the Issuer, the Indenture Trustee or the Note Registrar shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.

(d)          Upon the issuance of Definitive Notes, for purposes of evidencing ownership of any Notes, the registered holders of such Definitive Notes shall be recognized as Noteholders hereunder and, accordingly, shall be entitled directly to receive payments on, to exercise voting and consent rights with respect to, and to transfer and exchange such Definitive Notes.

(e)          The Issuer shall provide an adequate inventory of Definitive Notes to the Indenture Trustee.

Section 2.11         Mutilated, Destroyed, Lost or Stolen Notes.

If any mutilated Note is surrendered to the Note Registrar, the Issuer shall execute and the Indenture Trustee shall cause to be authenticated and delivered, in exchange therefor, a new Note of the same principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Issuer, the Indenture Trustee and the Note Registrar (i) evidence to their satisfaction of the destruction (including mutilation tantamount to destruction), loss or theft of any Note and the ownership thereof, and (ii) indemnity as may be reasonably required by them to hold each of them and any of their agents harmless, then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and the Indenture Trustee shall cause to be authenticated and delivered, in lieu of any such destroyed, lost or stolen Note, a new Note of the same tenor and denomination registered in the same manner, dated the date of its authentication and bearing a number not contemporaneously outstanding.

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Upon the issuance of any new Note under this Section 2.11, the Issuer, the Indenture Trustee and the Note Registrar may require the payment by the Noteholder of an amount sufficient to pay or discharge any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Authenticating Agent and the Indenture Trustee) in connection therewith.

Every new Note issued pursuant to this Section 2.11 in lieu of any destroyed, mutilated, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, mutilated, lost or stolen Note shall be at any time enforceable by any Person, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.11 are exclusive and shall preclude (to the extent permitted by applicable law) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

Section 2.12         Noteholder Lists.

The Note Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Noteholders, which list, upon request, will be made available to the Indenture Trustee insofar as the Indenture Trustee is no longer the Note Registrar. Upon written request of any Noteholder made for purposes of communicating with other Noteholders with respect to their rights under this Indenture, the Note Registrar shall promptly furnish such Noteholder at such Noteholder’s expense with a list of the Noteholders of record identified in the Note Register at the time of the request. Every Noteholder, by receiving such access, or by receiving a Note or an interest therein, agrees with the Note Registrar that the Note Registrar will not be held accountable in any way by reason of the disclosure of any information as to the names and addresses of any Noteholder regardless of the source from which such information was derived.

Section 2.13         Persons Deemed Owners.

The Issuer, the Indenture Trustee, the Note Registrar and any of their agents, may treat the Person in whose name a Note is registered as the owner of such Note as of the related Record Date for the purpose of receiving payments of principal, interest and other amounts in respect of such Note and for all other purposes, whether or not such Note shall be overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar or any agents of any of them, shall be affected by notice to the contrary.

Section 2.14         Payment Account.

(a)          On or prior to the Closing Date, the Indenture Trustee shall establish and maintain one or more segregated trust accounts (collectively, the “Payment Account”) at [Trustee TBD] (or at such other financial institution as necessary to ensure that the Payment Account is at all times an Eligible Account or a sub-account of an Eligible Account, in each case subject to an Account Control Agreement), in its name, as Indenture Trustee, bearing a designation clearly indicating that such account and all funds deposited therein are held for the exclusive benefit of the Noteholders and the Issuer as their interests may appear. On each Remittance Date, the Indenture Trustee shall deposit or cause to be deposited in the Payment Account the Available Amount for such Payment Date. Except as provided in this Indenture, the Indenture Trustee, in accordance with the terms of this Indenture, shall have exclusive control and sole right of withdrawal with respect to the Payment Account. Funds in the Payment Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Payment Account shall be held by and under the control of the Indenture Trustee in the Payment Account for the benefit of the Noteholders and the Issuer as herein provided.

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(b)          Amounts in the Payment Account shall be held uninvested.

(c)          The Indenture Trustee is authorized to make withdrawals from the Payment Account to make payments on the Notes and to other parties as set forth in the priorities of payments pursuant to Section 2.15(b) of this Indenture.

(d)          Upon the satisfaction and discharge of this Indenture pursuant to Section 3.01, the Indenture Trustee shall pay to the Issuer all amounts, if any, held by it remaining as part of the Collateral Pool.

Section 2.15         Payments on the Notes.

(a)          Subject to Section 2.15(b), the Issuer agrees to pay:

(i)          on each Payment Date prior to the Final Payment Date (but only to the extent of the Available Amount pursuant to Section 2.15(b)), interest on and, to the extent payable on such Payment Date pursuant to the terms of this Indenture or the Notes, principal of such Notes in the amounts and in accordance with the priorities set forth in Section 2.15(b); and

(ii)         on the Final Payment Date, the entire Outstanding Principal Balance, together with all accrued and unpaid interest thereon.

Amounts properly withheld under the Code by any Person from a payment to any Holder of a Note of interest, principal or other amounts, or any such payment set aside on the Final Payment Date for such Note as provided in Section 2.15(b), shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.

(b)          With respect to each Payment Date, any interest, principal and other amounts payable on the Notes shall be paid to each Person that is a registered holder thereof at the close of business on the related Record Date; provided, however, that interest, principal and other amounts payable at the Final Payment Date of any Note shall be payable only against surrender thereof at the Indenture Trustee’s Office or such other address as may be specified in the notice of final payment. Payments of interest, principal and other amounts on the Notes to be made on any Payment Date other than the Final Payment Date shall be made, subject to applicable laws and regulations, by wire transfer to such accounts as each such Noteholder shall designate by written instruction received by the Indenture Trustee not later than the Record Date related to such Payment Date or otherwise by check mailed on or before such Payment Date to the Person entitled thereto at such Person’s address appearing on the Note Register as of the related Record Date. The Indenture Trustee shall pay each Note in whole or in part as provided herein on its Final Payment Date in immediately available funds from funds in the Payment Account as promptly as possible after presentation to the Indenture Trustee of such Note at the Indenture Trustee’s Office, but in no event later than the next Business Day after the day of such presentation. If presentation is made after 3:30 p.m., New York City time, on any day, such presentation shall be deemed to have been made on the immediately succeeding Business Day.

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Each payment with respect to a Book-Entry Note shall be paid to the Depository, as holder thereof, and the Depository shall be responsible for crediting the amount of such payment to the accounts of its Depository Participants in accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such payments to the related Note Owners that it represents and to each indirect participating brokerage firm for which it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the related Note Owners that it represents. None of the parties hereto shall have any responsibility therefor except as otherwise provided by this Indenture or applicable law. The Issuer and the Indenture Trustee shall perform their respective obligations under each Letter of Representations.

Except as provided in the following sentence, if a Note is issued in exchange for any other Note during the period commencing at the close of business at the office or agency where such exchange occurs on any Record Date and ending before the opening of business at such office or agency on the related Payment Date, no interest, principal or other amounts will be payable on such Payment Date in respect of such new Note, but will be payable on such Payment Date only in respect of the prior Note. Interest, principal and other amounts payable on any Note issued in exchange for any other Note during the period commencing at the close of business at the office or agency where such exchange occurs on the Record Date immediately preceding the Final Payment Date and ending on the Final Payment Date, shall be payable to the Person that surrenders the new Note as provided in this Section 2.15(b).

All payments of interest, principal and other amounts made with respect to the Notes will be allocated pro rata among the Outstanding Notes as set forth below.

If any Note on which the final payment was due is not presented for payment on the Final Payment Date, then the Indenture Trustee shall set aside such payment in a segregated, non-interest bearing account (and shall remain uninvested) separate from the Payment Account (but which may be a sub-account thereof) but which constitutes an Eligible Account (or a sub-account of an Eligible Account), and the Indenture Trustee and the Issuer shall act in accordance with Section 5.10 in respect of the unclaimed funds.

On each Payment Date, the Available Amount for such Payment Date will be applied by the Indenture Trustee in the following manner and order of priority:

(1)         to the Indenture Trustee, the earned and unpaid Indenture Trustee Fee;

(2)         to the Noteholders, the Note Interest, plus unpaid Note Interest from any prior Payment Date, together with interest on any such unpaid Note Interest at the Note Rate;

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(3)         (I) for so long as no Early Amortization Period has commenced or Event of Default has occurred and is continuing, to the Noteholders (until the Outstanding Principal Balance of the Notes has been reduced to zero), an amount up to the sum of the Mandatory Principal Payment allocable to the Notes for such Payment Date; or (II) if an Early Amortization Period has commenced or Event of Default has occurred and is continuing, to the Noteholders, all remaining Available Amounts until the Outstanding Principal Balance of the Notes has been reduced to zero;

(4)         to the Issuer, all remaining Available Amounts.

Notwithstanding the provisions of this Section 2.15(b), the Issuer may, subject to Section 9.06, at any time advance funds to the Indenture Trustee for the purpose of allowing the Indenture Trustee to make required payments on the Notes without right of reimbursement.

(c)          In connection with making any payments pursuant to Section 2.15(b), the Indenture Trustee shall make available to the Issuer on the related Payment Date via the Indenture Trustee’s internet website specified in Section 6.01(a), a written statement detailing the amounts so paid; provided, that if such information is not so available on the Indenture Trustee’s internet website for any reason, the Indenture Trustee shall provide the Issuer with such written statement by facsimile transmission, confirmed in writing by first class mail or overnight courier.

Section 2.16         Final Payment Notice.

(a)          Notice of final payment under Section 2.15(b) shall be given by the Indenture Trustee as soon as practicable, but not later than two (2) Business Days prior to the Final Payment Date, to each Noteholder as of the close of business on the Record Date in the calendar month preceding the Final Payment Date at such Noteholder’s address appearing in the Note Register and to the Issuer.

(b)          All notices of final payment in respect of the Notes shall state (i) the Final Payment Date, (ii) the amount of the final payment for the Notes and (iii) the place where the Notes are to be surrendered for payment.

(c)          Notice of final payment of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Indenture Trustee. Failure to give notice of final payment, or any defect therein, to any Noteholder shall not impair or affect the validity of the final payment of any other Note.

Section 2.17         Compliance with Withholding Requirements.

Notwithstanding any other provision of this Indenture, the Indenture Trustee shall comply with all federal withholding requirements with respect to payments to Noteholders of interest, original issue discount, or other amounts that the Indenture Trustee reasonably believes are applicable under the Code or any other applicable federal law. The consent of Noteholders shall not be required for any such withholding.

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Section 2.18         Cancellation.

The Issuer may at any time deliver to the Note Registrar for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Note Registrar.

All Notes delivered to the Indenture Trustee for payment shall be forwarded to the Note Registrar. All such Notes and all Notes surrendered for transfer and exchange in accordance with the terms hereof shall be canceled and disposed of by the Note Registrar in accordance with its customary procedures.

Section 2.19         Tax Treatment of the Notes and the Issuer.

The Issuer has entered into this Indenture, and the Notes will be issued, with the intention that, for purposes of any federal, state and local income or franchise tax and any other taxes imposed on or measured by income, the Notes will qualify as indebtedness of the Issuer. The Issuer, by entering into this Indenture, each Noteholder, by acceptance of its Note, and each Note Owner, by purchasing or otherwise acquiring an Ownership Interest in a Note, agree to treat the Notes and such Ownership Interests for purposes of any federal, state and local income or franchise tax and any other taxes imposed on or measured by income, as indebtedness of the Issuer.

Section 2.20         Representations and Warranties with Respect to the Issuer.

The Issuer hereby represents and warrants to the other parties hereto as follows:

(a)          The Issuer is a corporation duly created and validly existing in good standing under the laws of the State of New York and has full power, authority and legal right to execute and deliver the Indenture and the other Transaction Documents to which the Issuer is a party, to issue the Notes, to pledge the Collateral included in the Collateral Pool to the Indenture Trustee and to perform its obligations under the Indenture and the other Transaction Documents to which it is a party.

(b)          The execution and delivery by the Issuer of the Indenture and the performance by the Issuer of its obligations under the Indenture and the other Transaction Documents to which the Issuer is a party has been duly and validly authorized and will not violate the organizational documents of the Issuer, nor will such execution, delivery or performance require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action by, any arbitrator, court or other Governmental Authority (other than the SEC) or conflict with, or result in a breach or violation of, any provision of any law or regulation governing the Issuer or any order, writ, judgment or decree of any arbitrator, court or other Governmental Authority applicable to the Issuer or any of its assets, any indenture, mortgage, deed of trust, partnership agreement or other agreement or instrument to which the Issuer is a party or by which the Issuer or all or any portion of the Collateral is bound, which breach or violation would materially adversely affect either the ability of the Issuer to perform its obligations under this Indenture and the other Transaction Documents to which it is a party or the financial condition of the Issuer or the value of any Mortgaged Property as security for the Notes.

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(c)          The Issuer has requisite power and authority to own the Mortgage Loans and other Collateral and to transact the businesses in which it is now engaged. The Issuer is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection its business and operations. The Issuer possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own the Mortgage Loans and to transact the businesses in which it is now engaged, the failure of which to obtain would result in a material adverse effect on either the ability of the Issuer to perform its obligations under this Indenture and the other Transaction Documents to which it is a party or the financial condition of the Issuer or the value of any Mortgage Loan as security for the Notes.

(d)          This Indenture and the other Transaction Documents (including the Notes when issued) have been duly executed and delivered by the Issuer and, assuming due authorization, execution and delivery by each of the other parties hereto and thereto, constitutes (and the Notes when issued will constitute) a valid, legal and binding obligation of the Issuer, enforceable against the Issuer in accordance with the terms hereof, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.

(e)          The Issuer has no employee benefit plans and is not required to make any contributions to any Plans.

(f)          The Issuer (i) has not entered into the Indenture or any of the other Transaction Documents with the actual intent to hinder, delay, or defraud any creditor and (ii) has received reasonably equivalent value in exchange for its obligations under the Indenture. Giving effect to the issuance of the Notes, the fair saleable value of all of the Issuer’s assets will, immediately following the execution and delivery of the Transaction Documents, exceed the Issuer’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of the Issuer’s assets will, immediately following the execution and delivery of the Transaction Documents, be greater than the Issuer’s probable liabilities, including the maximum amount of its contingent liabilities or debts as such debts become absolute and mature. The Issuer’s assets immediately following the execution and delivery of the Transaction Documents will not constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. The Issuer does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of the Issuer).

(g)          The Issuer is not: (i) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the 1940 Act; (ii) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any other federal or state law or regulation which prevents the Issuer from entering into the Indenture. As of the Closing Date, this Indenture is not required to be qualified under the 1939 Act.

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(h)          The Transaction Documents and the Prospectus do not contain any untrue statement of a material fact or omit to state any material fact necessary to make statements contained herein or therein not misleading.

(i)          No Default or Event of Default under the Indenture has occurred and is continuing.

(j)          Neither the Issuer nor MBC is contemplating the filing of a petition by the Issuer or MBC, as applicable, under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of the Issuer’s or MBC’s assets or property, and the Issuer has no knowledge of any Person contemplating the filing of any such petition against the Issuer or MBC.

(k)          The Issuer is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code and the related Treasury Regulations, including temporary regulations.

(l)          The Issuer has not incurred any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), that has not been repaid in full, other than (i) the Notes, (ii) trade and operational debt incurred in the ordinary course of business with trade creditors and in amounts as are normal and reasonable under the circumstances (including the expenses relating to the transactions contemplated by this Indenture) and (iii) the Webster Guaranty.

(m)          The Issuer has good title to, and is the sole owner of, all Collateral included in the Collateral Pool, free and clear of any pledge, lien, encumbrance or security interest other than Permitted Encumbrances and the liens created hereby. This Indenture creates a valid and continuing security interest in each such item of the Collateral Pool in which a security interest may be created under Article 9 of the UCC in favor of the Indenture Trustee. The Issuer has caused the filing of an appropriate financing statement with the Secretary of State of the State of New York in order to perfect the security interests in the Collateral granted to the Indenture Trustee hereunder. Upon the issuance of the Notes and the proper filing of such financing statements, the Indenture Trustee will have a valid and enforceable perfected lien or perfected security interest, as applicable, in the Collateral, which lien or security interest is prior to all other liens, encumbrances and security interests, other than Permitted Encumbrances, and is enforceable as such against creditors of and purchasers from the Issuer.

(n)          As of the Closing Date and at all times throughout the term of the Notes, (i) none of the funds or other assets of the Issuer constitute property of, or are beneficially owned, directly or indirectly, by any Person subject to trade restrictions under U.S. law, including but not limited to, the Patriot Act (including the anti-terrorism provisions thereof), the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701, et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder (such person, an “Embargoed Person”), with the result that the investment in the Notes (whether directly or indirectly) is prohibited by law, (ii) no Embargoed Person has any interest of any nature whatsoever in the Issuer, with the result that the investment in the Notes (whether directly or indirectly) is prohibited by law, and (iii) none of the funds of the Issuer have been derived from any unlawful activity with the result that the investment in the Issuer (whether directly or indirectly) is prohibited by law.

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(o)          No part of the proceeds of the Notes will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of the Indenture or the other Transaction Documents.

Section 2.21         Representations and Warranties With Respect to Mortgaged Properties and Mortgage Loans.

The Issuer shall make the following representations and warranties, as of the Closing Date or Transfer Date, with respect to the Mortgage Loans (and the related Mortgage, Mortgage Note, Collateral Assignment, if any, and Mortgaged Property) added to the Collateral Pool by the Issuer in connection with the issuance of the Notes or as Qualified Substitute Loans:

(a)          The information set forth in the Mortgage Loan Schedule with respect to the Mortgage Loans is complete, true and correct in all material respects.

(b)          All payments made with respect to the Mortgage Loans under the terms of the applicable Mortgage Notes have been properly applied to the amount intended to be paid by the related Mortgagor Customers. No payment required under any Mortgage Loan is more than 60 days past due nor has any payment under any Mortgage Loan been more than 60 days past due at any time since the origination of such Mortgage Loan. The first Mortgage Loan Payment shall be made, or shall have been made, with respect to each Mortgage Loan on its due date or within the grace period, all in accordance with the terms of the related Mortgage Note.

(c)          Neither MBC, the Issuer nor any Affiliate of either thereof has advanced funds to, or induced, solicited or knowingly received any advance of funds from a party other than the applicable Mortgagor Customer, directly or indirectly, for the payment of any amount required under the related Mortgage Loan.

(d)          The terms of the Mortgage Notes and Mortgages have not been waived, altered or modified in any respect, from the date of origination, except by a written instrument which has been recorded, if necessary to protect the interests of the Indenture Trustee and the Noteholders, and which has been delivered to the Indenture Trustee and the terms of which are reflected in the Mortgage Loan Schedule. No Mortgagor Customer in respect of a Mortgage Loan has been released, in whole or in part, except in connection with an assumption agreement, which assumption agreement is part of the Mortgage Loan File delivered to the Indenture Trustee and the terms of which are reflected in the Mortgage Loan Schedule.

(e)          No Mortgagor Customer has asserted any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury with respect to the related Mortgage Loan. No Mortgagor Customer in respect of any Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency proceeding at the time such Mortgage Loan was originated or is a debtor in any state or federal bankruptcy or insolvency proceeding.

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(f)          Each Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where such Mortgaged Property is located in an amount not less than the outstanding principal balance of such Mortgage Loan. If any portion of such Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the lesser of (1) the outstanding principal balance of the Mortgage Loan and (2) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming the Issuer, its successors and assigns (including without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. No such notice has been received by MBC or Funding. All premiums on such insurance policy have been paid. The related Mortgage obligates the related Mortgagor Customer to maintain all such insurance and, at such Mortgagor Customer’s failure to do so, authorizes the mortgagee to maintain such insurance at such Mortgagor Customer’s cost and expense and to seek reimbursement therefor from such Mortgagor Customer. Where required by state law or regulation, the Mortgagor Customer has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. Neither MBC nor the Issuer has engaged in, and has no knowledge of any Mortgagor Customer’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Issuer.

(g)          Any and all requirements of any federal, state or local law applicable to the Mortgage Loans have been complied with in all material respects, including the Patriot Act and the rules and regulations of the U.S. Treasury Department’s Office of Foreign Assets Control.

(h)          The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the related Mortgaged Property has not been released from the lien of the related Mortgage, in whole or in part, nor has any instrument been executed that would affect any such release, cancellation, subordination or rescission. Neither MBC nor the Issuer has waived the performance by any Mortgagor Customer of any action, if such Mortgagor Customer’s failure to perform such action would cause the related Mortgage Loan to be in default, nor has MBC or the Issuer waived any default resulting from any action or inaction by any Mortgagor Customer.

(i)          Each Mortgage is a valid, enforceable and perfected first lien, on the related Mortgaged Property, including all buildings on such Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of each Mortgage is subject only to:

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(i)          in the case of a construction loan, the lien of the Issuer (or its predecessor in interest) on such Mortgaged Property securing the Mortgage Loan made to the related Mortgagor Customer the proceeds of which were used to acquire such Mortgaged Property;

(ii)         any lien for real property taxes and assessments with respect to which a notice of lien has not been filed against such Mortgaged Property;

(iii)        covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in the lender’s title insurance policy delivered to the originator of the related Mortgage Loan; and

(iv)        other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by such Mortgage or the use, enjoyment, value or marketability of such Mortgaged Property (any of the foregoing described in subparagraph (i), (ii), (iii) or (iv), a “Permitted Encumbrance” and, collectively, the “Permitted Encumbrances”).

(j)          Each Mortgage Note, each Mortgage and any other agreement executed and delivered by a Mortgagor Customer or a Mortgage Loan Guarantor, if applicable, in connection with a Mortgage Loan is genuine, is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law. All parties to each Mortgage Note, each Mortgage and any other such related agreement had legal capacity to enter into the related Mortgage Loan and to execute and deliver such Mortgage Note, such Mortgage and any such other agreements, and such Mortgage Note, such Mortgage and any other such agreements have been duly and properly executed by such parties. No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to any Mortgage Loan has taken place on the part of any Person, including, without limitation, the Mortgagor Customer or any other party involved in the origination of the related Mortgage Loan. MBC or the Issuer has reviewed all of the documents constituting the Mortgage Loan File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein.

(k)          Each Mortgage Loan has been closed and the proceeds of such Mortgage Loan have been fully disbursed and there is no further requirement for future advances thereunder, except in the case of construction loans. All costs, fees and expenses incurred in making or closing each Mortgage Loan and the recording of the related Mortgage were paid, and the related Mortgagor Customer is not entitled to any refund of any amounts paid or due under the related Mortgage Note or such Mortgage.

(l)          The Issuer is the sole owner and holder of each Mortgage Loan. No Mortgage Loan has been assigned or pledged by the Issuer, and the Issuer has good, indefeasible and marketable title thereto, and has full right and authority to transfer, pledge and assign each Mortgage Loan pursuant to this Indenture to the Indenture Trustee free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and following the pledge of each Mortgage Loan pursuant to this Indenture, the Indenture Trustee will hold such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest.

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(m)          No Mortgage Loan has an LTV greater than (i) in the case of a Mortgage Loan the proceeds of which were used to acquire the related Mortgaged Property, 75% and (ii) in the case of a Mortgage Loan the proceeds of which were used to finance construction of the related Mortgaged Property, 80%.

(n)          Each Mortgage Loan is covered by either an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to FNMA or FHLMC and each such title insurance policy is issued by a title insurer acceptable to FNMA or FHLMC and qualified to do business in the jurisdiction where such Mortgaged Property is located, insuring the Issuer (or its predecessor in interest), its successors and assigns, as to the first priority lien of the related Mortgage in the original principal amount of such Mortgage Loan (or to the extent the related Mortgage Note provides for negative amortization, the maximum amount of negative amortization in accordance with such Mortgage), subject only to Permitted Encumbrances, and any other matters that MBC or the Issuer agreed to allow to be outstanding against such Mortgaged Property, provided that such matters, would not affect the recovery of funds in the event of foreclosure, and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the related Mortgage Interest Rate and the related Mortgage Loan Payment. Where required by state law or regulation, each Mortgagor Customer has been given the opportunity to choose the carrier of the related required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the related Mortgaged Property or any interest therein. Such lender’s title insurance policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses. The Issuer (or its predecessor in interest), its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Indenture. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including MBC or the Issuer, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Issuer.

(o)          Neither MBC nor the Issuer has knowledge of any mechanics’ or similar liens or claims which have been filed for work, labor or material (and to their knowledge no rights are outstanding that under the law could give rise to such liens) affecting any Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage.

(p)          Each Mortgage Note has a stated maturity. The stated maturity of each Mortgage Note does not exceed twelve (12) months and does not provide for, or have, any extension beyond forty-eight (48) months from the original due date of such Mortgage Note. Each Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the related Mortgaged Property of the benefits of the security provided thereby. Upon default by a Mortgagor Customer on a Mortgage Loan and foreclosure on, or trustee’s sale of, the related Mortgaged Property pursuant to the proper procedures, the holder of such Mortgage Loan will be able to deliver good and marketable title to such Mortgaged Property. There is no homestead or other exemption available to a Mortgagor Customer which would interfere with the right to sell the related Mortgaged Property at a trustee’s sale or the right to foreclose the related Mortgage.

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(q)          Each Mortgage Loan was underwritten in the ordinary course of business of MBC or the Issuer, as the case may be. Neither MBC nor the Issuer has made any representations to a Mortgagor Customer that are inconsistent with the mortgage instruments used.

(r)          To the best of MBC’s and the Issuer’s knowledge, all permits, licenses and other governmental authorizations necessary for the renovation or construction of any building on each Mortgaged Property have been obtained by the related Mortgagor Customer or by any Person managing such renovation or construction. Neither MBC nor the Issuer has received notification from any Governmental Authority that any such renovation or construction is in material non-compliance with any applicable law, ordinance, regulation, standard, permit, license or other governmental authorization which the related Mortgagor Customer is not endeavoring to cure.

(s)          The Mortgage Note, the Mortgage and any other documents required to be delivered under this Indenture for each Mortgage Loan have been delivered to the Indenture Trustee. The Issuer or its agent is in possession of a complete, true and accurate Mortgage Loan File for each Mortgage Loan, except for such documents the originals of which have been delivered to Indenture Trustee.

(t)          Each Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the related Mortgage Loan in the event that the related Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

(u)          No Mortgage Loan contains provisions pursuant to which Mortgage Loan Payments are paid or partially paid with funds deposited in any separate account established by the Issuer, the Mortgagor Customer or anyone on behalf of the Issuer or the Mortgagor Customer, or paid by any source other than the Mortgagor Customer, nor does any Mortgage Loan contain any other similar provisions which may constitute a “buydown” provision. No Mortgage Loan is a graduated payment mortgage loan and no Mortgage Loan has a shared appreciation or other contingent interest feature.

(v)         All advances made to a Mortgagor Customer with respect to a construction loan are evidenced by a single Mortgage Note in the stated principal amount equal to the maximum amount of advances such Mortgagor Customer is permitted to borrow under the related Mortgage Loan and all such advances are secured by the related Mortgage and bear a single interest rate and single repayment term. The lien of the related Mortgage securing the consolidated principal amount is expressly insured as having first lien priority, subject only to any acquisition loan made to such Mortgagor Customer with respect to the same Mortgaged Property, by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to FNMA and FHLMC.

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(w)          There have not been any condemnation proceedings with respect to any Mortgaged Property.

(x)          The origination and collection practices used by MBC and the Issuer with respect to each Mortgage Loan have been in all respects in compliance with applicable laws and regulations, and have been in all respects legal and proper and in the ordinary course of business. All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited.

(y)          No Mortgage Note by its terms provides for the capitalization or forbearance of interest.

(z)          No document relating to any Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property or a sharing in the appreciation of the value of such Mortgaged Property. The indebtedness evidenced by each Mortgage Note is not convertible to an ownership interest in the related Mortgaged Property or the related Mortgagor Customer and neither MBC nor the Issuer has financed nor does MBC or the Issuer own, directly or indirectly, any equity of any form in such Mortgaged Property or such Mortgagor Customer.

(aa)         The proceeds of the Mortgage Loans have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the related Mortgagor Customers to MBC, the Issuer or any Affiliate of MBC or the Issuer.

(bb)         Each Mortgage either has been or will promptly be submitted for recordation in the appropriate governmental recording office of the jurisdiction where the related Mortgaged Property is located.

(cc)         Except as previously disclosed to the Indenture Trustee by the Issuer and approved by Indenture Trustee in writing, no Mortgage Loan has been rejected for purchase by a whole loan buyer.

(dd)         To the best of MBC’s and the Issuer’s knowledge, each Mortgaged Property is free from any and all Hazardous Substances and there exists no violation of any Environmental Laws.

(ee)         Neither MBC nor the Issuer has knowledge of any circumstances existing that should reasonably be expected to adversely affect the value or the marketability of any Mortgaged Property or any Mortgage Loan.

(ff)         No Mortgage Loan is (i) subject to the provisions of the Homeownership and Equity Protection Act of 1994 as amended (“HOEPA”), (ii) a “high cost” mortgage loan, “covered” mortgage loan or “predatory” mortgage loan or any other comparable term, no matter how defined under any federal, state or local law, or (iii) subject to any comparable federal, state or local statutes or regulations or any other statute or regulation providing assignee liability to holders of such mortgage loans.

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(gg)         No predatory, abusive or deceptive lending practices, including but not limited to, the extension of credit to a Mortgagor Customer without regard for such Mortgagor Customer’s ability to repay the related Mortgage Loan and the extension of credit to such Mortgagor Customer which has no tangible net benefit to such Mortgagor Customer, were employed in connection with the origination of such Mortgage Loan.

(hh)         The principal amount of each Mortgage Loan is less than One Million Five Hundred Thousand Dollars ($1,500,000); provided, that (i) up to three (3) Mortgage Loans originated in any calendar year may be in a principal amount not to exceed Two Million Dollars ($2,000,000.00) and (ii) the aggregate principal amount of all Eligible Mortgage Loans owing at any time by any Mortgagor Customer (together with Affiliates of such Mortgagor Customer (including common Mortgage Loan Guarantors and/or related entities)) to the Issuer or any Affiliate of the Issuer shall not exceed Three Million Dollars ($3,000,000).

(ii)         To the best of MBC’s and the Issuer’s knowledge, there is no pending action or proceeding involving any Mortgaged Property in which the compliance with any lead paint law, rule or regulation is an issue. Nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation that constitutes a prerequisite to the use and enjoyment of such property.

(jj)         To the best of MBC’s and the Issuer’s knowledge, there are no pending actions, suits or proceedings, arbitrations or governmental investigations against any Mortgagor Customer or any Mortgaged Property, an adverse outcome of which would materially affect (i) such Mortgagor Customer’s performance under the related Mortgage Note and other related Mortgage Loan Documents, or the use of such Mortgaged Property for the use currently being made thereof, the operation of such Mortgaged Property as currently being operated or the value of such Mortgaged Property or (ii) the collectability or enforceability of the related Mortgage with respect to such Mortgaged Property or the related Mortgage Loan.

(kk)         To the best of MBC’s and the Issuer’s knowledge, no asbestos is located on any Mortgaged Property except as may have been disclosed in the Phase I environmental reports delivered to the Indenture Trustee.

(ll)         All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable law in connection with the transfer of the Mortgage Loans and Mortgage Loan Documents to the Issuer have been paid. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable law in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Mortgage Loan Documents, including, without limitation, the Mortgages, have been paid.

(mm)         Each Mortgagor Customer under a Mortgage Loan or related Mortgage Loan Documents (which document does not negate other representations and warranties set forth herein) has been instructed to make payments directly to the Collection Account; provided that, with respect to any Mortgage Loan acquired by the Issuer from MBC pursuant to the Asset Transfer Agreement, the Issuer shall have ten (10) days after the date of such acquisition to direct, in writing, each related Mortgagor Customer to make payments directly to the Collection Account and a breach of this subsection (mm) with respect to such Mortgage Loan shall occur only if such written direction is not so delivered to such Mortgagor Customer.

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(nn)         The obligations of each Mortgagor Customer under the related Mortgage Note and other Mortgage Loan Documents are not affected by reason of: (i) any damage to or destruction of any portion of a related Mortgaged Property; (ii) any taking of such Mortgaged Property; or (iii) any prohibition, limitation, interruption, cessation, restriction, prevention or interference of such Mortgagor Customer’s use, occupancy or enjoyment of such Mortgaged Property.

ARTICLE III
SATISFACTION AND DISCHARGE

Section 3.01         Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect except as to (a) any surviving rights herein expressly provided for, (b) in the case of clause (1)(B) below, the rights of the Noteholders hereunder to receive payment of the Outstanding Principal Balance of and interest on the Notes and any other rights of the Noteholders hereunder, and (c) the provisions of Section 3.02, when:

(1)         either: (A) all Notes theretofore authenticated and delivered (other than (I) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.11 and (II) Notes for which payment of money has theretofore been deposited in the Payment Account by the Indenture Trustee and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 5.10) have been delivered to the Note Registrar for cancellation; or (B) all such Notes not theretofore delivered to the Note Registrar for cancellation (I) have become due and payable or (II) will become due and payable on the next Payment Date, and in the case of clause (B)(I) or (B)(II) above, cash in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Note Registrar for cancellation or sufficient to pay the Outstanding Principal Balance thereof and any interest thereon accrued to the date of such deposit (in the case of Notes which have become due and payable) or to the end of the related Accrual Period for the next Payment Date has been deposited with the Indenture Trustee as trust funds in trust for these purposes;

(2)         the Issuer has paid or caused to be paid all other sums payable or reasonably expected to become payable by the Issuer to the Indenture Trustee, each of the other Persons to which amounts are payable hereunder and each of the Noteholders (in each case, if any); and

(3)         the Issuer has delivered to the Indenture Trustee an Officer’s Certificate of the Issuer (upon which the Indenture Trustee may rely) stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with;

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provided, however, that if, at any time after the payment that would have otherwise resulted in the satisfaction and discharge of this Indenture and such obligations, such payment is rescinded or must otherwise be returned for any reason, effective upon such rescission or return such satisfaction and discharge of this Indenture and such obligations shall automatically be deemed never to have occurred and this Indenture and such obligations shall be deemed to be in full force and effect.

Notwithstanding the foregoing, the obligations of the Issuer to the Indenture Trustee under Section 5.04 and the obligations of the Indenture Trustee to the Noteholders under Section 3.02 shall survive satisfaction and discharge of this Indenture.

Section 3.02         Application of Trust Money.

Subject to the provisions of Section 2.15, Section 5.10 and Section 7.01, all Cash deposited with the Indenture Trustee pursuant to Section 3.01 shall be held in the Payment Account and applied by the Indenture Trustee, in accordance with the provisions of the Notes and this Indenture, to pay to the Persons entitled thereto the amounts to which such Persons are entitled pursuant to the provisions hereof.

ARTICLE IV
EVENTS OF DEFAULT; REMEDIES

Section 4.01         Events of Default.

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

(a)          the failure of the Issuer to pay interest on the Notes on any Payment Date or any other amount on account of the Notes (other than a payment default under subsection (b)) and such failure continues unremedied for a period of thirty (30) days;

(b)          the failure of the Issuer to pay any Redemption Payment or retire the Notes on the Final Payment Date;

(c)          (i) any material default in the observance or performance of any material covenant or agreement of the Issuer or MBC made in this Indenture or any other Transaction Documents to which it is a party (other than a covenant or agreement, a default in the observance or performance of which is elsewhere in this Section 4.01 specifically dealt with), which default shall continue unremedied for a period of thirty (30) days after there shall have been given to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the Noteholders holding at least 25% of the Outstanding Principal Balance, a written notice specifying such default and requiring it to be remedied; (ii) any monetary default by the Issuer under any Transaction Document, other than this Indenture or the Notes, which monetary default continues beyond any applicable cure period set forth in such Transaction Document, or if no cure period is set forth in such document, such default continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee; or (iii) any material default in the observance or performance of any non-monetary covenant or agreement on the part of the Issuer or MBC contained in any Transaction Document, other than this Indenture or the Notes, which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee, provided, however, if such default under this clause (iii) is reasonably susceptible of cure, but not within such thirty (30) day period, then the Issuer or MBC, as applicable, may be permitted an additional forty-five (45) days to cure such default provided the Issuer or MBC, as applicable, diligently and continuously pursues such cure;

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(d)          (i) the impairment of the validity or effectiveness of this Indenture or the material impairment of the validity or effectiveness of any other security document purporting to grant a lien to the Indenture Trustee, the subordination of the lien of the Indenture Trustee on any part of the Collateral Pool, the creation of any lien or other encumbrance on any part of the Collateral Pool in addition to the lien of the Indenture Trustee or the failure of the lien of the Indenture Trustee to constitute a valid first priority perfected security interest in the Collateral included in the Collateral Pool, in each case, that has a material adverse effect with respect to the Collateral Pool, subject to Permitted Encumbrances; provided, that if susceptible of cure, no Event of Default shall arise pursuant to this subsection (d) until the continuation of any such default unremedied for a period of thirty (30) days after receipt by the Issuer of notice thereof; or (ii) the creation of any mechanic’s, materialman’s or other lien or encumbrance, other than a Permitted Encumbrance, on any part of the Collateral, which lien is not removed of record or otherwise insured over to Indenture Trustee’s satisfaction within forty-five (45) days of the filing or recording of such lien;

(e)          a material breach of the representations and warranties of the Issuer contained in the Indenture (other than as set forth in Section 2.21) that materially and adversely affects the interests of the Indenture Trustee, on behalf of the Noteholders, which continues unremedied for a period of thirty (30) days after the date on which written notice of such breach, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee;

(f)          a decree or order of a court or agency or supervisory authority having jurisdiction in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or appointing a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities and reorganization or similar proceedings, or for the winding up or liquidation of its affairs, shall have been entered against the Issuer or MBC and such decree or order shall have remained in force undischarged or unstayed for a period of ninety (90) days;

(g)          the Issuer or MBC shall voluntarily file a petition for bankruptcy, reorganization, assignment for the benefit of creditors or similar proceeding or consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings of, or relating to, the Issuer or MBC or of, or relating to, all or substantially all of the assets of the Issuer or MBC;

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(h)          any Collateral is subject to a Collateral Transfer other than as provided in this Indenture;

(i)          any default under any other Transaction Document (that is deemed an “Event of Default under the Indenture” pursuant to the terms of such other Transaction Document);

(j)          a Guaranty ceases to be in full force and effect or is declared to be null and void and unenforceable or a Guaranty is found to be invalid or a Guarantor denies its liability under its Guaranty or gives notice to that effect (other than by reason of release of the Guarantor in accordance with the terms of this Indenture);

(k)          the rendering of a final judgment or judgments (not subject to appeal) of a court of competent jurisdiction against the Issuer or MBC which could be reasonably expected to have a material adverse effect on (i) the condition, operations, assets, business or prospects of the Issuer or MBC, as applicable, (ii) the Issuer’s ability to make any payments under this Indenture, the Notes or the other Transaction Document in accordance with the terms hereof or thereof, (iii) MBC’s ability to make payments under the Guaranty, (iv) the value of the Collateral, or the Indenture Trustee’s liens on the Collateral or the priority of any such lien or (v) the practical realization of the benefits of the Indenture Trustee’s rights and remedies under this Indenture and the Transaction Documents;

(l)          MBC or any Guarantor shall fail to pay any principal or interest, regardless of amount, due in respect indebtedness exceeding $250,000 when and as the same shall become due and payable, or any other event or circumstance which would permit the holder of any such indebtedness to accelerate such indebtedness (and/or the obligations of MBC or such Guarantor thereunder) prior to the scheduled maturity or termination thereof, shall occur (regardless of whether the holder of such indebtedness shall actually accelerate, terminate or otherwise exercise any rights or remedies with respect to such indebtedness); or

(m)          the Issuer or MBC shall cease doing business as conducted on the Closing Date.

Section 4.02         Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than with respect to clause (f), clause (g) or clause (i) of the definition thereof) should occur and be continuing, at the written direction of the Requisite Majority (which shall have the right, but not the obligation, to direct the Indenture Trustee to accelerate the Notes and, subject to the provisions of this Indenture, cause the foreclosure and sale of the Collateral included in the Collateral Pool), the Indenture Trustee shall declare all of the Notes to be immediately due and payable. If an Event of Default specified in clause (f), clause (g) or clause (i) of the definition thereof occurs, the unpaid Outstanding Principal Balance of such Notes, together with all accrued interest thereon through the date of acceleration, shall automatically become due and payable in full without any declaration or other act on the part of the Indenture Trustee or any Noteholder.

At any time after such declaration of acceleration has been made and before a judgment or decree for payment of the money due in respect of the Notes has been obtained by the Indenture Trustee as hereinafter provided in this ARTICLE IV, the Requisite Majority may rescind and annul such declaration and its consequences if:

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(a)          the Issuer has paid to or deposited with the Indenture Trustee a sum sufficient to pay:

(i)          all payments of principal of and interest on the Notes and all other amounts that would, in each case, then be due hereunder or upon the Notes if the Event of Default giving rise to such acceleration had not occurred; and

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

(b)          all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by virtue of such acceleration, have been cured or waived as provided in Section 4.12.

No such rescission and annulment shall affect any subsequent default or impair any right consequent thereto.

Section 4.03         Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)          If the Issuer fails to pay all amounts due upon an acceleration of the Notes under Section 4.02 forthwith upon demand and such declaration and its consequences shall not have been rescinded and annulled, the Indenture Trustee, in its capacity as Indenture Trustee and as trustee of an express trust, shall, if directed by the Requisite Majority (which will have the right, but not the obligation, to direct the Indenture Trustee to cause the foreclosure and sale of the Collateral in the Collateral Pool), institute a judicial proceeding for the collection of the sums so due and unpaid, prosecute such proceeding to judgment or final decree and enforce the same against the Issuer or any other obligor upon such Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the Collateral, wherever situated, or may institute and prosecute such non-judicial proceedings in lieu of judicial proceedings as are then permitted by applicable law.

(b)          If an Event of Default occurs and is continuing, the Indenture Trustee may, in its discretion and in any order, proceed to protect and enforce its rights and the rights of the Noteholders by such appropriate proceedings as the Indenture Trustee shall deem most effective 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 or legal or equitable right vested in the Indenture Trustee by this Indenture or any Mortgage or by law.

(c)          In case (i) there shall be pending, relative to the Issuer, MBC or any Person having or claiming an interest in the Collateral Pool, proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, (ii) a receiver, assignee, debtor-in-possession or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or shall have taken possession of the Issuer or MBC or their respective property or (iii) there shall be pending a comparable judicial proceeding brought by creditors of the Issuer or MBC or affecting the property of the Issuer or MBC, the Indenture Trustee, irrespective of whether the principal of or interest on any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

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(iv)        to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective attorneys, and for reimbursement of all reasonable expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of willful misconduct, negligence or bad faith of the Indenture Trustee or any predecessor Indenture Trustee, as applicable) and of the Noteholders allowed in such proceedings;

(v)         unless prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any election of a trustee, a standby trustee or Person performing similar functions in any such proceedings;

(vi)        to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their and its behalf; and

(vii)       to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Noteholders allowed in any judicial proceedings relative to the Issuer or MBC, their respective creditors and their respective property;

and any trustee, receiver, liquidator, custodian or other similar official in any such proceeding is hereby authorized by each of Noteholders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective attorneys, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of willful misconduct, negligence or bad faith of the Indenture Trustee or predecessor Indenture Trustee.

(d)          Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of the Noteholder or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

(e)          In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any Noteholder a party to any such proceedings.

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(f)          All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its counsel, be for the ratable benefit of the Noteholders in respect of which such judgment has been recovered, subject to the payment priorities of Section 2.15(b).

Section 4.04         Remedies.

If an Event of Default has occurred and is continuing, and the Notes have been declared due and payable pursuant to Section 4.02 and such declaration and its consequences shall not have been rescinded and annulled, the Indenture Trustee shall, at the written direction of the Requisite Majority, in addition to performing any tasks as provided in Section 4.03, do one or more of the following:

(a)          institute, or cause to be instituted, Proceedings for the collection of all amounts then payable on or under the Collateral or this Indenture with respect to the Notes, whether by declaration of acceleration or otherwise, of the sums due and unpaid, prosecute such Proceedings, enforce any judgment obtained and collect from the Collateral included in the Collateral Pool the moneys adjudged to be payable;

(b)          liquidate, or cause to be liquidated, all or any portion of the Collateral Pool at one or more public or private sales called and conducted in any manner permitted by applicable laws; provided, however, that the Indenture Trustee shall give the Issuer written notice of any private sale called by or on behalf of the Indenture Trustee pursuant to this Section 4.04(b) at least 10 days prior to the date fixed for such private sale;

(c)          institute, or cause to be instituted, Foreclosure Proceedings with respect to all or part of the Collateral included in the Collateral Pool;

(d)          exercise, or cause to be exercised, any remedies of a secured party under the UCC;

(e)          maintain the lien of this Indenture over the Collateral included in the Collateral Pool and, in its own name or in the name of the Issuer or otherwise, collect and otherwise receive in accordance with is Indenture any money or property at any time payable or receivable on account of or in exchange for the Mortgaged Properties and Mortgage Loans in the Collateral Pool;

(f)          take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee hereunder; and

(g)          exercise, or cause to be exercised, any remedies contained in any Mortgage;

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provided, however, that the Indenture Trustee shall not, unless required by law, sell or otherwise liquidate all or any portion of the Collateral Pool following any Event of Default except in accordance with Section 4.15; provided, further, that, with respect to instituting any remedies pursuant to this Section 4.04 in any state wherein the law prohibits more than one “judicial action” or “one form of action” to enforce a mortgage obligation, the Indenture Trustee shall enforce any of the Indenture Trustee’s rights hereunder with respect to any Mortgaged Properties in accordance with the directions of the Requisite Majority.

In the event that the Indenture Trustee, following an Event of Default hereunder, institutes Foreclosure Proceedings, the Indenture Trustee shall promptly give a notice to that effect to the Issuer.

Section 4.05         Application of Money Collected.

Any money collected by the Indenture Trustee pursuant to this Article shall be deposited in the Payment Account and, on each Payment Date, shall be applied in accordance with Section 2.15 and, in case of the distribution of such money on account of the principal of or interest on the Notes, upon presentation and surrender of the Notes if fully paid.

Section 4.06         Limitation on Suits,

Except as provided in Section 4.07, no Noteholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(1)         such Noteholder has previously given written notice to the Indenture Trustee of a continuing Event of Default;

(2)         the Requisite Majority shall have made written request to the Indenture Trustee to institute proceedings in respect of such Event of Default in its own name as Indenture Trustee hereunder;

(3)         such Noteholder has offered to the Indenture Trustee adequate indemnity or security satisfactory to the Indenture Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

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

(5)         an Event of Default shall have occurred and be continuing;

it being understood and intended that no one or more of such Noteholders shall have any right in any manner whatever by virtue of, or by availing itself or themselves of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Noteholders, or to obtain or to seek to obtain priority or preference over any other of such Noteholders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Noteholders. Subject to the foregoing restrictions, the Noteholders may exercise their rights under this Section 4.06 independently.

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Section 4.07         Unconditional Right of Noteholders to Receive Principal and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Note at Maturity shall have the right, which is absolute and unconditional, to receive payments of interest, principal and other amounts then due on such Note (subject to Section 2.15) and to institute suit for the enforcement of any such payment (subject to Section 4.06), and such rights shall not be impaired without the consent of such Noteholder, unless a non-payment has been cured pursuant to the second paragraph of Section 4.02. The Issuer shall, however, be subject to only one consolidated lawsuit by the Noteholders, or by the Indenture Trustee on behalf of the Noteholders, for any one cause of action arising under this Indenture or otherwise.

Section 4.08         Restoration of Rights and Remedies.

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

Section 4.09         Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.11, no right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 4.10         Delay or Omission Not Waiver.

No delay or omission of the Indenture Trustee or any Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Indenture or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, to the extent permitted by applicable law, by the Indenture Trustee or the Noteholders, as the case may be.

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Section 4.11         Control by Requisite Majority.

The Requisite Majority shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee under Section 4.04, or exercising any trust or power conferred on the Indenture Trustee (including, without limitation, the exercise of its rights under any Account Control Agreement); provided, that such direction shall not be in conflict with any rule of law or with this Indenture or involve the Indenture Trustee in personal liability; provided, further, that the Indenture Trustee may take any other action deemed proper by the Indenture Trustee which is not inconsistent with such direction.

Section 4.12         Waiver of Past Defaults.

Prior to the acceleration of the Maturity of the Notes, the Requisite Majority may waive any past default hereunder and its consequences, except a default:

(1)         in the distribution of principal or interest on any Note, for which a waiver shall require the consent of Noteholders holding 100% of the Outstanding Principal Balance of all Notes affected thereby;

(2)         in respect of a covenant or provision hereof which under ARTICLE VIII cannot be modified or amended without the consent of the Holder of each Note affected thereby, for which a waiver shall require the consent by each such Holder;

(3)         depriving the Indenture Trustee of a lien on any part the Collateral, for which a waiver shall require the consent of the Indenture Trustee; or

(4)         depriving the Indenture Trustee of any fees, reimbursement, or indemnification, to which the Indenture Trustee is entitled, for which a waiver shall require the written consent of the Indenture Trustee.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom (and any Early Amortization Period resulting therefrom) shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Any costs or expenses incurred by the Indenture Trustee in connection with such waiver shall be reimbursable to the Indenture Trustee from amounts on deposit in the Payment Account.

Section 4.13         Undertaking for Costs.

All parties to this Indenture agree, and each Noteholder and Note Owner by its acceptance of such Note or an Ownership Interest therein shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, a court in its discretion may require, 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. The provisions of this Section 4.13 shall not apply to any suit instituted by the Indenture Trustee, to any suit instituted by any Noteholder or group of Noteholders holding in the aggregate at least 25% of the Outstanding Principal Balance, or to any suit instituted by any Noteholder pursuant to Section 4.07.

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Section 4.14         Waiver of Stay or Extension Laws.

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

Section 4.15         Sale of Collateral.

(a)          The power to effect any public or private sale of any portion of the Collateral Pool pursuant to Section 4.03 or Section 4.04 shall not be exhausted by any one or more sales as to any portion of the Collateral remaining unsold, but shall continue unimpaired until either the entirety of the Collateral Pool shall have been sold or all amounts payable on the Notes and under this Indenture with respect thereto shall have been paid. The Indenture Trustee may from time to time postpone any sale by public announcement made at the time and place of such sale. The Indenture Trustee hereby expressly waives its right to any amount fixed by law as compensation for any such sale but such waiver does not apply to any amounts to which the Indenture Trustee is otherwise entitled under Section 5.04.

(b)          Subject to Section 4.15(c), the Indenture Trustee shall not sell the Collateral included in the Collateral Pool pursuant to Section 4.03 or Section 4.04, unless:

(i)          the Requisite Majority consents to or directs the Indenture Trustee to make the related sales; or

(ii)         the proceeds of such liquidation would be greater than or equal to the Outstanding Principal Balance.

The foregoing provisions of this Section 4.15 shall not preclude or limit the ability of the Indenture Trustee or its designee to purchase all or any portion of the Collateral at any sale, public or private, and the purchase by the Indenture Trustee or its designee of all or any portion of the Collateral at any sale shall not be deemed a sale or disposition thereof for purposes of this Section 4.15(b).

(c)          In the event that the Notes is not fully paid on the Final Payment Date, the Noteholders holding more than 25% of the Outstanding Principal Balance shall have the right to require the sale of the Collateral, subject to Section 4.15(b) and Section 4.15(d).

(d)          In connection with a sale of all or any portion of the Collateral Pool:

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(i)          any Holder or Holders of Notes may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Outstanding Notes or claims for interest thereon in lieu of cash up to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such Notes, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show such partial payment;

(ii)         the Indenture Trustee shall execute and deliver, without recourse, an appropriate instrument of conveyance transferring its interest in any portion of the Collateral Pool in connection with a sale thereof;

(iii)        the Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer and convey any the Issuer’s interest in any portion of the Collateral Pool in connection with a sale thereof, and to take all action necessary to effect such sale;

(iv)        no purchaser or transferee at such a sale shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys; and

(v)         no purchaser or transferee at such a sale shall have been a prior owner of such Collateral if such prior owner was MBC or an Affiliate thereof.

Section 4.16         Action on Notes.

The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral Pool.

ARTICLE V
THE INDENTURE TRUSTEE

Section 5.01         Certain Duties and Responsibilities.

(a)          The Issuer hereby irrevocably constitutes and appoints the Indenture Trustee, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in place and stead of the Issuer and in the name of the Issuer or in its own name or in the name of a nominee, from time to time in the Indenture Trustee’s discretion, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Indenture, all as set forth in this Section 5.01.

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(b)          The rights, duties and liabilities of the Indenture Trustee in respect of this Indenture shall be as follows:

(i)          The Indenture Trustee shall have the full power and authority to do all things not inconsistent with the provisions of this Indenture that it may deem advisable in order to enforce the provisions hereof or to take any action with respect to a default or an Event of Default hereunder, or to institute, appear in or defend any suit or other proceeding with respect hereto, or to protect the interests of the Noteholders. The Issuer shall prepare and file or cause to be filed, at the Issuer’s expense, a UCC Financing Statement and any continuation statements, describing the Issuer as debtor, the Indenture Trustee as secured party and the Collateral included in the Collateral Pool as the collateral, in all appropriate locations in the State of New York promptly following the issuance of the Notes, and within six months prior to each fifth anniversary of the original filing. The Indenture Trustee is hereby authorized and obligated to make, at the expense of the Issuer, all required filings and refilings with respect to which the Indenture Trustee receives written direction from the Issuer, necessary to preserve the liens created by this Indenture as provided herein. The Indenture Trustee shall not be required to take any action to exercise or enforce the trusts hereby created which, in the opinion of the Indenture Trustee, shall be likely to involve expense or liability to the Indenture Trustee, unless the Indenture Trustee shall have received an agreement satisfactory to it in its reasonable discretion to indemnify it against such liability and expense. Except as otherwise expressly provided herein, the Indenture Trustee shall not be required to ascertain or inquire as to the performance or observance of any of the covenants or agreements contained herein, or in any other instruments to be performed or observed by the Issuer.

(ii)         Subject to the other provisions of this ARTICLE V, the Indenture Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Indenture Trustee that are specifically required to be furnished pursuant to any provisions of this Indenture, shall examine them to determine whether they are on their face in the form required by this Indenture to the extent expressly set forth herein. If any such instrument is found on its face not to conform to the requirements of this Indenture in a material manner, the Indenture Trustee shall take such action as it deems appropriate to have the instrument corrected. The Indenture Trustee shall not incur any liability in acting upon any signature, notice, request, consent, certificate, opinion, or other instrument reasonably believed by it to be genuine. In administering the trusts hereunder, the Indenture Trustee may execute any of the trusts or powers hereunder directly or through its agents or attorneys; provided, that it shall remain liable for the acts of all such agents and attorneys. The Indenture Trustee may, at its own expense (except as otherwise provided in Section 5.04), consult with counsel, accountants and other professionals to be selected and employed by it, and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice of any such Person nor for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent facts.

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(iii)        The Indenture Trustee shall not, except as otherwise provided in Section 5.01(b)(i), have any duty to make, arrange or ensure the completion of any recording, filing or registration of any instrument or other document (including any UCC Financing Statements), or any amendments or supplements to any of said instruments or to determine if any such instrument or other document is in a form suitable for recording, filing or registration, and the Indenture Trustee shall not have any duty to make, arrange or ensure the completion of the payment of any fees, charges or taxes in connection therewith.

(iv)        Whenever in performing its duties hereunder, the Indenture Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee may, in the absence of bad faith on the part of the Indenture Trustee, rely upon (unless other evidence in respect thereof be specifically prescribed herein) an Officer’s Certificate of the Issuer and such Officer’s Certificate shall be full warrant to the Indenture Trustee for any action taken, suffered or omitted by it on the faith thereof.

(v)         The Indenture Trustee shall not have any obligation to see to the payment or discharge of any liens (other than the liens of this Indenture and the Mortgages) upon the Collateral included in the Collateral Pool, or to see to the application of any payment of the principal of or interest on any Note secured thereby or to the delivery or transfer to any Person of any property released and from any such lien, or to give notice to or make demand upon any mortgagor, mortgagee, trustor, beneficiary or other Person for the delivery or transfer of any such property. The Indenture Trustee (and any successor trustee or co-trustee in its individual capacity) nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any liens or encumbrances on the Collateral included in the Collateral Pool, arising as a result of the Indenture Trustee (or such successor trustee or co-trustee, as the case may be) acting negligently, in bad faith or with willful misconduct in its capacity as Indenture Trustee (or such successor trustee or co-trustee, as the case may be).

(vi)        The Indenture Trustee shall not be concerned with or accountable to any Person for the use or application of any deposited moneys or of any property or securities or the proceeds thereof that shall be released or withdrawn in accordance with the provisions hereof or of any property or securities or the proceeds thereof that shall be released from the lien hereof or thereof in accordance with the provisions hereof or thereof and the Indenture Trustee shall not have any liability for the acts of other parties that are not in accordance with the provisions hereof.

(c)          The rights, duties and liabilities of the Indenture Trustee in respect of the Collateral Pool and this Indenture, in addition to those set forth in Section 5.01(a), shall be as follows:

(i)          except during the continuance of an Event of Default with respect to the Notes, the Indenture 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 Indenture Trustee; and

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

(d)          Subject to Section 4.12, in case an Event of Default known to the Indenture Trustee with respect to the Notes has occurred and is continuing, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

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

(i)          this subsection shall not be construed to limit the effect of subsections (b), (c) or (d) of this Section 5.01;

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

(iii)        the Indenture 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 directions of any applicable party pursuant to a Transaction Document, the Requisite Majority (unless a lower or higher percentage of Noteholders is expressly permitted or required to authorize such action hereunder, in which case such lower or higher percentage) of the Outstanding Principal Balance, as the case may be, relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising or omitting exercise any trust or power conferred upon the Indenture Trustee, under this Indenture with respect to the Notes; and

(iv)        the Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of a default in the observance of any covenant contained in Section 9.06 or ARTICLE X unless either (1) a Responsible Officer of the Indenture Trustee shall have actual knowledge of such default or (2) written notice of such default shall have been given by the Issuer or by any Noteholder to and received by a Responsible Officer of the Indenture Trustee. In the absence of receipt of such notice or actual knowledge the Indenture Trustee may conclusively assume that there is no default or Event of Default.

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The Indenture Trustee shall perform the duties and obligations specified to be performed by the Indenture Trustee in this Indenture and in the other Transaction Documents.

Section 5.02         Notice of Defaults.

The Indenture Trustee, promptly but not later than two (2) Business Days after a Responsible Officer of the Indenture Trustee acquires actual knowledge of the occurrence of any default under this Indenture, shall notify the Issuer and the Noteholders of any such default (a “Notice of Default”), unless all such defaults known to the Indenture Trustee shall have been cured before the giving of such notice or unless the same is rescinded and annulled, or waived by the Requisite Majority pursuant to Section 4.02 or Section 4.12. For the purpose of this Section 5.02, the term “default” means any event which is, or after notice, or direction of the Requisite Majority or lapse of time would become, an Event of Default with respect to the Notes.

Section 5.03         Certain Rights of Indenture Trustee.

Subject to the provisions of Section 5.01, in connection with this Indenture:

(a)          the Indenture Trustee may request and rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties as may be required by such party or parties pursuant to the terms of this Indenture or any other Transaction Document, as applicable;

(b)          any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by the Issuer Request or Issuer Order and any resolution of the board of directors of the Issuer may be sufficiently evidenced by a Resolution;

(c)          whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate;

(d)          the Indenture Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel rendered thereby 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 Indenture 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, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Indenture Trustee in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney;

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(f)           the Indenture Trustee may, at its own expense (except as otherwise provided in Section 5.04), execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys of the Indenture Trustee; provided, that it shall remain liable for the acts of all such attorneys and agents;

(g)          the Indenture Trustee shall not be required to provide any surety or bond of any kind in connection with the execution or performance of its duties hereunder;

(h)          except with respect to the representations made by it in Section 5.06, the Indenture Trustee shall not make any representations as to the validity or sufficiency of this Indenture;

(i)           the Indenture Trustee shall not at any time have any responsibility or liability with respect to the legality, validity or enforceability of the Collateral included in the Collateral Pool other than its failure to act in accordance with the terms of this Indenture;

(j)           The Indenture Trustee shall be under no obligation to exercise any of the powers vested in it by this Indenture or any other Transaction Document, as applicable, or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Noteholders, pursuant to the provisions of this Indenture, unless such Noteholders shall have offered to the Indenture Trustee security or indemnity satisfactory to the Indenture Trustee against the costs, expenses and liabilities which may be incurred therein or thereby (which in the case of the Requisite Majority will be deemed to be satisfied by a letter agreement with respect to such costs from such Noteholders); nothing contained herein shall, however, relieve the Indenture Trustee of the obligation, upon the occurrence of an Event of Default of which a Responsible Officer of the Indenture Trustee shall have actual knowledge, and such Event of Default having not been cured, to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs;

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

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

(m)          The Indenture Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability for the performance of any of its duties hereunder or the exercise of any of its rights or powers if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not assured to it;

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

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(o)          To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When an account is opened, the Indenture Trustee will ask for information that will allow the Indenture Trustee to identify relevant parties. The parties hereto hereby acknowledge such information disclosure requirements and agree to comply with all such information disclosure requests from time to time from the Indenture Trustee;

(p)          Notwithstanding anything to the contrary herein, any and all email communications (both text and attachments) by or from the Indenture Trustee that the Indenture Trustee deems to contain confidential, proprietary, and/or sensitive information may be encrypted. The recipient (the “Email Recipient”) of the encrypted email communication will be required to complete a registration process. Instructions on how to register and/or retrieve an encrypted message will be included in the first secure email sent by the Indenture Trustee to the Email Recipient. Additional information and assistance on using the encryption technology can be found at [name of website] website at [website address] or by calling [telephone number] (in the U.S.) or [telephone number; and

(q)          The Indenture Trustee shall have the right to require that any directions, instructions or notices provided to it by any Noteholder be signed by an Authorized Person (as hereinafter defined), be provided on corporate letterhead, be notarized or contain a medallion signature guarantee, or contain such other evidence as may be reasonably requested by the Indenture Trustee to establish the identity and/or signatures thereon. The identity of such Authorized Persons, as well as their specimen signatures, title, telephone number and e-mail address, shall be delivered to the Indenture Trustee in the list of authorized signers form as set forth on Exhibit F and shall remain in effect until the applicable party, or an entity acting on its behalf, notifies the Indenture Trustee of any change thereto (the person(s) so designated from time to time, the “Authorized Persons”).

Section 5.04         Compensation; Reimbursement; Indemnification.

(a)          The Issuer hereby agrees:

(1)         to pay or cause to be paid to the Indenture Trustee, in accordance with the terms of this Indenture, monthly, the related Indenture Trustee Fee as compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

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(2)         to reimburse, indemnify or cause to be indemnified and hold harmless the Indenture Trustee and its directors, officers, employees, agents, Affiliates and Control Persons for any loss, liability, claim, expense or disbursements (including without limitation costs and expenses of litigation, and of investigation, reasonable counsel fees, damages, judgments and amounts paid in settlement): (A) incurred in connection with any act (including any actions taken by the Indenture Trustee or its agents pursuant to ARTICLE IV) or omission on the part of the Indenture Trustee with respect to this Indenture (and the transactions contemplated in connection herewith), any other Transaction Documents, the Collateral Pool (including but not limited to protecting its interest in such Collateral or collecting any amount payable thereunder or in enforcing its rights with respect to such Collateral, whether or not any legal proceeding is commenced hereunder or under the Mortgages) or the Notes, in each case, other than any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of the Indenture Trustee’s obligations or duties under this Indenture; (B) arising out of or in any way relating to any one or more of the following: (I) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about any Mortgaged Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (II) any use, non-use or condition in, on or about any Mortgaged Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (III) performance of any labor or services or the furnishing of any materials or other property in respect of any Mortgaged Property or any part thereof; and (IV) any failure of any Mortgaged Property to be in compliance with any Applicable Laws; or (C) arising out of or in any way relating to any tax on the making and/or recording of any Mortgage.

With respect to any third party claim:

(ii)         the Indenture Trustee shall give the Issuer written notice thereof promptly after the Indenture Trustee shall have knowledge thereof;

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

(iv)        notwithstanding the foregoing provisions of this Section 5.04(a), the Indenture Trustee shall not be entitled to reimbursement out of the Payment Account for settlement of any such claim by the Indenture Trustee entered into without the prior written consent of the Issuer, which consent shall not be unreasonably withheld.

The provisions of this Section 5.04(a) shall survive the termination of this Indenture and the resignation or termination of the Indenture Trustee.

The Indenture Trustee agrees to fully perform its duties under this Indenture notwithstanding any failure on the part of any of the Issuer to make any payments, reimbursements or indemnifications to the Indenture Trustee pursuant to this Section 5.04(a); provided, however, that (subject to Section 5.04(b)) nothing in this Section 5.04 shall be construed to limit the exercise by the Indenture Trustee of any right or remedy permitted under this Indenture in the event of any the Issuer’s failure to pay any sums due the Indenture Trustee pursuant to this Section 5.04.

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(b)          The Indenture Trustee shall not institute any proceeding seeking the enforcement of any lien against the Collateral Pool unless (i) such proceeding is in connection with a proceeding in accordance with ARTICLE IV for enforcement of the lien of this Indenture for the benefit of the Noteholders after the occurrence of an Event of Default (other than an Event of Default due solely to a breach of this Section 5.04) and a resulting declaration of acceleration of such Notes that has not been rescinded and annulled, or (ii) such proceeding does not and will not result in or cause a sale or other disposition of the Collateral included in the Collateral Pool.

Section 5.05         Corporate Indenture Trustee Required; Eligibility.

The Issuer hereby agrees that there shall at all times be an Indenture Trustee hereunder which shall be a bank (within the meaning of Section 2(a)(5) of the 1940 Act) organized and doing business under the laws of the United States or any State thereof, authorized under such laws to exercise corporate trust powers, having aggregate capital, surplus and undivided profits of at least $100,000,000, and subject to supervision or examination by Federal or State authority, the long-term unsecured debt of which is rated not lower than “A+” by S&P and the short-term debt of which is rated not lower than “A-1” by S&P. If such bank publishes reports of condition at least annually, pursuant to law or to the requirements of the applicable supervising or examining authority, then for the purposes of this Section 5.05, the combined capital, surplus and undivided profits of such bank shall be deemed to be its combined capital, surplus and undivided profits as set forth in its most recent report of condition so published. The Indenture Trustee shall at all times meet the requirements of Section 26(a)(1) of the 1940 Act and shall in no event be an Affiliate of the Issuer or an Affiliate of any Person involved in the organization or operation of the Issuer or be directly or indirectly controlled by the Issuer. If at any time a Responsible Officer of the Indenture Trustee becomes aware that the Indenture Trustee has ceased to be eligible in accordance with the provisions of this Section 5.05, the Indenture Trustee shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 5.06         Authorization of Indenture Trustee.

The Indenture Trustee represents and warrants as to itself: that it is duly authorized under applicable [federal] law, its charter and its by-laws to execute and deliver this Indenture, and to perform its obligations hereunder, including, without limitation, that (assuming it is enforceable against the other parties hereto) this Indenture constitutes its valid and binding obligation enforceable against it in accordance with the Indenture’s terms (subject to applicable bankruptcy and insolvency laws and general principles of equity), that it is duly authorized to accept the Grant to it of the Collateral included in the Collateral Pool and is authorized to authenticate the Notes issued pursuant hereto, and that all corporate action necessary or required therefor has been duly and effectively taken or obtained and all federal and state governmental consents and approvals required with respect thereto have been obtained.

Section 5.07         Merger, Conversion, Consolidation or Succession to Business.

Any corporation, bank, trust company or association into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation, bank, trust company or association resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation, bank, trust company or association succeeding to all or substantially all the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee hereunder; provided, that such corporation, bank, trust company or association shall be otherwise qualified and eligible under this ARTICLE V, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

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Section 5.08         Resignation and Removal; Appointment of Successor.

(a)          No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee pursuant to this ARTICLE V shall become effective until (i) the acceptance of appointment by the successor Indenture Trustee in accordance with the applicable requirements of Section 5.09 and (ii) payment to the predecessor Indenture Trustee of all unpaid fees and expenses.

(b)          Subject to Section 5.08(a), the Indenture Trustee may be removed at any time with respect to the Notes by the Requisite Majority and notice of such action by the Noteholders shall be delivered to the Indenture Trustee and the Issuer.

(c)          If at any time:

(i)          the Indenture Trustee shall cease to be eligible under Section 5.05, or the representations of the Indenture Trustee in Section 5.06 shall prove to be untrue in any material respect, and the Indenture Trustee shall fail to resign after written request therefor by the Issuer or the Noteholders of 10% of the Outstanding Principal Balance; or

(ii)         the Indenture Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Indenture Trustee or of its property shall be appointed or any public officer shall take charge or control of the Indenture Trustee or its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in either such case, (1) the Issuer, may, by written notice, remove the Indenture Trustee, or (2) subject to Section 4.13, any Noteholder may, on its own behalf and on behalf of all others similarly situated, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(d)          If the Indenture Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Indenture Trustee for any reason (including removal), the Issuer, with the consent of the Requisite Majority, shall promptly appoint a successor Indenture Trustee, who shall comply with the applicable requirements of Section 5.09. If, within 60 days after such resignation, or incapacity, or the occurrence of such vacancy, a successor Indenture Trustee shall not have been appointed by the Issuer, and shall not have accepted such appointment in accordance with the applicable requirements of Section 5.09, then a successor Indenture Trustee shall be appointed by act of the Requisite Majority delivered to the Issuer and the retiring Indenture Trustee, and the successor Indenture Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 5.09, become the successor Indenture Trustee with respect to the Notes. If the Indenture Trustee shall resign pursuant to this Section 5.08, then such resigning Indenture Trustee must pay all costs and expenses associated with the transfer of its duties. If the Indenture Trustee shall be removed pursuant to this Section 5.08, then the party requesting such removal of the Indenture Trustee shall pay all costs and expenses associated with the transfer of its duties.

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If, within 120 days after such resignation, removal or incapacity, or the occurrence of such vacancy, no successor Indenture Trustee shall have been so appointed and accepted appointment in the manner required by Section 5.09, the resigning Indenture Trustee may, on its own behalf, petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

(e)          The Issuer shall give notice of any resignation or removal of the Indenture Trustee and the appointment of a successor Indenture Trustee by giving notice of such event to the Noteholders. Each notice shall include the name of the successor Indenture Trustee and the address of its corporate trust office.

Section 5.09         Acceptance of Appointment by Successor.

In case of the appointment hereunder of a successor Indenture Trustee, the successor Indenture Trustee so appointed shall execute, acknowledge and deliver to the Issuer and to the retiring Indenture Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Indenture Trustee shall become effective and such successor Indenture Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Indenture Trustee; but, on the request of the Issuer or the successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment of its fees, execute and deliver an instrument transferring to such successor Indenture Trustee all the rights, powers and trusts of the retiring Indenture Trustee, shall duly assign, transfer and deliver to such successor Indenture Trustee all property and money held by such retiring Indenture Trustee hereunder, and shall take such action as may be requested by the Issuer to provide for the appropriate interest in the Collateral Pool (including, without limitation, the Mortgages) to be vested in such successor Indenture Trustee, but shall not be responsible for the recording of such documents and instruments as may be necessary to give effect to the foregoing.

Upon request of any such successor Indenture Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Indenture Trustee all such rights, powers and trusts referred to in this Section.

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

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Section 5.10         Unclaimed Funds.

The Indenture Trustee is required to hold any payments received by it with respect to the Notes that are not paid to the Noteholders in trust for the Noteholders. Notwithstanding the foregoing, at the expiration of three years following the Final Payment Date for the Notes any moneys set aside in accordance with Section 2.15(b) for payment of principal, interest and other amounts on such Notes remaining unclaimed by any lawful owner thereof, and, to the extent required by applicable law, any accrued interest thereon shall be remitted to the Issuer, as their interest may appear, to be held in trust by the Issuer for the benefit of the applicable Noteholder until distributed in accordance with applicable law, and all liability of the Indenture Trustee with respect to such money shall thereupon cease; provided, that the Indenture Trustee, before being required to make any such remittance, may, at the expense of the applicable Noteholder, payable out of such unclaimed funds, to the extent permitted by applicable law, and otherwise at the expense of the Issuer payable out of the Collateral Pool, cause to be published at least once but not more than three times in two newspapers in the English language customarily published on each Business Day and of general circulation in New York, New York, a notice to the effect that such moneys remain unclaimed and have not been applied for the purpose for which they were deposited, and that after a date specified therein, which shall be not less than 30 days after the date of first publication of said notice, any unclaimed balance of such moneys then remaining in the hands of the Indenture Trustee will be paid to the Issuer upon their written directions to be held in trust for the benefit of the applicable Noteholder until distributed in accordance with applicable law. Any successor to the Issuer through merger, consolidation or otherwise or any recipient of substantially all the assets of the Issuer in a liquidation of the Issuer shall remain liable for the amount of any unclaimed balance paid to the Issuer pursuant to this Section 5.10.

Section 5.11         Illegal Acts.

No provision of this Indenture or any amendment or supplement hereto shall be deemed to impose any duty or obligation on the Indenture Trustee to do any act in the performance of its duties hereunder or to exercise any right, power, duty or obligation conferred or imposed on it, which under any present or future law shall be unlawful, or which shall be beyond the corporate powers, authorization or qualification of the Indenture Trustee.

Section 5.12         Communications by the Indenture Trustee.

The Indenture Trustee, if any principal of or interest on any Notes due and payable hereunder is not paid, shall send to the Issuer, within one (1) Business Day after such payment was due, a written demand for payment thereon.

Section 5.13         Separate Indenture Trustees and Co-Trustees.

(a)          Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting legal requirements applicable to it in the performance of its duties hereunder, the Indenture Trustee shall have the power to, and shall execute and deliver all instruments to, appoint one or more Persons to act as separate trustees or co-trustees hereunder, jointly with the Indenture Trustee, of any portion of the Collateral Pool subject to this Indenture, and any such Persons shall be such separate trustee or co-trustee, with such powers and duties consistent with this Indenture as shall be specified in the instrument appointing such Person but without thereby releasing the Indenture Trustee from any of its duties hereunder. If the Indenture Trustee shall request the Issuer to do so, the Issuer shall join with the Indenture Trustee in the execution of such instrument, but the Indenture Trustee shall have the power to make such appointment without making such request. A separate trustee or co-trustee appointed pursuant to this Section 5.13 need not meet the eligibility requirements of Section 5.05.

(b)          Every separate trustee and co-trustee shall, to the extent not prohibited by law, be subject to the following terms and conditions:

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(i)          the rights, powers, duties and obligations conferred or imposed upon such separate or co-trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate or co-trustee jointly, as shall be provided in the appointing instrument, except to the extent that under any law of any jurisdiction in which any particular act is to be performed any nonresident trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or co-trustee at the direction of the Indenture Trustee;

(ii)         all powers, duties, obligations and rights conferred upon the Indenture Trustee, in respect of the custody of all cash deposited hereunder shall be exercised solely by the Indenture Trustee; and

(iii)        the Indenture Trustee may at any time by written instrument accept the resignation of or remove any such separate trustee or co-trustee, and, upon the request of the Indenture Trustee, the Issuer shall join with the Indenture Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation or removal, but the Indenture Trustee shall have the power to accept such resignation or to make such removal without making such request. A successor to a separate trustee or co-trustee so resigning or removed may be appointed in the manner otherwise provided herein.

(c)          Such separate trustee or co-trustee, upon acceptance of such trust, shall be vested with the estates or property specified in such instruments, jointly with the Indenture Trustee, and the Indenture Trustee shall take such action as may be necessary to provide for (i) the appropriate interest in the Collateral Pool to be vested in such separate trustee or co-trustee, and (ii) the execution and delivery of any transfer documentation or bond powers that may be necessary to give effect to the transfer of the lien of this Indenture and the Mortgages to the co-trustee. Any separate trustee or co-trustee may, at any time, by written instrument constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent permitted by law, do all acts and things and exercise all discretion authorized or permitted by it, for and on behalf of it and in its name. If any separate trustee or co-trustee shall be dissolved, become incapable of acting, resign, be removed or die, all the estates, property, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Indenture Trustee, without the appointment of a successor to said separate trustee or co-trustee, until the appointment of a successor to said separate trustee or co-trustee is necessary as provided in this Indenture.

(d)          Any notice, request or other writing, by or on behalf of any Noteholder, delivered to the Indenture Trustee shall be deemed to have been delivered to all separate trustees and co-trustees.

(e)          Although co-trustees may be jointly liable, no co-trustee or separate trustee shall be severally liable by reason of any act or omission of the Indenture Trustee or any other such trustee hereunder.

(f)          No appointment of a separate trustee or co-trustee pursuant to this Section 5.13 shall relieve the Indenture Trustee of any of its obligations, duties or responsibilities hereunder in any way or to any degree.

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ARTICLE VI
REPORTS TO NOTEHOLDERS

Section 6.01         Reports to Noteholders and Others.

(a)          Based on information with respect to the Mortgaged Properties and Mortgage Loans provided to the Indenture Trustee by MBC and the Issuer pursuant to this Indenture (and the Indenture Trustee’s calculations based on such information and the Indenture Trustee’s records with respect to the Notes), the Indenture Trustee shall prepare, or cause to be prepared, and make available either in electronic format or by first class mail on each Payment Date, or as soon thereafter as is practicable, to the Issuer, the Underwriter, each Noteholder and any other Person upon the direction of the Issuer a statement in respect of the payments made on such Payment Date setting forth the information set forth in Exhibit G hereto (the “Trustee Report”). The Indenture Trustee’s internet website will be located at [website address] or at such other address as the Indenture Trustee shall notify the parties hereto from time to time. For assistance with the Indenture Trustee’s internet website, Noteholders may call [telephone number].

The Indenture Trustee shall not be liable for having disseminated information in accordance with this Indenture.

The Indenture Trustee shall be entitled to rely on and shall not be responsible for the content or accuracy of any information provided by third parties for purposes of preparing the Trustee Report and may affix thereto any disclaimer it deems appropriate in its reasonable discretion (without suggesting liability on the part of any other party hereto).

(b)          Within a reasonable period of time after the end of each calendar year (but in no event more than 60 days following the end of such calendar year), the Indenture Trustee shall prepare, or cause to be prepared, and make available either in electronic format or by first class mail to each Person who at any time during the calendar year was a Noteholder (i) a statement containing the aggregate amount of principal and interest payments on the Notes for such calendar year or applicable portion thereof during which such person was a Noteholder and (ii) such other customary information as the Indenture Trustee deems necessary or desirable for Noteholders to prepare their federal, state and local income tax returns including, without limitation (and to the extent provided to it by the Issuer which shall so cause such information to be provided), the amount of original issue discount accrued on the Notes, if applicable. The obligations of the Indenture Trustee in the immediately preceding sentence shall be deemed to have been satisfied to the extent that substantially comparable information has been provided by the Indenture Trustee.

Section 6.02         Access to Certain Information.

(a)          The Indenture Trustee shall afford to the Noteholders, the Issuer, and any regulatory authority that may exercise authority over any Noteholder, access to any documentation regarding the Collateral Pool within its control. Such access shall be afforded without charge but only upon reasonable prior written request and during normal business hours at the offices of the Indenture Trustee designated by it.

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(b)          The Indenture Trustee shall maintain at its office primarily responsible for administration of the Collateral Pool and shall deliver to the Issuer and, subject to the succeeding paragraph, any Noteholder or Note Owner or Person identified to the Indenture Trustee as a prospective transferee of a Note or an Ownership Interest therein (at the reasonable request and expense of the requesting party), copies of the following items (to the extent that such items have been delivered to the Indenture Trustee or the Indenture Trustee can cause such items to be delivered to it without unreasonable burden or expense): (i) the Prospectus, in the form most recently provided to the Indenture Trustee by the Issuer or by any Person designated by the Issuer; (ii) this Indenture, any Asset Transfer Agreement and any amendments hereto or thereto; (iii) all reports prepared by, and all reports delivered to, the Indenture Trustee since the Closing Date; (iv) all Officer’s Certificates delivered by the Issuer since the Closing Date pursuant to Section 9.09 and all Officer’s Certificates delivered by the Issuer since the Closing Date pursuant to Section 9.09; (v) all accountants’ reports caused to be delivered by the Issuer since the Closing Date pursuant to Section 9.10; (vi) all Determination Date Reports since the Closing Date prepared pursuant to Section 9.11(a); and (vii) the Mortgage Loan Files, including any and all modifications, waivers and amendments of the terms of each Mortgage Loan entered into or consented to by the Issuer and delivered to the Indenture Trustee pursuant to Section 10.08(c) or otherwise. The Indenture Trustee shall make available copies of any and all of the foregoing items upon written request of any party set forth in the previous sentence. However, the Indenture Trustee shall be permitted to require of such party the payment of a sum sufficient to cover the reasonable costs and expenses of providing such copies as are requested by such party.

The Indenture Trustee will make available, upon reasonable advance notice and at the expense of the requesting party, copies of the above items to any Noteholder or Note Owner and to prospective purchasers of Notes.

(c)          The Indenture Trustee shall not be liable for any dissemination of information made in accordance with Section 6.02(a) or Section 6.02(b).

(d)          The Issuer shall permit agents, representatives and employees of the Indenture Trustee to inspect the Mortgaged Properties or any part thereof at reasonable hours upon reasonable advance notice, subject to the applicable Mortgage Loans.

ARTICLE VII
REDEMPTION

Section 7.01         Optional Redemption.

(a)          The Issuer, at its option, may redeem the Notes, in whole or in part, on any Payment Date on or after ____________ __, 2019 (any such Payment Date, the “Redemption Date”) at the redemption prices (expressed as percentages of principal amount), set forth below, plus accrued and unpaid interest thereon up to, but not including, the Redemption Date (subject to the right of Noteholders of record on the relevant Record Date to receive interest due on the relevant Payment Date), if redeemed during the periods set forth below:

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Redemption Date occurs:	Redemption Price:
On or after ___________ __, 2019 but prior to _____________ __, 2020	103.0%
On or after ___________ __, 2020 but prior to _____________ __, 2021	101.5%
After _____________ __, 2021	100.0%

(b)          In the event that less than all of the Notes are to be redeemed at any time pursuant to an optional redemption, selection of such Notes for redemption will be made by the Indenture Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, unless prohibited by stock exchange or other applicable rule or regulation, and if pro rata redemption is so prohibited, by lot or by such method as the Indenture Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part.

(c)          At least 10 days, and no more than 20 days, before a Redemption Date, the Issuer shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.06(a) or otherwise delivered within such period in accordance with the applicable procedures of the Depository.

The notice shall identify the Notes to be redeemed (including the CUSIP numbers thereof) and shall state:

(i)          the Redemption Date;

(ii)         the redemption price and the amount of premium and accrued interest to be paid;

(iii)        if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued;

(iv)        the name and address of the Paying Agent;

(v)         that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(vi)        that unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(vii)       the provision of the Notes pursuant to which such Notes called for redemption are being redeemed; and

(viii)      the aggregate principal amount of Notes that are being redeemed.

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(d)          At the Issuer’s written request made at least five (5) Business Days prior to the date on which notice is to be given, the Indenture Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s sole expense. Notices of redemption may not be conditional.

(e)          Once the notice of redemption described in Section 7.01(c) is mailed, Notes called for redemption shall become due and payable on the Redemption Date and at the redemption price, including any premium, plus interest accrued to, but not including, the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued up to, but not including, the Redemption Date; provided that if the Redemption Date is after a regular Record Date and on or prior to the Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant Record Date, and provided, further, that if a Redemption Date is not a Business Day, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day.

(f)          On or prior to 10:00 a.m., New York City time, on each Redemption Date, the Issuer shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of, including premium, if any, and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date which have been delivered by the Issuer to the Indenture Trustee for cancellation.

On and after any Redemption Date, if money sufficient to pay the redemption price of, including premium, if any, and accrued interest on Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to accrue interest and the only right of the Holders of such Notes will be to receive payment of the redemption price of and, subject to the first proviso in Section 7.01(e), accrued and unpaid interest on such Notes up to, but not including, the Redemption Date. If any Note surrendered for redemption shall not be so paid, interest will be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case at the rate and in the manner provided in the Notes.

(g)          Upon surrender of a Note that is redeemed in part, the Indenture Trustee shall authenticate for the Holder thereof a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

Section 7.02         Purchase of Notes at Holders’ Option.

(a)          Notes shall be purchased in cash in whole or in part (provided that no Notes of a principal amount of $1,000 or less shall be redeemed in part) by the Issuer, at the option of Holders, in accordance with the provisions of this Section 7.02, on ___________ __, 2021 the “Put Right Purchase Date”), for cash at a purchase price equal to 100% of the principal amount of the Notes surrendered plus accrued and unpaid interest thereon up to, but not including, the Put Right Purchase Date (the “Put Right Purchase Price”); provided that if the Put Right Purchase Date falls after a Record Date and on or before the related Payment Date, then interest on the Notes payable on such Payment Date will instead be payable to the Holders in whose names the Notes are registered at the close of business on such Record Date.

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(b)          To exercise its rights pursuant to this Section 7.02, the Holder shall deliver to the Paying Agent a properly completed put right purchase notice (each, a “Put Right Purchase Notice”) at any time from the opening of business on the date that is six (6) months prior to the Put Right Purchase Date until the close of business on the date that is four (4) months prior to the Put Right Purchase Date stating:

(i)          if Definitive Notes have been issued, the certificate number of the Note that the Holder will deliver for repurchase (or if the Notes are not Definitive Notes, the Put Right Purchase Notice must comply with the rules and procedures of the Depositary to the extent applicable),

(ii)         the portion of the Note which the Holder will deliver to be purchased, provided that that no Notes of a principal amount of $1,000 or less shall be redeemed in part, and

(iii)        that such Note shall be purchased as of the Put Right Purchase Date pursuant to the terms and conditions in this Section 7.02 and the Notes.

(c)          The Issuer shall pay the Put Right Purchase Price for all Notes with respect to which a Put Right Purchase Notice is given and not validly withdrawn, on the Put Right Purchase Date. Surrender by a Holder of its Notes to be purchased shall be a condition to receipt by such Holder of the Put Right Purchase Price therefor. The Put Right Purchase Price shall be paid pursuant to this Section 7.02 only if the Note delivered to the Paying Agent conforms in all respects to the description thereof in the related Put Right Purchase Notice, as determined by the Issuer.

(d)          Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Put Right Purchase Notice contemplated by this Section 7.02 shall have the right to withdraw such Put Right Purchase Notice in whole or in part at any time prior to the close of business on the Business Day immediately preceding the Put Right Purchase Date by delivery of a written notice of withdrawal to the Paying Agent specifying:

(i)          the aggregate principal amount the Notes with respect to which such notice of withdrawal is being submitted,

(ii)         the certificate number, if any, of the Notes in respect of which such notice of withdrawal is being submitted (or, if the Notes are not Definitive Notes, the withdrawal notice must comply with the rules and procedures of the Depositary to the extent applicable), and

(iii)        the aggregate principal amount, if any, of such Notes which remains subject to the original Put Right Purchase Notice and which has been or will be delivered for purchase by the Issuer.

(e)          The Paying Agent shall promptly notify the Issuer of the receipt by it of any Put Right Purchase Notice or written notice of withdrawal thereof.

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(f)          On or before 10:00 a.m. New York City time on the Put Right Purchase Date, the Issuer shall deposit with the Indenture Trustee or with the Paying Agent an amount of immediately available funds sufficient to pay the aggregate Put Right Purchase Price of all the Notes or portions thereof which are to be purchased as of the Put Right Purchase Date.

(g)          If the Indenture Trustee or the Paying Agent holds, in accordance with the terms hereof, immediately available funds sufficient to pay the Put Right Purchase Price of any Note for which a Put Right Notice has been tendered and not withdrawn, then, from and after the Put Right Purchase Date, such Note will cease to be Outstanding, and interest shall cease to accrue, whether or not such Note is delivered to the Paying Agent, and the rights of the Holder in of such Notes shall terminate (other than the right to receive the Put Right Purchase Price as aforesaid).

(h)          The Put Right Purchase Price shall be paid to such Holder with respect to Notes for which a Put Right Purchase Notice has been tendered and not validly withdrawn, subject to receipt of funds by the Indenture Trustee or the Paying Agent, promptly after the later of (i) the Put Right Purchase Date (provided that the conditions in Section 7.02(b) have been satisfied) and (ii) the time of delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 7.02(b).

(i)          No Notes may be purchased by the Issuer at the option of Holders on a Put Right Purchase Date if there has occurred and is continuing a Default or an Event of Default with respect to the Notes, other than a Default in the payment of the Put Right Purchase Price with respect to such Notes.

ARTICLE VIII
SUPPLEMENTAL INDENTURES; AMENDMENTS

Section 8.01         Supplemental Indentures or Amendments Without Consent of Noteholders.

Without the consent of any Noteholder, the parties to each agreement listed below, at any time and from time to time, may enter into one or more indentures supplemental hereto, or one or more amendments hereto or to the Notes, any Guaranty or any other Transaction Documents, as applicable, for any of the following purposes:

(1)         to correct any typographical error or cure any ambiguity, or to cure, correct, amend or supplement any provision herein or in the Notes, any Guaranty or any other Transaction Document; provided, that such action shall not adversely affect the interests of the Noteholders in any material respect;

(2)         to convey, transfer, assign, mortgage or pledge any property to the Indenture Trustee so long as the interests of the Noteholders would not be adversely affected in any material respect;

(3)         to correct any manifestly incorrect description, or amplify the description, of any property subject to the lien of this Indenture;

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(4)         to modify the Indenture, any Guaranty or any other Transaction Documents as required or made necessary by any change in applicable law, so long as the interests of the Noteholders would not be adversely affected in any material respect;

(5)         to add to the covenants of the Issuer, or any other party for the benefit of the Noteholders, or to surrender any right or power conferred upon the Issuer under this Indenture, any Asset Transfer Agreement or any Guaranty;

(6)         to add any additional Events of Default hereunder; provided, that such action shall not adversely affect the interests of the Noteholders in any material respect; or

(7)         to evidence and provide for the acceptance of appointment by a successor Indenture Trustee.

Without the consent of any Noteholder, the Issuer and the Indenture Trustee, at any time and from time to time, may enter into one or more amendments to any Account Control Agreement.

Section 8.02         Supplemental Indentures With Consent.

With the consent of Requisite Majority, the parties to the agreements listed below may enter into one or more indentures supplemental hereto, or one or more amendments hereto or to the Notes, any Guaranty or any other Transaction Document for the purpose of adding any provisions hereto or thereto, changing in any manner or eliminating any of the provisions hereof or thereof or modifying in any manner the rights of the Noteholders hereunder or thereunder; provided, that no such supplemental indenture or amendment may, without the consent of the Noteholders of 100% of the Outstanding Principal Balance of the Outstanding Notes affected thereby:

(1)         change the Final Payment Date or the Payment Date of any principal, interest or other amount on any Note;

(2)         reduce the Outstanding Principal Balance of a Note or the applicable Note Rate;

(3)         authorize the Indenture Trustee to agree to delay the timing of, or reduce the payments to be made on or in respect of, the Mortgaged Properties or the Mortgage Loans, except as provided in this Indenture or in any Asset Transfer Agreement;

(4)         change the coin or currency in which the principal of any Note or interest thereon is payable;

(5)         impair the right to institute suit for the enforcement of any such payment on or after the Final Payment Date;

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(6)         reduce the percentage of the then Outstanding Principal Balance, the consent of whose Holders is required for any supplemental indenture or amendment, or the consent of whose Holders is required for any waiver of defaults under this Indenture and their consequences provided for in this Indenture, or for any other reason under this Indenture;

(7)         change any obligation of the Issuer to maintain an office or agency in the places and for the purposes set forth in this Indenture;

(8)         except as otherwise expressly provided in this Indenture or in any Asset Transfer Agreement, deprive the Indenture Trustee of the benefit of a first priority security interest in the Collateral included in the Collateral Pool;

(9)         modify Section 2.15; or

(10)        release from the lien of any Asset Transfer Agreement and this Indenture (except as specifically permitted under this Indenture or such Asset Transfer Agreement) all or any portion of the Collateral Pool.

It shall not be necessary for the consent of the Noteholders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Section 8.03         Delivery of Supplements and Amendments.

Promptly after the execution by the Issuer and the Indenture Trustee (and any other party, if required) of any supplemental indenture or amendment pursuant to the provisions hereof, the Indenture Trustee, at the expense of the Issuer, payable out of the Collateral Pool pursuant to Section 5.04, shall furnish a notice setting forth in general terms the substance of such supplemental indenture or amendment to each Noteholder at the address for such Noteholder set forth in the Note Register.

Section 8.04         Execution of Supplemental Indentures, Etc.

In executing, or accepting the additional trusts created by, any supplemental indenture or amendment permitted by this Article or in accepting the modifications thereby of the trusts created by this Indenture or in giving any consent to any modification of any Mortgage Loan pursuant to this Indenture, the Indenture Trustee shall be entitled to receive, at the Issuer’s expense payable out of the Collateral Pool pursuant to Section 5.04, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture, amendment or modification is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture or amendment or consent to any such modification which affects the Indenture Trustee’s own rights, duties or immunities under this Indenture or otherwise.

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ARTICLE IX
COVENANTS; WARRANTIES

Section 9.01         Maintenance of Office or Agency.

The Issuer shall maintain or cause to be maintained an office or agency in the continental United States where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Indenture Trustee and the Noteholders of the location, and any change in the location, of such office or agency.

Section 9.02         Existence and Good Standing.

Subject to Section 9.11, the Issuer shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and corporate franchises and comply in all material respects with all Legal Requirements applicable to it and the Collateral. There shall never be committed by the Issuer or MBC any act or omission affording any Governmental Authority the right of forfeiture as against any Collateral or any part thereof or any moneys paid in performance of the Issuer’s obligations under any of the Transaction Documents. The Issuer hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. The Issuer shall at all times maintain, preserve and protect, or cause to be maintained, preserved and protected, all franchises and trade names and preserve all the remainder of its property required for the conduct of its business and shall keep (or cause the Mortgagor Customers under each applicable Mortgage Loan to keep) the Mortgaged Properties in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto. The Issuer shall keep (or cause the Mortgagor Customers under each applicable Mortgage Loan to keep) the Mortgaged Properties insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Indenture.

Section 9.03         Payment of Taxes and Other Claims.

(a)          The Issuer shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all applicable taxes, assessments and governmental charges (the “Taxes”) levied or imposed upon the Issuer or upon the income, profits or property of the Issuer, or shown to be due on the tax returns filed by the Issuer, except as set forth in Section 9.03(b); provided, that the Issuer’s failure to pay or discharge Taxes will not cause a forfeiture of, or a lien (other than a Permitted Encumbrance) to encumber, any property included in the Collateral. Upon the written direction of the Issuer, the Indenture Trustee is authorized to pay out of the Payment Account, prior to making payments on the Notes, any such taxes, assessments, governmental charges or claims which, if not paid, would cause a forfeiture or sale of, or a lien (other than a Permitted Encumbrance) to encumber, any property included in the Collateral.

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(b)          After prior written notice to the Indenture Trustee, the Issuer, at its own expense, may in good faith contest by appropriate Proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any applicable Taxes; provided, that: (i) such Proceeding shall not be precluded by, and be conducted in accordance with the provisions of, any other instrument to which the Issuer is subject and shall not constitute a default thereunder and such Proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (ii) no Collateral nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iii) the Issuer shall promptly upon final determination thereof pay, or cause to be paid, the amount of any such Taxes, together with all costs, interest and penalties which may be payable in connection therewith; (iv) such Proceeding shall suspend the collection of such contested Taxes from the Collateral; and (v) the Issuer shall furnish such security and/or reserves as may be required in the Proceeding as required in accordance with GAAP, to insure the payment of any such Taxes, together with all interest and penalties thereon.

Section 9.04         Title to the Collateral; Lien.

(a)          The Issuer shall ensure that all cash at any time owned by the Issuer and held as part of the Collateral Pool is deposited and maintained in the Collection Account, Payment Account or any other account subject to an Account Control Agreement. The Issuer shall not consent to the bank or securities intermediary maintaining any such account to comply with instructions or entitlement orders of any person other than the Indenture Trustee. The Issuer will ensure that the bank or securities intermediary maintaining the Collection Account, the Payment Account or any other account held as part of the Collateral Pool, on or promptly after the establishment of such account, executes and delivers to the Indenture Trustee an Account Control Agreement with respect to such account.

Section 9.05         Protection of Collateral Pool.

The Issuer, and, to the extent directed by the Issuer or the Requisite Majority, the Indenture Trustee, will, at the Issuer’s expense, and without expense to the Indenture Trustee, from time to time execute and deliver all such amendments and supplements hereto (subject to Section 8.01 and Section 8.02) and all such financing statements, continuation statements, instruments of further assurance and other instruments (provided, however, that the Indenture Trustee will not be obligated to prepare or file any such supplements, statements or other instruments), and will take such other action necessary or advisable to:

(a)          Grant more effectively all or any portion of the Collateral Pool;

(b)          maintain or preserve the lien (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof;

(c)          perfect, publish notice of, or protect the validity of any Grant made or to be made by or in this Indenture;

(d)          enforce any of the Mortgage Loans included in the Collateral Pool;

(e)          preserve and defend title to the Collateral included in the Collateral Pool and the rights of the Indenture Trustee in such Collateral against the claims of all Persons and parties; or

(f)          for carrying out the intention or facilitating the performance of the terms of this Indenture.

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The Issuer will promptly execute and deliver and hereby authorizes the Indenture Trustee to execute in the name of the Issuer or without the signature of the Issuer to the extent the Indenture Trustee may lawfully do so, one or more financing statements or other instruments, to evidence more effectively the security interest of the Indenture Trustee in the Collateral.

The Issuer grants to the Indenture Trustee an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to the Indenture Trustee at law and in equity, including, without limitation, such rights and remedies available to the Indenture Trustee pursuant to this Section 9.05, including for the purpose of executing and delivering any financing statement, continuation statement or other instrument required pursuant to this Section 9.05; provided, that, subject to and consistent with Section 5.01, the Indenture Trustee will not be obligated to prepare or file any such statements or instruments.

Section 9.06         Limitation on Sales of Assets.

(a)          Neither the Issuer nor MBC shall, directly or indirectly, make any Asset Sale, unless:

(i)          the Issuer or MBC, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of, and

(ii)         at least 75% of such consideration received by the Issuer or MBC consists of (1) cash or Permitted Investments, (2) assets (other than securities) to be used in a Related Business, (3) with respect to an Asset Sale by MBC, the Capital Stock of any Person engaged in a Related Business that is, or as a result of or in connection with the acquisition of such Capital Stock by MBC becomes a subsidiary of MBC or (4) a combination of cash, Permitted Investments, such assets and such Capital Stock.

(b)          The amount of any notes or other obligations received by the Issuer or MBC from such transferee that are converted, sold or exchanged within one (1) year of the related Asset Sale by the Issuer or MBC into cash or Permitted Investments shall be deemed to be cash, in an amount equal to the net cash proceeds or the Fair Market Value of the Permitted Investments realized upon such conversion, sale or exchange for purposes of determining the percentage of the consideration received by the Issuer or MBC in cash or Permitted Investments.

(c)          Except as provided in Section 9.06(b), if at any time any non-cash consideration received by the Issuer or MBC, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with the provisions of this Section 9.06.

(d)          The Issuer or MBC, as the case may be, may apply an amount equal to the Net Cash Proceeds of any Asset Sale within 120 days of receipt thereof to:

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(i)          with respect to an Asset Sale by MBC, repay secured indebtedness outstanding under any credit facility or any other secured indebtedness of MBC (and to cause a corresponding reduction in commitments if such repaid indebtedness was outstanding under the revolving portion of a credit facility), other than Indebtedness owed to the Issuer or an Affiliate of MBC; or

(ii)         make an investment in or expenditures for Mortgage Loans or, with respect to an Asset Sale by MBC, acquire the Capital Stock of any Person engaged in a Related Business.

Pending the final application of any such Net Cash Proceeds, MBC may temporarily reduce revolving credit borrowings to the extent not prohibited by the terms of this Indenture.

(e)          To the extent all or part of the Net Cash Proceeds of any Asset Sale are not applied or committed within 120 days of such Asset Sale as described in Section 9.06(d)(i) or Section 9.06(d)(ii) (the “Net Proceeds Trigger Date” and such Net Cash Proceeds, the “Unutilized Net Cash Proceeds”), the Issuer shall, within 20 days after such 120^th day, make an offer to purchase (a “Net Proceeds Offer”) all outstanding Notes up to an aggregate maximum principal amount of Notes equal to such Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, up to, but not including, the purchase date thereof).

The Issuer shall mail a notice of a Net Proceeds Offer by first-class mail, postage prepaid, to the record Holders as shown on the register of Holders within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the Indenture Trustee, containing all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms:

(1)         that the Net Proceeds Offer is being made pursuant to this Section 9.06, that all Notes tendered will be accepted for payment and that the Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer periods as may be required by law;

(2)         the offer price (including the amount of accrued interest) and the Net Proceeds Offer date of payment (the “Net Proceeds Offer Payment Date”) (which shall be not less than 30 nor more than 45 days following the commencement of the Net Proceeds Offer and which shall be at least five (5) Business Days after the Indenture Trustee receives notice thereof from the Issuer);

(3)         that any Note not tendered will continue to accrue interest;

(4)         that, unless the Issuer defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest from and after the Net Proceeds Offer Payment Date;

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(5)         that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender such Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day prior to the Net Proceeds Offer Payment Date;

(6)         that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Net Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of the Notes such Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and

(7)         that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Note surrendered; provided, however, that no Notes of a principal amount of $1,000 or less shall be purchased in part.

On or before the Net Proceeds Offer Payment Date, the Issuer shall (i) accept for payment Notes or portions thereof (provided that no Notes of a principal amount of $1,000 or less shall be purchased in part) validly tendered pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent, in accordance with Section 2.09, immediately available funds in an amount sufficient to pay the purchase price plus accrued and unpaid interest, if any, of all Notes to be purchased and (iii) deliver to the Indenture Trustee an Officers’ Certificate describing the Notes or portions thereof being purchased by the Issuer. Upon receipt by the Paying Agent of the monies specified in clause (ii) of the preceding sentence and a copy of the Officers’ Certificate specified in clause (iii) of the preceding sentence, the Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued and unpaid interest, if any, out of the funds deposited with the Paying Agent in accordance with the preceding sentence. The Indenture Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Upon the payment of the purchase price for the Notes accepted for purchase, the Indenture Trustee shall return the Notes purchased to the Issuer for cancellation. Any monies remaining after the purchase of Notes pursuant to a Net Proceeds Offer shall be returned within three (3) Business Days by the Indenture Trustee to the Issuer except with respect to monies owed as obligations to the Indenture Trustee pursuant to this Indenture. For purposes of this Section 9.06, the Indenture Trustee shall act as the Paying Agent.

(f)          With respect to any Net Proceeds Offer effected pursuant to this Section 9.06, to the extent the aggregate principal amount of Notes exceeds the Unutilized Net Cash Proceeds to be applied to the repurchase thereof, such Notes shall be purchased pro rata based on the aggregate principal amount of such Notes tendered by each Holder thereof (provided that no Notes of a principal amount of $1,000 or less shall be purchased in part). To the extent the Unutilized Net Cash Proceeds exceed the aggregate amount of Notes tendered by the holders thereof pursuant to such Net Proceeds Offer (such excess constituting an “Excess”), the Issuer may retain and utilize such Excess for any general corporate purposes. Upon the completion of a Net Proceeds Offer, the amount of Unutilized Net Cash Proceeds shall be reset to zero.

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(g)          If the Issuer makes a Net Proceeds Offer, the Issuer will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act and any other applicable federal or state securities laws and regulations and any applicable requirements of any securities exchange on which the Notes are listed, and any violation of the provisions of this Section 9.06 relating to such Net Proceeds Offer occurring as a result of such compliance shall not be deemed a Default or an Event of Default.

Section 9.07         Repurchase at the Option of Holders upon Change of Control.

(a)          In the event of the occurrence of a Change of Control (the date of such occurrence being the “Change of Control Date”), the Issuer shall, within 30 days after the occurrence of such Change of Control, make an offer (the “Change of Control Offer”) to all Holders to purchase all outstanding Notes properly tendered pursuant to such offer, and within 60 days after the occurrence of the Change of Control, all Notes properly tendered pursuant to such offer shall be accepted for purchase (the date of such purchase, the “Change of Control Purchase Date”) for a cash price equal to 101% of the principal amount thereof as of the Change of Control Purchase Date, plus accrued and unpaid interest up to, but not including, the date of purchase.

(b)          In order to effect the Change of Control Offer, the Issuer shall mail a notice to each Holder with a copy to the Indenture Trustee stating:

(i)          that a Change of Control has occurred and that each Holder has the right to require the Issuer to purchase such Holder’s Notes at a purchase price (the “Change of Control Purchase Price”) in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest up to, but not including, the date of purchase;

(ii)         the purchase date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed or otherwise delivered in accordance with the applicable procedures of the Depository;

(iii)        that, unless the Issuer defaults in the payment of the purchase price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest from and after the Change of Control Purchase Date; and

(iv)        the procedures determined by the Issuer, consistent with this Indenture, that a Holder must follow in order to have its Notes purchased.

Alternatively, the Issuer will not be required to make a Change of Control Offer as provided above, if, in connection with or in contemplation of any Change of Control, the Issuer has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Purchase Price and has purchased all Notes properly tendered in accordance with the terms of such Alternate Offer so long as the terms and conditions of such contemplated Change of Control are described in reasonable detail to the Holders in the notice delivered in connection with such Alternate Offer.

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The Issuer will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in a manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Issuer or makes an Alternate Offer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or Alternate Offer.

(c)          If the Issuer makes a Change of Control Offer or Alternate Offer, the Issuer will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other applicable federal or state securities laws and regulations and any applicable requirements of any securities exchange on which the Notes are listed, and any violation of the provisions of this Indenture relating to such Change of Control Offer occurring as a result of such compliance shall not be deemed a Default or an Event of Default.

Section 9.08         Covenants.

For so long as the Notes are outstanding, the Issuer shall not:

(a)          cause or permit any Collateral Transfer of a legal or beneficial interest in any Mortgage Loan or any part thereof or any legal or beneficial interest therein or any other part of the Collateral Pool, except as expressly permitted by this Indenture;

(b)          dissolve or liquidate in whole or in part;

(c)          engage, directly or indirectly, in any business other than that the business of making and holdings Mortgage Loans, ;

(d)          incur, create or assume any indebtedness for borrowed money other than the Notes or otherwise pursuant to this Indenture and the Webster Guaranty;

(e)          voluntarily file a petition for bankruptcy or reorganization, make an assignment for the benefit of creditors or commence any similar proceeding;

(f)          change its state of organization, name, identity or organizational status, or otherwise amend the organizational documents of the Issuer, without notifying the Indenture Trustee of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in the Issuer’s organizational status or any such amendment, without first obtaining the prior written consent of the Indenture Trustee;

(g)          withdraw or direct any party to withdraw any funds from the Collection Account, other than in accordance with the terms of this Indenture;

(h)          engage in any business or activity other than as permitted under the organizational documents of the Issuer and this Indenture;

(i)          except as contemplated by the Transaction Documents, commingle its funds or assets with those of any other Person and shall not participate in any cash management system with any other Person, provided that the Issuer may participate in MBC’s cash management system;

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(j)          pledge its assets to or for the benefit of any other Person except to the Indenture Trustee, for the benefit of the Noteholders to secure the Notes;

(k)          enter into or be a party to, any transaction with any of its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are commercially reasonable terms comparable to those of an arm’s-length transaction with an unrelated third party; or

(l)          indemnify its partners, officers, directors or members, as the case may be, in each case unless such an obligation or indemnification is fully subordinated to the Notes and shall not constitute a claim against it in the event that its cash flow is insufficient to pay the Notes.

(m)          engage in any business other than for the purpose of acquiring, owning, holding, selling, transferring, exchanging, managing and operating the Mortgage Loans, entering into and performing its obligations under the Transaction Documents and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;

(n)          have any assets other than the Mortgage Loans, the related Mortgage Notes and personal property necessary or incidental to its ownership and operation of such Mortgage Loans; and

(o)          directly or indirectly, (i) declare or pay any dividend or any other distribution on any Capital Stock of the Issuer or make any payment or distribution to the direct or indirect holders (in their capacities as such) of Capital Stock of the Issuer, (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Issuer or (iii) make any Investment in any Person (other than Permitted Investments), provided that the Issuer may make such payments described in clause (i) if (1) no Default or Event of Default shall have occurred and be continuing at the time or immediately after giving effect to such payment, and (2) immediately after giving effect to such payment, (A) the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (B) Available Amounts on deposit in the Collection Account are not less than the amount required to be paid pursuant to Section 2.15(b) on the immediately succeeding Payment Date.

Section 9.09         Statement as to Compliance.

(a)          The Issuer shall deliver to the Indenture Trustee, within 120 days after the end of each fiscal year commencing with 2016, an Officer’s Certificate of the Issuer stating that, in the course of the performance by the officer executing such Officer’s Certificate of such officer’s present duties as an officer of the Issuer, such officer would normally obtain knowledge or have made due inquiry of employees of the Issuer and the Issuer’s Affiliates as to the existence of any condition or event which would constitute an Event of Default after notice or lapse of time or both and that to the best of the officer’s knowledge, (i) the Issuer has fulfilled all of its obligations under this Indenture in all material respects throughout such year, or, if there has been an Event of Default in the fulfillment of any such obligation in any material respect, specifying each such default known to such officer and the nature and status thereof, and (ii) no Event of Default has occurred and is continuing and no condition or event that would constitute an Event of Default after notice or lapse of time or both has occurred, or, if such an event has occurred and is continuing, specifying each such event known to such officer and the nature and status thereof.

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(b)          The Issuer shall deliver to the Indenture Trustee, within 60 days after the end of each calendar quarter, an Officer’s Certificate stating that (i) a review of the activities of the Issuer throughout the preceding calendar quarter, and of its performance under this Indenture has been made under such officer’s supervision, (ii) to such officer’s knowledge, based on such review, the Issuer has fulfilled in all material respects throughout such period its obligations under this Indenture or, if there was a default in the fulfillment of any such obligation in any material respect, such Officer’s Certificate shall specify each such default known to such officer and the nature and status thereof.

Section 9.10         Reports by Independent Public Accountants.

If this Indenture is required to be qualified under the 1939 Act, on or before September 30 of each year, beginning the September 30 following the first year in which this Indenture is required to be so qualified, the Issuer, at its expense, shall cause a firm of independent public accountants (which may also render other services to MBC or the Issuer) to furnish to the Indenture Trustee a report containing such firm’s opinion that, on the basis of an examination conducted by such firm substantially in accordance with standards established by the American Institute of Certified Public Accountants, the assertion made pursuant to Section 9.09 regarding compliance by the Issuer with the minimum Servicing Standards identified in the Uniform Single Attestation for Mortgage Bankers (to the extent applicable to residential or commercial properties) during the preceding fiscal year is fairly stated in all material respects, subject to such exceptions and other qualifications that, in the opinion of such firm, such institute’s standards require it to report.

Section 9.11         Reports to the Indenture Trustee.

(a)          Not later than 4:00 p.m., New York City time, three (3) Business Days prior to each Payment Date, the Issuer shall deliver to the Indenture Trustee a report (the “Determination Date Report”) in a mutually agreeable electronic format, reflecting as of the close of business on the last day of the related Collection Period, the information required for purposes of making the payments required by Section 2.15(b) and the calculations and reports referred to in Section 6.01. The Issuer shall also provide to the Indenture Trustee the wire instructions for the relevant parties to which payments under Section 2.15(b) will be made. The Determination Date Report shall also contain a certification by the Issuer that (1) on the date of such report and immediately after giving effect to such payments, the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (2) no Default or Event of Default has occurred and is continuing on such date or would result from such payments. Such information shall be delivered by the Issuer in such form as may be reasonably acceptable to Indenture Trustee.

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(b)          The Issuer shall deliver to the Indenture Trustee:

(i)          within forty-five (45) days after the end of each calendar quarter the following items, each executed by a the Issuer as being true and correct: (1) a certificate dated as of the last day of each such calendar quarter identifying for each of the Mortgage Loans the respective termination or maturity dates, Mortgage Loan Payments required to be paid, and identifying any defaults under a Mortgage Loan with respect to which it has knowledge, and (2) statements of the financial affairs and condition of MBC and its subsidiaries on a consolidated basis, including a balance sheet, a cash flow summary report, a statement of profit and loss for MBC and its subsidiaries on a consolidated basis and an operating statement including detailed income and expense statement, in each case in such detail as the Indenture Trustee may request for MBC for the immediately preceding calendar quarter, which statements shall be prepared by MBC;

(ii)         within one hundred twenty (120) days after the end of each calendar year, statements of the financial affairs and condition of MBC and its subsidiaries on a consolidated basis, including a balance sheet, a cash flow summary report, a statement of profit and loss for MBC and its subsidiaries on a consolidated basis and an operating statement including detailed income and expense statement, audited in conjunction with the audit of MBC by a or another independent certified public accountant reasonably acceptable to the Indenture Trustee, for the immediately preceding calendar year; and

(iii)        copies of notices of defaults under, or any material modifications to, any of the Mortgage Loans; and

(iv)        at any time and from time to time such other financial data as the Indenture Trustee or its agents shall reasonably request with respect to MBC or the Issuer or any of their respective Affiliates.

(c)          The Indenture Trustee shall have the right, at any time and from time to time when an Event of Default exists, upon reasonable notice to the Issuer and MBC and during normal business hours at the Issuer’s or MBC’s principal place of business, to conduct an inspection or review, at the Issuer’s expense, of the Issuer’s or MBC’s, as applicable, books and records. The Issuer and MBC shall cooperate, and shall cause their respective agents and employees to cooperate in the conduct of any such inspection or review.

(d)          On or before 1:00 p.m. on the Business Day following each Determination Date, the Issuer shall determine whether the Available Amount distributable on such Payment Date pursuant to (and subject to the priorities set forth in) Section 2.15(b) will be sufficient to pay the obligations under this Indenture on such Payment Date. In the event the Issuer determines that the Available Amount distributable on such Payment Date pursuant to (and subject to the priorities set forth in) Section 2.15(b) will not be sufficient to pay the obligations under this Indenture on such Payment Date (a “Deficiency”) the Issuer shall notify the Indenture Trustee in writing of such Deficiency, which written notice shall be delivered on or before 1:00 p.m. New York City time on the third Business Day before such Payment Date.

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Section 9.12         Mergers and Consolidations.

The Issuer may not consolidate with or merge with or into (whether or not the Issuer is the surviving entity) any other entity, unless:

(a)          either (i) the Issuer shall be the surviving entity or (ii) the surviving entity (if other than the Issuer) shall be a Person organized and validly existing under the laws of the United States of America or any State thereof or the District of Columbia, and shall, in any such case, expressly assume by a supplemental indenture, the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of every covenant of this Indenture and the other Transaction Documents to be performed or observed on the part of the Issuer; provided, that in the case where the surviving entity is not a corporation, there is a co-obligor of the Notes that is a corporation; and

(b)          immediately thereafter, after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

Section 9.13         Litigation.

The Issuer shall give prompt written notice to the Indenture Trustee of any Proceedings pending against the Issuer which could reasonably be expected to materially and adversely affect the Issuer’s condition (financial or otherwise) or business or any Mortgaged Property.

Section 9.14         Notice of Default.

The Issuer shall promptly advise the Indenture Trustee of any material adverse change in the Issuer’s condition, financial or otherwise not otherwise reported, or of the occurrence of any material Event of Default of which the Issuer has knowledge.

Section 9.15         Cooperate in Legal Proceedings.

The Issuer shall cooperate fully with the Indenture Trustee with respect to any Proceedings before any court, board or other Governmental Authority which may in any way affect the rights of the Indenture Trustee hereunder or any rights obtained by the Indenture Trustee under any of the other Transaction Documents and, in connection therewith, permit the Indenture Trustee, at its election, to participate in any such Proceedings.

Section 9.16         Insurance Benefits.

The Issuer shall cooperate with the Indenture Trustee in obtaining for the Indenture Trustee the benefits of any proceeds of the insurance policies lawfully or equitably payable in connection with any applicable Mortgaged Property, subject to the rights of Mortgagor Customers under the applicable Mortgage Loans, and the Indenture Trustee shall be reimbursed for any expenses incurred in connection therewith (including reasonable attorneys’ fees and disbursements) out of such insurance proceeds.

Section 9.17         Costs of Enforcement.

In the event (a) that any Mortgage encumbering any Mortgaged Property is foreclosed in whole or in part or that any such Mortgage is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any Mortgage in which Proceeding the Indenture Trustee is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar Proceeding in respect of the Issuer or MBC or an assignment by the Issuer or MBC for the benefit of its creditors, the Issuer, its successors or assigns, shall be chargeable with and agrees to pay all reasonable costs of collection and defense, including reasonable attorneys’ fees and costs, incurred by the Indenture Trustee or the Issuer in connection therewith and in connection with any appellate Proceeding or post-judgment action involved therein, together with all required service or use taxes.

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Section 9.18         Performance of Issuer’s Duties by MBC.

The duties of the Issuer will be performed on behalf of the Issuer by MBC pursuant to the Management Services Agreement dated as of the Closing Date between the Issuer and MBC.

Section 9.19         Payment of Debts.

The Issuer will use commercially reasonable efforts to remain solvent and the Issuer will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.

Section 9.20         Capitalization of the Issuer.

The Issuer use commercially reasonable efforts to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.

Section 9.21         Employees.

The Issuer shall pay its own liabilities and expenses, including, without limitation, the salaries of its own employees, if any, out of its own funds and assets and maintain a sufficient number of employees if any are required in light of its contemplated business operations.

Section 9.22         Performance by the Issuer.

(a)          The Issuer shall observe, perform and satisfy all the terms, provisions, covenants and conditions of, and shall pay when due all applicable costs, fees and expenses to the extent required under, the Transaction Documents executed and delivered by, or applicable to, the Issuer.

(b)          The Issuer shall in a timely manner observe, perform, enforce and fulfill each and every covenant, term and provision of each Transaction Document executed and delivered by, or applicable to, the Issuer, or recorded instrument affecting or pertaining to the applicable Mortgaged Properties, to the extent the failure to observe or perform the same would materially and adversely affect the Issuer’s interest in such Mortgaged Properties, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Transaction Document executed and delivered by, or applicable to, the Issuer except in accordance with the terms and provisions thereof.

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Section 9.23         Use of Proceeds.

The Issuer shall use the proceeds of the Notes to purchase from MBC, pursuant to the Asset Transfer Agreement dated as of the Closing Date, the Mortgage Loans and related assets set forth therein.

Section 9.24         Other Rights, Etc.

It is agreed that the risk of loss or damage to any Collateral is on the Issuer, and the Indenture Trustee shall have no liability whatsoever for decline in value of the Collateral.

Section 9.25         Books and Records.

The Issuer will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party and file its own tax returns (provided that the Issuer’s financial statements and tax returns may be prepared on a consolidated basis with other entities provided that such consolidated financial statements and tax returns indicate the separate existence of the Issuer and its assets and liabilities). The Issuer shall maintain its books, records, resolutions and agreements as official records.

Section 9.26         Overhead Expenses.

The Issuer shall allocate fairly and reasonably overhead expenses, if any, that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate.

ARTICLE X
COVENANTS REGARDING MORTGAGE LOANS

Section 10.01         Collection of Mortgage Loan Payments; Collection Account; Release Account.

(a)          The Issuer shall undertake reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans and shall follow such collection procedures as are consistent with the Servicing Standard.

(b)          The Issuer shall establish and maintain one segregated account in the name of the Issuer for the benefit of the Indenture Trustee on behalf of the Noteholders (the “Collection Account”), which shall be established in such manner and with the type of depository institution (the “Collection Account Bank”) specified in this Indenture. The Collection Account shall be an Eligible Account. The Collection Account will be subject to an Account Control Agreement among the Issuer, the Indenture Trustee and the Collection Account Bank in form and substance reasonably satisfactory to the Indenture Trustee pursuant to which the Collection Account Bank agrees to follow the instructions of the Indenture Trustee with respect to the Collection Account and the amounts on deposit therein, provided that the Indenture Trustee shall deliver such instructions only after the occurrence of an Event of Default. Subject to Section 10.02, neither MBC nor the Issuer will have any right of withdrawal from the Collection Account and the Issuer hereby covenants and agrees that it shall not withdraw, or direct any Person to withdraw, any funds from the Collection Account. The Collection Account shall be maintained by the Indenture Trustee as a segregated account, separate and apart from trust funds created for trust certificates or bonds of other series serviced and the other accounts of the Issuer.

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(c)          The Issuer shall, not later than ten (10) days after the Closing Date (or, if later, the date the related Mortgage Loan is first included in the Collateral Pool) instruct the Mortgagor Customers to make all Mortgage Loan Payments to the Collection Account. The Issuer shall deposit or cause to be deposited in the Collection Account, within two (2) Business Days after receipt, the following payments and collections received or made by or on behalf of the Issuer subsequent to the Closing Date (other than payments due on or before the Closing Date):

(i)          all payments on account of Mortgage Loan Payments;

(ii)         all payments of other amounts payable by the Mortgagor Customer on the Mortgage Loans;

(iii)        all Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds received in respect of any Mortgaged Property;

(iv)        the Release Price from the release of any Mortgage Loan to the extent not deposited into the Release Account; and the Release Price from the release of any Mortgage Loan transferred from the Release Account to the Collection Account pursuant to this Indenture and all proceeds representing earnings on investments in the Release Account (including interest on any Permitted Investments) made with such proceeds;

(v)         any amounts paid by any party to indemnify the Issuer or the Indenture Trustee pursuant to any provision of this Indenture;

(vi)        any amounts received on account of payments under the guaranties provided by related Mortgage Loan Guarantors; and

(vii)       any other amounts required to be so deposited under this Indenture.

(d)          The Issuer shall establish and maintain at a bank designated by the Indenture Trustee a Release Account. The Release Account shall be an Eligible Account. The funds held in the Release Account may be held as cash or invested in Permitted Investments in accordance with the provisions of Section 10.03(a). The Issuer will deposit or cause to be deposited in the Release Account, on the date of receipt, any cash proceeds from the sale of any Mortgage Loan.

Section 10.02         Withdrawals From the Collection Account.

The Account Control Agreement with respect to the Collection Account shall provide that (a) on each Remittance Date the Collection Account Bank shall deliver the Available Amount by wire transfer of immediately available funds for deposit into the Payment Account for application by the Indenture Trustee to make payments in accordance with the priorities set forth pursuant to Section 2.15(b) and (b) on any Business Day other than a Remittance Date the Collection Account Bank shall remit to the Issuer or to the Issuer’s designee the amount requested by the Issuer, provided that (i) the Issuer shall not request an amount which, after giving effect to such remittance, would cause the remaining Available Amount on deposit in the Collection Account to be less than the amount required to be paid pursuant to Section 2.15(b) (excluding any remaining Available Amounts to be paid to the Issuer) on the immediately succeeding Payment Date and (ii) the Issuer shall have executed and delivered to the Collection Account Bank and the Indenture Trustee a certificate stating that (1) a copy of such certificate has simultaneously been delivered to the Indenture Trustee, (2) no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such payment, and (3) immediately after giving effect to such payment (A) the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (B) the remaining Available Amount on deposit in the Collection Account is not less than the amount required to be paid pursuant to Section 2.15(b) (excluding any remaining Available Amounts to be paid to the Issuer) on the immediately succeeding Payment Date.

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Section 10.03         Investment of Funds in the Collection Account.

(a)          At the Issuer’s direction, the Collection Account Bank shall invest the funds held in the Collection Account in one or more Permitted Investments selected by the Issuer bearing interest or sold at a discount, and maturing, unless payable on demand, not later than the Business Day immediately preceding the next succeeding Remittance Date. All such Permitted Investments shall be held to maturity, unless payable on demand. Any investment of funds in the Collection Account shall be made in the name of the Issuer for the benefit of the Indenture Trustee (in its capacity as such). The Issuer shall promptly deliver to the Indenture Trustee, and the Indenture Trustee shall maintain continuous possession of, any Permitted Investment that is either (i) a “certificated security,” as such term is defined in the Uniform Commercial Code, or (ii) other property in which a secured party may perfect its security interest by possession under the Uniform Commercial Code or any other applicable law. If amounts on deposit in the Collection Account are at any time invested in a Permitted Investment payable on demand, the Issuer shall:

(1)         consistent with any notice required to be given thereunder, demand that payment thereon be made on the last day such Permitted Investment may otherwise mature hereunder in an amount equal to the lesser of (A) all amounts then payable thereunder and (B) the amount required to be withdrawn on such date; and

(2)         demand payment of all amounts due thereunder promptly upon determination by the Issuer that such Permitted Investment would not constitute a Permitted Investment in respect of funds thereafter on deposit in the Collection Account.

(b)          In the event that the Issuer elects to remove a Mortgage Loan from the Collateral Pool under Section 2.04 or Section 11.02, amounts deposited in the Release Account shall be applied by the Issuer (or the Indenture Trustee based solely on the instructions of the Issuer), first, to pay the expenses related to such release and, second, either to acquire a Qualified Substitute Loan or Qualified Substitute Loans within twelve (12) months following the removal of such Released Loan. Any amounts remaining in the Release Account following the twelve (12) month period from the related Release shall be transferred as Unscheduled Proceeds into the Collection Account and applied as Unscheduled Principal Payments on the following Payment Date. During an Early Amortization Period, all amounts in the Release Account shall be deposited as Unscheduled Proceeds into the Collection Account and will be included in the Available Amount on the following Payment Date to be applied as Unscheduled Principal Payments.

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(a)          Whether or not the Issuer directs the investment of funds in the Collection Account, interest and investment income realized on funds deposited therein, to the extent of the Net Investment Earnings, if any, for the Collection Account for each Collection Period, shall be added to the Available Amount for such Collection Period.

(b)          Except as otherwise expressly provided in this Indenture, if any default occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any other performance required under any Permitted Investment, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings.

(c)          Notwithstanding the investment of funds held in the Collection Account, for purposes of the calculations hereunder, including the calculation of the Available Amount, the amounts so invested shall be deemed to remain on deposit in the Collection Account.

(d)          Any actual losses sustained on the liquidation of a Permitted Investment in the Collection Account shall be deposited by the Issuer immediately, but in no event later than one Business Day following such liquidation, into the Collection Account.

Section 10.04         Mortgage Loans.

With respect to each Mortgaged Property, the Issuer (a) shall observe and perform all the obligations imposed upon it under the related Mortgage Loan and shall not do or permit to be done anything to impair materially the value of such Mortgaged Property or related Mortgage Loan as security, (b) shall promptly send copies to the Indenture Trustee of all notices of event of default which the Issuer shall send or receive under the related Mortgage Loan, (c) shall notify the Indenture Trustee in writing of any material change in the status of any Mortgagor Customer with respect to such Mortgaged Property, including, without limitation, the vacating or surrender of any Mortgagor Customer, even if such action is expressly permitted by the terms of such Mortgagor Customer’s Mortgage Loan, (d) shall enforce all of the material terms, covenants and conditions contained in a related Mortgage Loan upon the part of the Mortgagor Customer thereunder to be observed or performed (including, without limitation, collecting financial information from each Mortgagor Customer) consistent with past practice of the Issuer or MBC, (e) shall not execute any assignment of the Issuer’s interest in a related Mortgage Loan or the Mortgage Loan Payments, and (f) shall not consent to any assignment of a related Mortgage Loan not in accordance with its terms or as permitted thereunder. The Issuer shall not agree to any material modification of a related Mortgage Loan, other than in the ordinary course of business of the Issuer.

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Section 10.05         Compliance With Laws.

With respect to each Mortgaged Property:

(a)          The Issuer shall promptly comply, or cause the Mortgagor Customers to comply, in all material respects with all federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting such Mortgaged Property, or the use thereof (“Applicable Laws”), currently existing or enacted in the future.

(b)          The Issuer shall give prompt notice to the Indenture Trustee of the receipt by the Issuer of any written governmental agency notice related to a violation of any Applicable Laws and of the commencement of any governmental agency proceedings or investigations which relate to compliance with Applicable Laws.

(c)          After prior written notice to the Indenture Trustee, the Issuer, at its own expense, may contest by appropriate Proceeding, promptly initiated and conducted in good faith and with due diligence, the Applicable Laws affecting any Mortgaged Property; provided, that (i) no Event of Default has occurred and is continuing under this Indenture, (ii) the Issuer is not prohibited from doing so under the provisions of any Mortgage Loan, (iii) none of such Mortgaged Property, any part thereof or interest therein, any of the related Mortgagor Customers or occupants thereof, or the Issuer shall be affected in any materially adverse way as a result of such Proceeding, (iv) non-compliance with the Applicable Laws shall not impose criminal liability on the Issuer or civil or criminal liability on the Indenture Trustee, and (v) the Issuer shall have furnished to the Indenture Trustee all other items reasonably requested by the Indenture Trustee.

Section 10.06         Other Rights, Etc.

It is agreed that the risk of loss or damage to a Mortgaged Property is on the Issuer, and the Indenture Trustee shall have no liability whatsoever for decline in value of such Mortgaged Property, for failure to maintain insurance policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by the Indenture Trustee shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Mortgaged Property or any other Collateral included in the Collateral Pool and not in the Indenture Trustee’s possession.

Section 10.07         Right to Release Any Portion of the Collateral Pool.

The Indenture Trustee shall not release any portion of the Collateral Pool except as expressly set forth in the terms and provisions of this Indenture and the other Transaction Documents and shall release such portion without, as to the remainder of such Collateral, in any way impairing or affecting the lien or priority of this Indenture, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by the Indenture Trustee for such release, and may accept by assignment, pledge or otherwise any other property in place thereof, all in accordance with the terms hereof. This Indenture shall continue as a lien and security interest in the remaining portion of the Collateral Pool to which it applies.

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Section 10.08         Mortgage Loan Matters.

(a)          The Issuer may enter into renewals of Mortgage Loans and new Mortgage Loans that are on commercially reasonable terms, provided any such renewal and new Mortgage Loans are entered into in the ordinary course of business consistent with past practices of the Issuer and MBC. The Issuer shall execute and deliver, or cause to be executed and delivered, at the request of any party hereto all such further assurances, confirmations and assignments in connection with the Mortgage Loans as may be required by the Issuer.

(b)          Except as specifically set forth herein, the Issuer shall not (i) amend or modify in any material respect, or terminate (other than in connection with a bona fide default by the Mortgagor Customer thereunder beyond any applicable notice or grace period), any Mortgage Loan other than in accordance with the Servicing Standard, (ii) shall not collect any of the Mortgage Loan Payments more than one (1) month in advance, and (iii) shall not execute any other assignment of the Issuer’s interest in the Mortgage Loans or any other Collateral (except as contemplated by the Transaction Documents). For the purpose of this Section 10.08, without limiting the generality of the foregoing, any extension of the term of a Mortgage Loan that does not reduce the Mortgage Loan Payment payable thereunder shall be deemed not to be material and any amendment or modification of a Mortgage Loan that reduces the term of such Mortgage Loan or the Mortgage Loan Payment payable thereunder shall be deemed to be material.

(c)          Notwithstanding the foregoing:

(i)          The Issuer may, consistent with the Servicing Standard, agree to any modification, waiver or amendment of any term of, forgive any Mortgage Loan Payment on, and permit the release of the related Mortgagor Customer or any Mortgage Loan Guarantor (each, a “Mortgage Loan Amendment”) without the consent of the Indenture Trustee, any Noteholder or any other Person, provided that the Issuer certifies to the Indenture Trustee that:

(1)         such Mortgage Loan Amendment is entered into for a commercially reasonable purpose in an arm’s-length transaction on market terms; and

(2)         in the reasonable judgment of the Issuer, such Mortgage Loan Amendment is in the best interest of the Noteholders and will not have an adverse effect on such Mortgage Loan or the Appraised Value of the related Mortgaged Property.

(ii)         Any Mortgage Loan Amendment in connection with a bona fide default by a Mortgagor Customer shall not be subject to the foregoing terms of this Section 10.08. Regardless of whether any Mortgage Loan Amendment is material or not, the Issuer will give the Indenture Trustee prompt written notice thereof and shall indicate whether such action is being taken pursuant to the preceding sentence and upon request will deliver a copy of any documents executed in connection therewith to the Indenture Trustee.

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(iii)        The limitations, conditions and restrictions set forth in Section 10.08(c)(i) shall not apply to the Issuer’s ability to terminate a Mortgage Loan in accordance with the terms thereof.

(d)          The Issuer shall have no liability to the Indenture Trustee, the Noteholders or to any other Person if its analysis and determination that the Mortgage Loan Amendment or other action contemplated by Section 10.08(c) would not materially reduce the likelihood of timely payment of amounts due thereon, or that such Mortgage Loan Amendment or other action is reasonably likely to produce a greater recovery to the Issuer on a present value basis than would liquidation, should prove to be wrong or incorrect, so long as the analysis and determination were made on a reasonable basis in accordance with the Servicing Standard in good faith by the Issuer.

(e)          All modifications, waivers, amendments and other actions entered into or taken in respect of a Mortgage Loan pursuant to this Section 10.08 shall be in writing. The Issuer shall notify the Indenture Trustee, in writing, of any modification, waiver, amendment or other action entered into or taken in respect of any Mortgage Loan pursuant to this Section 10.08 and the date thereof, and shall deliver to the Indenture Trustee for deposit in the related Mortgage Loan File an original counterpart of the agreements relating to such modification, waiver, amendment or other action, promptly (and in any event within 10 Business Days) following the execution thereof. In addition, following any Mortgage Loan Amendment, the issuer shall deliver to the Indenture Trustee an Officer’s Certificate setting forth in reasonable detail the basis of the determinations made by it pursuant to Section 10.08(c).

Section 10.09         Perfection of Security Interest.

The Issuer shall take all action that may be necessary or desirable, or that the Indenture Trustee may request, so as at all times to maintain the validity, perfection, enforceability and priority of the Indenture Trustee’s security interest in the Collateral or to enable the Indenture Trustee to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to:

(a)          immediately discharging all liens other than Permitted Encumbrances;

(b)          subject to any Permitted Encumbrances, warranting, defending and preserving the validity and priority of the lien of any Collateral against the claims of all Persons whomsoever.

(c)          obtaining landlords’ waivers and related agreements;

(d)          delivering to the Indenture Trustee, endorsed or accompanied by such instruments of assignment as the Indenture Trustee may specify, and stamping or marking, in such manner as the Indenture Trustee may specify, any and all chattel paper, instruments, letters of credit and advices thereof and documents evidencing or forming a part of the Collateral;

(e)          entering into warehousing, lockbox and other custodial arrangements satisfactory to the Indenture Trustee;

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(f)          executing (as appropriate) and delivering authorizations for the recording of financing statements, instruments of pledge, notices and assignments, in each case in form and substance satisfactory to the Indenture Trustee, relating to the creation, validity, perfection, maintenance or continuation of the Indenture Trustee’s security interest under the Uniform Commercial Code or other applicable law;

(g)          obtaining “control” of any investment property, deposit account, letter-of-credit right or electronic chattel paper (the term “control” as used in respect of the foregoing types of Collateral having the meaning set forth in Articles 8 and 9 of the UCC), with any agreements establishing such “control” to be in form and substance satisfactory to the Indenture Trustee; and

(h)          if the Issuer at any time has or acquires a commercial tort claim, promptly notifying the Indenture Trustee thereof, in writing, and granting a specific collateral assignment of such claim to the Indenture Trustee as additional Collateral.

ARTICLE XI
TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS

Section 11.01         Exchange of Mortgage Loans.

(a)          The Issuer may remove an Exchanged Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool. In addition, no exchange of a Mortgaged Loan to a third party or to MBC or any Affiliate of MBC or of the Issuer may occur if an Early Amortization Period exists or would occur as a result of such exchange.

(b)          In the event that the Issuer elects to substitute one or more Qualified Substitute Loans pursuant to this Section 11.01, the Issuer shall deliver to the Indenture Trustee all documents as specified in the definition of “Mortgage Loan File” with respect to each Qualified Substitute Loan in accordance with this Indenture. Mortgage Loan Payments due with respect to Qualified Substitute Loans in the month of substitution shall not be part of the Collateral and will be retained by the Issuer. For the month of substitution, the Available Amount shall include the Mortgage Loan Payment due on the Mortgage Loan for the Removed Mortgage Loan for such month and thereafter the Issuer shall be entitled to retain all amounts received in respect of such Removed Mortgage Loan. On or prior to the effective date of any such substitution, the Issuer shall deliver to the Indenture Trustee an amended Mortgage Loan Schedule reflecting the addition to the Collateral of each new Qualified Substitute Loan and the removal from the Collateral of each Removed Mortgage Loan. Upon such substitution, each Qualified Substitute Loan shall be subject to the terms of this Indenture in all respects, and the Issuer shall be deemed to have made the representations and warranties contained in Section 2.21 with respect to each Qualified Substitute Loan.

(c)          The Issuer shall effect such substitution by having each Qualified Substitute Loan assigned to the Issuer and distributing or otherwise transferring the Removed Mortgage Loan to MBC or the entity purchasing the Removed Mortgage Loan and delivering to and depositing with the Indenture Trustee (i) any transfer documents transferring such Qualified Substitute Loan to the Issuer, (ii) any transfer documents transferring such Removed Mortgage Loan to MBC or the entity purchasing the Removed Mortgage Loan and (iii) the Mortgage Loan File for such Qualified Substitute Loan.

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(d)          Upon receipt of an Officer’s Certificate from the Issuer to the effect that all requirements with respect to any substitution pursuant to the foregoing terms of this Section 11.01 have been satisfied, upon which the Indenture Trustee shall be permitted to fully rely and shall have no liability for so relying without any obligation to confirm or verify, (i) the Indenture Trustee shall release or cause to be released to the Issuer’s designee the related Mortgage Loan, the related Mortgage Note and the related Mortgage Loan File for the Removed Mortgage Loan and (ii) each of the Indenture Trustee and the Issuer shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse, as shall be provided to it and are reasonably necessary to vest in the Issuer’s designee the ownership of the Removed Mortgage Loan and to release other lien or security interest in such Removed Mortgage Loan.

Section 11.02         Release of Mortgaged Property by the Issuer.

(a)          The Issuer shall have the right to have released from the lien of this Indenture any Mortgage Loan (following such release, a “Released Loan”) by depositing in the Release Account an amount equal to the Release Price in immediately available funds for the Released Loan and satisfying the Required Conditions. Upon the Indenture Trustee’s receipt of an Officer’s Certificate from the Issuer certifying that all Required Conditions have been satisfied, the Indenture Trustee shall release to the Issuer or its designee the related Mortgage Loan File and execute and deliver such instruments of release, transfer or assignment, in each case without recourse, that shall be provided to it by the Issuer and are reasonably necessary to release any lien or security interest in such Released Loan.

(b)          No sale of a Mortgage Loan to a third party or to MBC or any Affiliate thereof may occur if an Early Amortization Period would occur as a result of such purchase.

Section 11.03         Mortgage Loan Substitution.

(a)          The Issuer may remove a Mortgage Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.01 provided that the Issuer determines, in its reasonable discretion, that there is a reasonable risk of monetary default by the Mortgagor Customer under such Mortgage Loan (“Credit Risk”).

(b)          The Issuer may remove a Mortgage Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.01 provided that the Issuer determines, in its reasonable discretion, that such Mortgage Loan is no longer an Eligible Mortgage Loan.

(c)          The Issuer shall, in connection with the removal of a Mortgage Loan from the Collateral Pool and the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.03, deliver to the Indenture Trustee and Officer’s Certificate from the Issuer certifying (i) the reason for such removal, including an explanation of the related Credit Risk (and a copy of any written communication from the Mortgagor Customer related to such Credit Risk) or why such Mortgage Loan is no longer an Eligible Mortgage Loan, as the case may be, or (ii) a summary description of the anticipated Qualified Substitute Loans, (iii) that (1) immediately after giving effect to such removal and substitution, the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (2) no Default or Event of Default has occurred and is continuing on the date of such removal and substitution or would result therefrom.

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Section 11.04         Release, Sale and Exchange of Defaulted Mortgage Loans.

(a)          The Issuer shall exercise reasonable efforts, to the extent consistent with the Servicing Standard, to enforce a Defaulted Mortgage Loan as to which no satisfactory arrangements can be made for collection of delinquent payments.

(b)          The Issuer may offer to sell a Defaulted Mortgage Loan pursuant to this Section 11.04, for a fair price, free and clear of the lien of this Indenture, if and when the Issuer determines that, consistent with the Servicing Standard, such a sale would be in the best interests of the Noteholders. The Issuer shall give the Indenture Trustee not less than twenty (20) Business Days’ prior written notice of its intention to sell any Defaulted Mortgage Loan pursuant to this Section 11.04. No Interested Person shall be obligated to submit a bid to purchase any such Defaulted Mortgage Loan. The Liquidation Proceeds shall be deposited into the Collection Account and applied as set forth herein.

(c)          If and when the Issuer deems it necessary and prudent for purposes of establishing a fair price for any Defaulted Mortgage Loan for purposes of conducting a sale of such Defaulted Mortgage Loan pursuant to Section 11.04(b), the Issuer is authorized, at the Issuer’s cost, to have an appraisal conducted by an Independent MAI-designated appraiser or other expert.

(d)          Whether any cash bid constitutes a fair price for any Defaulted Mortgage Loan for purposes of Section 11.04(b) shall be determined by the Issuer in its reasonable discretion or, if such cash bid is from an Interested Person, by the Indenture Trustee. In determining whether any bid received from an Interested Person represents a fair price for any Defaulted Mortgage Loan, the Indenture Trustee shall be supplied with and may conclusively rely on the most recent appraisal conducted in accordance with Section 11.04(c) within the preceding 12-month period or, in the absence of any such appraisal, on a narrative appraisal prepared by an Independent MAI-designated appraiser or other expert retained by the Issuer, at the Issuer’s cost. Such appraiser shall be selected by the Issuer. In determining whether any bid constitutes a fair price for any such Defaulted Mortgage Loan, the Issuer shall take into account, among other factors, the period and amount of any delinquency on the affected Mortgage Loan, the occupancy status and physical condition of the related Mortgaged Property and the state of the local economy.

(e)          The Issuer shall act on behalf of itself and the Indenture Trustee in negotiating and taking any other action necessary or appropriate in connection with the sale of any Defaulted Mortgage Loan, and the collection of all amounts payable in connection therewith. In connection therewith, the Issuer may charge prospective bidders fees that approximate the Issuer’s actual costs in the preparation and delivery of information pertaining to such sales or evaluating bids without obligation to deposit such amounts into the Collection Account. Any sale of a Defaulted Mortgage Loan shall be free and clear of the lien of this Indenture and shall be final and without recourse to the Issuer or the Indenture Trustee. If such sale is consummated in accordance with the terms of this Indenture, the Indenture Trustee shall not have any liability to the Issuer or any Noteholder with respect to the purchase price therefor accepted by the Issuer or the Indenture Trustee, as the case may be.

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(f)          The Issuer shall accept the first (and, if multiple bids are received contemporaneously, highest) cash bid received from any Person that constitutes a fair price for such Defaulted Mortgage Loan. Notwithstanding the foregoing, the Issuer shall not be obligated to accept the highest cash bid if the Issuer determines, in accordance with the Servicing Standard, that rejection of such bid would be in the best interests of the Noteholders, and the Issuer may accept a lower cash bid if it determines, in accordance with the Servicing Standard, that acceptance of such bid would be in the best interests of the Noteholders (for example, if the prospective buyer making the lower bid is more likely to perform its obligations or the terms offered by the prospective buyer making the lower bid are more favorable).

(e)          At any time that a Defaulted Mortgage Loan has not already been sold pursuant to the terms hereof, the Issuer may at its option (i) release such Defaulted Mortgage Loan from the lien of this Indenture pursuant to Section 11.02 or (ii) exchange one or more Qualified Substitute Loans for the subject Defaulted Mortgage Loan pursuant to Section 11.01.

(f)          The Issuer shall, and is hereby authorized and empowered by the Indenture Trustee to, prepare, execute and deliver in its own name, on behalf of the Issuer and the Indenture Trustee or any of them, the endorsements, assignments and other documents necessary to effectuate a sale of a Defaulted Mortgage Loan pursuant to this Section 11.04, and the Indenture Trustee shall execute and deliver any limited powers of attorney necessary to permit the Issuer to do so; provided, however, that the Indenture Trustee shall not be held liable for any misuse of any such power of attorney by the Issuer and the Issuer hereby agrees to indemnify the Indenture Trustee against, and hold the Indenture Trustee harmless from, any loss or liability arising from any misuse or negligence in the exercise of such power of attorney.

Section 11.05         Servicing Agent.

The Issuer shall, subject to the terms and conditions herein set forth, act as servicing agent in connection with the Mortgage Loans, including performance of the following services:

(a)          collect on a monthly basis all principal and interest due from each Mortgagor Customer under the Mortgage Notes and any other Mortgage Loan Document;

(b)          collect any other revenue due in connection with the Mortgage Notes, and any other Mortgage Loan Document, and any other revenue due in connection with matters relating to any Mortgaged Property, including, without limitation, any rents, security deposits, additional rent, direct and indirect operating costs, tenant improvement charges, and any amounts due in connection with or as a result of any casualty or exercise of eminent domain;

(c)          except as otherwise provided herein, instruct all Mortgagor Customers to remit all payments in respect of the Mortgage Notes to the Collection Account;

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(d)          cause each Mortgagor Customer to keep the Mortgaged Property owned by such Mortgagor Customer insured in accordance with this Indenture;

(e)          immediately upon the filing of a notice of lien against any Mortgaged Property, cause the applicable Mortgagor Customer to pay any and all general and special city and county taxes of every kind and nature, any and all real estate and ad valorem taxes, personal property taxes, assessments, water rates, sewer rents, fines, impositions, levies, permits, inspection and license fees, all special assessments for public improvements (without permitting any improvement bond to be issued for special assessments) and all other charges now or hereafter levied or imposed upon or assessed against such Mortgaged Property or any part thereof by any municipality or other governmental authority or upon the revenues, rents, issues, income and profits of such Mortgaged Property or arising in respect of the occupancy, use or possession thereof or the use of walks, chutes, areas and other space beyond the lot line of such Mortgaged Property and on or abutting the public sidewalks and/or highways in front or adjoining such Mortgaged Property or pursuant to any environmental protection act for the use of any furnace, compactors, incinerators, parking areas or for other matters covered by any such act, together with any penalties and interest on any of the foregoing;

(f)          notify the Indenture Trustee of any monetary default or other material default by any Mortgagor Customer under the terms, covenants and conditions of any Mortgage Loan Collateral within five (5) days after the date the Issuer discovers such default;

(g)          notify the appropriate Mortgagor Customer of any monetary default or other material default under the terms of any Mortgage Loan Collateral in accordance with the terms of the applicable Mortgage Loan Documents, and otherwise communicate with such Mortgagor Customer on the Indenture Trustee’s behalf as and when required pursuant to the terms of such Mortgage Loan Documents;

(h)          notify the Indenture Trustee of (i) any abandonment by a Mortgagor Customer of such Mortgaged Property; (ii) the Issuer’s receipt of a notice from a Mortgagor Customer alleging that the Issuer is in default in the performance of its obligations under the Mortgage Loan Collateral or that any other right, entitlement, protection or condition for the benefit of a Mortgagor Customer is not being observed, performed or satisfied; (iii) the Issuer’s receipt of any notice of a proposed or threatened exercise of the right of eminent domain with respect to the Mortgaged Property or any portion thereof; and (iv) any casualty, damage or injury to the Mortgaged Property or a portion thereof which could create a risk of a material, immediate diminution in the revenue earned by or generated from the Mortgaged Property;

(i)          cooperate and assist in any legal proceedings by or against the Indenture Trustee or any the Indenture Trustee with regard to the Mortgage Loan Collateral or the Mortgaged Property and involving third parties;

(j)          following an event of a default by any Mortgagor Customer which is not timely cured within any applicable notice and cure period, take such action as may be necessary or appropriate with respect to such default, including, without limitation, retaining counsel, at the Issuer’s sole cost and expense, to foreclose the defaulting Mortgage Loan Collateral;

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(k)          maintain and keep in good order separate, accurate and complete accounts and records for the Indenture Trustee, and maintain orderly files containing records of interest and principal paid, insurance policies, leases and subleases, correspondence and all other documents and papers pertaining to the Mortgage Loan Collateral and the Mortgaged Property or the operation thereof;

(l)          at the Indenture Trustee’s option, either audit and verify the accuracy of any statements and information required to be submitted by any Mortgagor Customer with respect to its Mortgage Loan Collateral or refer said matter to the Indenture Trustee’s accountants and cooperate with said accountants in the conduct of any such audit;

(m)          take service, if requested, for the Indenture Trustee of legal notices; advise the Indenture Trustee’s attorneys as promptly as possible of such service; advise the Indenture Trustee of the receipt of information concerning any claim of injury, damage or other liability against the Indenture Trustee or any the Indenture Trustee and, to the extent available, other relevant information concerning such claim; and provide copies of all relevant legal papers to the Indenture Trustee’s attorneys. The Issuer will give notice of claims and forward documents to the Indenture Trustee’s insurance carrier whenever appropriate, and furnish the Indenture Trustee with copies of insurance claims made against or on behalf of the Indenture Trustee; and

(n)          generally, do all things reasonably deemed necessary or desirable for the proper servicing of Mortgage Loan Collateral.

Section 11.06         Servicing.

(a)          The Issuer covenants to maintain or cause the servicing of the Mortgage Loans to be maintained in conformity with the Servicing Standard. In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such servicing contract shall terminate automatically upon the earliest of (i) an Event of Default, (ii) the date on which all the Notes have been paid in full or (iii) the transfer of servicing.

(b)          If the Mortgage Loans are serviced by the Issuer, (i) the Issuer agrees agree that the Indenture Trustee is the collateral assignee of all servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Mortgage Loans (the “Servicing Records”), and (ii) the Issuer grants the Indenture Trustee a security interest in all servicing fees and rights relating to the Mortgage Loans and all Servicing Records to secure the obligation of the Issuer or its designee to service in conformity with this Section 11.06 and any other obligation of the Issuer to the Indenture Trustee and the Noteholders. The Issuer covenants to safeguard such Servicing Records and to deliver them promptly to the Indenture Trustee or its designee at the Indenture Trustee’s request.

(c)          If the Mortgage Loans are serviced by a third party servicer (such third party servicer, the “Servicer”), the Issuer (i) shall provide a copy of the servicing agreement to the Indenture Trustee, which shall be in form and substance acceptable to the Indenture Trustee (the “Servicing Agreement”), and (ii) shall provide a Servicer Notice to the Servicer substantially in the form of Exhibit I hereto (a “Servicer Notice”) and shall cause the Servicer to acknowledge and agree to the same. Any successor or assignee of a Servicer shall be approved in writing by the Indenture Trustee and shall acknowledge and agree to a Servicer Notice prior to such successor’s assumption of servicing obligations with respect to the Mortgage Loans.

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(d)          If the servicer of the Mortgage Loans is the Issuer or the Servicer is an Affiliate of the Issuer, such Person shall provide to the Indenture Trustee a letter from to the effect that upon the occurrence of an Event of Default, the Indenture Trustee may terminate any Servicing Agreement and in any event transfer servicing to the Indenture Trustee’s designee, at no cost or expense to the Indenture Trustee, it being agreed that the Issuer will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to the designee of the Indenture Trustee.

(e)          In the event the Issuer or its Affiliate is servicing the Mortgage Loans, the Issuer shall, and shall cause such Affiliate to, permit the Indenture Trustee from time to time to inspect the Issuer’s or such Affiliate’s, as the case may be, servicing facilities for the purpose of satisfying the Indenture Trustee that the Issuer or such Affiliate, as the case may be, has the ability to service the Mortgage Loans as provided in this Indenture.

Section 11.07         Termination of Servicing Duties.

At any time following an Event of Default, the Indenture Trustee may elect to discontinue the Issuer’s duties pursuant to Section 11.06. Following any such election by the Indenture Trustee, the Indenture Trustee shall designate and retain a subsidiary, affiliate or agent of the Indenture Trustee (the “Indenture Trustee’s Designee”) to perform said duties. Promptly after being discharged of its duties in accordance with the terms of this Section 11.07, the Issuer shall forward to the Indenture Trustee or the Indenture Trustee’s Designee any amounts then being held by the Issuer in connection with the Mortgage Loan Collateral or the Mortgaged Property.

ARTICLE XII
COSTS

Section 12.01         Performance at the Issuer’s Expense.

The Issuer acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of any Mortgaged Property or any part thereof, whether required by law, regulation or any governmental or quasi-governmental authority. The Issuer hereby acknowledges and agrees to pay, immediately, upon demand, all fees of a type or nature which may reasonably be imposed by the Indenture Trustee from time to time, in accordance with the priorities set forth herein. Wherever it is provided for herein that the Issuer pay any costs and expenses, such costs and expenses shall include, but not be limited to, all reasonable legal fees and disbursements of the Indenture Trustee in accordance with the priorities set forth herein.

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ARTICLE XIII
MISCELLANEOUS

Section 13.01         Execution Counterparts.

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

Section 13.02         Compliance Certificates and Opinions, Etc.

Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

Section 13.03         Form of Documents Delivered to Indenture Trustee.

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

Any certificate or opinion of an Authorized Officer of the Issuer 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 in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer 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 Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Whenever this Indenture requires that a document or instrument (other than any Note) be delivered in substantially the form attached hereto as an exhibit, modifications and additions to and deletions from any such exhibit reflected in such document or instrument as delivered hereunder shall not impair the validity or acceptability of such document or instrument (nor shall any Person be entitled to reject such document or instrument as a result thereof) to the extent that such modifications, additions or deletions are approved by the Issuer and are made in a manner consistent with applicable law (including changes thereto).

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

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that any Person shall deliver any document as a condition of the granting of such application, or as evidence of such Person’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of such Person to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in ARTICLE V.

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Section 13.04         No Oral Change.

This Indenture, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of the Issuer or the Indenture Trustee, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought and otherwise in accordance herewith.

Section 13.05         Acts of Noteholders.

(a)          Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” or “Acts” of the Noteholders 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 (subject to Section 5.01) conclusive in favor of the Indenture Trustee and the Issuer if made in the manner provided in this Section 13.05. With respect to authorization to be given or taken by Noteholders, the Indenture Trustee shall be authorized to follow the written directions or the vote of the Requisite Majority, unless any greater or lesser percentage is required by the terms hereunder.

(b)          The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)          The Outstanding Principal Balance and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Note Register.

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

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Section 13.06         Computation of Percentage of Noteholders.

Unless otherwise specified herein, whenever this Indenture states that any action may be taken by a specified percentage of the Noteholders, such statement shall mean that such action may be taken by the Noteholders of such specified percentage of the Outstanding Principal Balance.

Section 13.07         Notice to the Indenture Trustee, the Issuer and Certain Other Persons.

Any communication provided for or permitted hereunder shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given if delivered by courier or mailed by first class mail, postage prepaid, or if transmitted by facsimile and confirmed in a writing delivered or mailed as aforesaid, to: (a) in the case of the Issuer to MBC Funding II Corp., c/o Manhattan Bridge Capital, Inc., 60 Cutter Mill Road, Suite 205, Great Neck, New York 11021, Attention: Assaf Ran, and (b) in the case of the Indenture Trustee, [Trustee TBD], [address], Attention: ________________, facsimile number: __________; or, as to each such Person, such other address or facsimile number as may hereafter be furnished by such Person to the parties hereto in writing.

Section 13.08         Notices to Noteholders; Notification Requirements and Waiver.

Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given if in writing and delivered by courier or mailed by first class mail, postage prepaid to each Noteholder affected by such event, at its address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is delivered or mailed in the manner herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular courier and mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

Section 13.09         Successors and Assigns.

All covenants and agreements in this Indenture by the Issuer shall bind their successors and permitted assigns, whether so expressed or not.

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Section 13.10         Interest Charges; Waivers.

This Indenture is subject to the express condition that at no time shall the Issuer be obligated or required to pay interest hereunder at a rate which could subject the Indenture Trustee to either civil or criminal liability as a result of being in excess of the maximum interest rate which the Issuer is permitted by applicable law to contract or agree to pay. If by the terms of this Indenture, the Issuer is at any time required or obligated to pay interest hereunder at a rate in excess of such maximum rate, such rate shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.

The Issuer expressly waives presentment, demand, diligence, protest and all notices of any kind whatsoever with respect to this Indenture, except for notices expressly provided for in this Indenture or the Notes.

Section 13.11         Severability Clause.

In case any provision of this Indenture or of the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall, to the extent permitted by law, not in any way be affected or impaired thereby.

Section 13.12         Governing Law.

(a)          THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).

(b)          Any action or proceeding against any of the parties hereto relating in any way to this Indenture or any Note or the Collateral included in the Collateral Pool may be brought and enforced in the courts of the State of New York sitting in the borough of Manhattan or of the United States District Court for the Southern District of New York and each of the Issuer irrevocably submits to the jurisdiction of each such court in respect of any such action or proceeding. The Issuer hereby waives, to the fullest extent permitted by law, any right to remove any such action or proceeding by reason of improper venue or inconvenient forum. As long as any of the Notes remain Outstanding, service of process upon the Issuer shall, to the fullest extent permitted by law, be deemed in every respect effective service in any such legal action or proceeding.

Section 13.13         Effect of Headings and Table of Contents.

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

Section 13.14         Benefits of Indenture.

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Noteholders and any other party secured hereunder or named as a beneficiary of any provision hereof, any benefit or any legal or equitable right, remedy or claim under this Indenture.

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Section 13.15         Trust Obligation.

No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (a) the Indenture Trustee in its individual capacity or (b) any partner, owner, beneficiary, agent, officer, director, employee, agent or Control Person of the Issuer, the Indenture Trustee, in its individual capacity, any holder of a beneficial interest in the Issuer or of any successor or assignee of the Issuer, the Indenture Trustee, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee does not any such obligations in its individual capacity).

Section 13.16         Inspection.

The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all the books of account, records, reports, and other papers of the Issuer, to make copies and extracts therefrom and to discuss the Issuer’s affairs, finances and accounts relating to the Issuer with the officers of MBC on behalf of the Issuer and the Issuer’s employees and independent public accounting firm, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) or the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder.

Section 13.17         Method of Payment.

Except as otherwise provided in Section 2.15(b), all amounts payable or to be remitted pursuant to this Indenture shall be paid or remitted or caused to be paid or remitted in immediately available funds by wire transfer to an account specified in writing by the recipient thereof.

Section 13.18         Trust Indenture Act Controls.

If this Indenture is required to be qualified under the 1939 Act:

(a)          if any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the 1939 Act, the required provision shall control;

(b)          if any provision of this Indenture modifies any 1939 Act provision that may be so modified, such 1939 Act provision shall be deemed to apply to this Indenture as so modified;

(c)          if any provision of this Indenture excludes any 1939 Act provision that may be so excluded, such 1939 Act provision shall be excluded from this Indenture; and

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(d)          the provisions of Sections 310 through 317 of the 1939 Act that impose duties on any Person (including the provisions automatically deemed included unless expressly excluded by this Indenture) shall be a part of and shall govern this Indenture, whether or not physically contained herein.

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

MBC FUNDING II CORP., as the Issuer
By:
	Name:
	Title:
MANHATTAN BRIDGE CAPITAL, INC.
By:
	Name:
	Title:
[TRUSTEE TBD],
not in its individual capacity but solely as Indenture Trustee
By:
	Name:
	Title:

EXHIBIT A

MORTGAGE LOAN SCHEDULE

A-1-1

EXHIBIT B-1

FORM OF GLOBAL SENIOR SECURED NOTE

Note Rate: __%	Initial Principal Balance of this Note:  $[                 ]
Cut-off Date: [          ], 2016	CUSIP No.
Closing Date:  [          ], 2016	ISIN No.
First Payment Date: [          ], 2016	Final Payment Date:  [                         ]
Issuer:  MBC Funding II Corp.	Note No.
Indenture Trustee: [Trustee TBD]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE, THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR DISTRIBUTION, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 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.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEFINITIVE NOTES, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AND EACH BENEFICIAL OWNER BY PURCHASING OR OTHERWISE ACQUIRING A BENEFICIAL INTEREST IN THIS NOTE, EACH AGREES TO TREAT THIS NOTE AND SUCH BENEFICIAL INTEREST FOR PURPOSES OF UNITED STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND ANY OTHER TAXES IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER AND TO REPORT THIS NOTE AND SUCH BENEFICIAL INTEREST ON ALL APPLICABLE TAX RETURNS IN A MANNER CONSISTENT WITH SUCH TREATMENT.

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE QUARTERLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

The Issuer, a New York corporation, for value received, hereby promises to pay to Cede & Co. or its registered assigns, upon presentation and surrender of this Note (this “Note”), the principal sum of [                                            ] United States dollars ($[                    ]) on the Final Payment Date referred to above, together with interest hereon from time to time in the amounts and at the times specified in the Indenture referred to below.

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or about                                    , 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(as the Issuer “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”), and will be secured by the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”). To the extent not defined herein, capitalized terms used herein have the respective meanings assigned in the Indenture. This Note is issued under and is subject to the terms, provisions and conditions of the Indenture, to which Indenture the Holder of this Note by virtue of the acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Indenture, payments of any interest and other amounts payable on this Note (other than payments of principal) shall be made on the 15^th day of each calendar month, commencing on                     15, 2016, and, to the extent required by the terms of the Indenture, payments of principal on this Note shall be made on the 15^th day of each calendar quarter, commencing on                 15, 2016, or, if any such day is not a Business Day, then on the next succeeding Business Day (each, a “Payment Date”), to the Person in whose name this Note is registered at the close of business on the related Record Date. All payments made under the Indenture on this Note will be made by the Indenture Trustee by wire transfer of immediately available funds to the account of the Person entitled thereto at a bank or other entity having appropriate facilities therefor, if such Noteholder shall have provided the Indenture Trustee with wiring instructions prior to the related Record Date (which wiring instructions may be in the form of a standing order applicable to all subsequent payments), or otherwise by check mailed to the address of such Noteholder as it appears in the Note Register as of the related Record Date. Notwithstanding the foregoing, the final payment on this Note on the Final Payment Date will be made in like manner, but only upon presentation and surrender of this Note at the offices of the Indenture Trustee or such other location specified in the notice to the Holder hereof of such final payment. Notwithstanding anything herein to the contrary, no payments will be made with respect to a Note that has previously been surrendered as contemplated by the preceding sentence or, with limited exception, that should have been surrendered as contemplated by the preceding sentence.

Any payment to the Holder of this Note in reduction of the Outstanding Principal Balance hereof is binding on such Holder and all future Holders of this Note and any Note issued upon the transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such payment is made upon this Note.

The Notes are issuable in fully registered form only without coupons in minimum denominations specified in the Indenture.

Each transferee of a Note or an Ownership Interest therein will be deemed to have represented, warranted and agreed that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii)(A) such Note is rated investment grade or better as of the date of the purchase, (B) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (C) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register upon surrender of this Note for registration of transfer at the offices of the Note Registrar, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of the same authorized denominations evidencing the same Outstanding Principal Balance will be issued to the designated transferee or transferees.

No service charge will be imposed for any transfer or exchange of this Note, but the Indenture Trustee or the Note Registrar 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 this Note.

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note Registrar or any such agent shall be affected by notice to the contrary.

The Indenture, any Asset Transfer Agreement and the Notes are subject to amendment, including by supplemental indenture, from time to time in accordance with the terms thereof, including in circumstances which do not require the consent of any or all Noteholders.

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

The Indenture Trustee makes no representation as to the validity or sufficiency of this Note (other than as to its signature set forth hereon below).

This Note shall be governed by and construed in accordance with the laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without regard to conflict of laws principles).

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed by the Issuer.

Dated:  [__________], 2016

MBC FUNDING II CORP.
By:
	Authorized Signatory

CERTIFICATE OF AUTHENTICATION

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

[TRUSTEE TBD],
not in its individual capacity but solely as Indenture Trustee
By:
	Authorized Signatory

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(please print or typewrite name and address including postal zip code of assignee)

the within Senior Secured Note and hereby authorize(s) the registration of transfer of such Note to assignee on the Note Register.

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a like Outstanding Principal Balance to the above named assignee and deliver such Note to the following address:

Dated:

Signature by or on behalf of Assignor

Signature Guaranteed

PAYMENT INSTRUCTIONS

The Assignee should include the following for purposes of payment:

Payments shall, if permitted, be made by wire transfer or otherwise, in immediately available funds, to ______________________________________________________________________________ for the account of ________________________________________. ______________________________ Payments made by check (such check to be made payable to____________________________) and all applicable statements and notices should be mailed to___________________________________.

This information is provided by                                                                       , the Assignee named above, or                                                                                     , as its agent.

EXHIBIT B-2

FORM OF DEFINITIVE SENIOR SECURED NOTE

DEFINITIVE NOTE 

Note Rate: __%	Initial Principal Balance of this Note:  $[                  ]
Cut-off Date: [          ], 2016	CUSIP No.
Closing Date:  [            ], 2016	ISIN No.
First Payment Date: [                ], 2016	Final Payment Date:  [                             ]
Issuer:  MBC Funding II Corp.	Note No.
Indenture Trustee: [Trustee TBD]

A-2-1

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AGREES TO TREAT THIS NOTE FOR PURPOSES OF UNITED STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND ANY OTHER TAXES IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER AND TO REPORT THIS NOTE ON ALL APPLICABLE TAX RETURNS IN A MANNER CONSISTENT WITH SUCH TREATMENT.

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE MONTHLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

A-2-2

The Issuer, a New York corporation, for value received, hereby promises to pay to [____________________] or its registered assigns, upon presentation and surrender of this Note (this “Note”), the principal sum of [_______________________] United States dollars ($[____________]) on the Final Payment Date referred to above, together with interest hereon from time to time in the amounts and at the times specified in the Indenture referred to below.

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(as the Issuer “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”), and will be secured by the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”). To the extent not defined herein, capitalized terms used herein have the respective meanings assigned in the Indenture. This Note is issued under and is subject to the terms, provisions and conditions of the Indenture, to which Indenture the Holder of this Note by virtue of the acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Indenture, payments of any interest and other amounts payable on this Note (other than payments of principal) shall be made on the 15^th day of each calendar month, commencing on __________ 15, 2016, and, to the extent required by the terms of the Indenture, payments of principal on this Note shall be made on the 15^th day of each calendar quarter, commencing on __________ 15, 2016, or, if any such day is not a Business Day, then on the next succeeding Business Day (each, a “Payment Date”), to the Person in whose name this Note is registered at the close of business on the related Record Date. All payments made under the Indenture on this Note will be made by the Indenture Trustee by wire transfer of immediately available funds to the account of the Person entitled thereto at a bank or other entity having appropriate facilities therefor, if such Noteholder shall have provided the Indenture Trustee with wiring instructions prior to the related Record Date (which wiring instructions may be in the form of a standing order applicable to all subsequent payments), or otherwise by check mailed to the address of such Noteholder as it appears in the Note Register as of the related Record Date. Notwithstanding the foregoing, the final payment on this Note on the Final Payment Date will be made in like manner, but only upon presentation and surrender of this Note at the offices of the Indenture Trustee or such other location specified in the notice to the Holder hereof of such final payment. Notwithstanding anything herein to the contrary, no payments will be made with respect to a Note that has previously been surrendered as contemplated by the preceding sentence or, with limited exception, that should have been surrendered as contemplated by the preceding sentence.

Any payment to the Holder of this Note in reduction of the Outstanding Principal Balance hereof is binding on such Holder and all future Holders of this Note and any Note issued upon the transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such payment is made upon this Note.

The Notes are issuable in fully registered form only without coupons in minimum denominations specified in the Indenture.

A-2-3

No transfer of this Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act, and effective registration or qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification. No person is obligated to register or qualify any of the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note or interest therein without registration or qualification.

Each transferee of a Note or an Ownership Interest therein shall represent, warrant and agree that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii)(A) such Note is rated investment grade or better as of the date of the purchase, (B) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (C) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register upon surrender of this Note for registration of transfer at the offices of the Note Registrar, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of the same authorized denominations evidencing the same Outstanding Principal Balance will be issued to the designated transferee or transferees.

No service charge will be imposed for any transfer or exchange of this Note, but the Indenture Trustee or the Note Registrar 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 this Note.

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note Registrar or any such agent shall be affected by notice to the contrary.

The Indenture, any Asset Transfer Agreement and the Notes are subject to amendment, including by supplemental indenture, from time to time in accordance with the terms thereof, including in circumstances which do not require the consent of any or all Noteholders.

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

The Indenture Trustee makes no representation as to the validity or sufficiency of this Note (other than as to its signature set forth hereon below).

A-2-4

This Note shall be governed by and construed in accordance with the laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without regard to conflict of laws principles).

A-2-5

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed by the Issuer.

Dated: [__________], 2016

MBC FUNDING II CORP.
By:
	Authorized Signatory

CERTIFICATE OF AUTHENTICATION

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

[TRUSTEE TBD], not in its individual capacity, but solely in its capacity as Indenture Trustee
By:
	Authorized Signatory

A-2-6

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(please print or typewrite name and address including postal zip code of assignee)

the within Senior Secured Note and hereby authorize(s) the registration of transfer of such Note to assignee on the Note Register.

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a like Outstanding Principal Balance to the above named assignee and deliver such Note to the following address:

Dated:

Signature by or on behalf of Assignor

Signature Guaranteed

PAYMENT INSTRUCTIONS

The Assignee should include the following for purposes of payment:

Payments shall, if permitted, be made by wire transfer or otherwise, in immediately available funds, to ______________________________________________________________________________ for the account of ________________________________________. ______________________________ Payments made by check (such check to be made payable to____________________________) and all applicable statements and notices should be mailed to___________________________________.

This information is provided by                                                                       , the Assignee named above, or                                                                                     , as its agent.

A-2-7

EXHIBIT C

FORM OF INTERIM RECEIPT

[DATE]

MBC Funding II Corp.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Aegis Capital Corp.
810 Seventh Avenue, 18^th Floor
New York, New York 10019

RE:       Interim Receipt pursuant to Section 2.03(b) of the Indenture, dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”)

Ladies and Gentlemen:

In accordance with Section 2.03(b) of the above-referenced Indenture, the Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File related to the Mortgaged Properties listed on Schedule __ hereto, subject to any exceptions set forth in Schedule __ hereto, and other than any Mortgage Loan or Mortgaged Property specifically identified in any exception report annexed thereto as not being covered by such certification, (i) the original or a physical or electronic copy (certified to be true, correct and complete by the Issuer) of each Mortgage Loan is in its possession and (ii) such Mortgage Loan has been reviewed by it, appears regular on its face and appears to relate to a Mortgaged Property included in the Collateral.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

[Trustee TBD]
By:
	Name:
	Title:

EXHIBIT D

FORM OF RECEIPT OF COLLATERAL

[DATE]

MBC Funding II Corp.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Aegis Capital Corp.
810 Seventh Avenue, 18^th Floor
New York, New York 10019

RE: Receipt of Collateral pursuant to Section 2.03(b) of the Indenture, dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”)

Ladies and Gentlemen:

In accordance with Section 2.03(b) of the above-referenced Indenture, the Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File related to the Mortgaged Properties listed on Schedule __ hereto, subject to any exceptions set forth in Schedule __ hereto, and other than with respect to any Mortgage Loan or Mortgaged Property specifically identified in any exception report annexed thereto as not being covered by such certification, (i) all documents specified in the definition of “Mortgage Loan File” are in its possession, (ii) all such documents received by it with respect to such Mortgage Loan and the related Mortgaged Property have been reviewed by it, appear to be regular on their face and appear to relate to such Mortgage Loan or the related Mortgaged Property, and (iii) based on the examinations referred to in Section 2.03 of the Indenture and only as to the foregoing documents, the information set forth in such Mortgage Loan Schedule with respect to the items specified in clause (i) of the definition of “Mortgage Loan Schedule” accurately reflects the information set forth in such Mortgage Loan File.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

A-2-2

[Trustee TBD]
By:
	Name:
	Title:

A-2-3

EXHIBIT E

FORM OF TRANSFEROR CERTIFICATE

[Date]

[Trustee TBD]

[Address]

Attention:

Re: MBC FUNDING II CORP., Senior Secured Notes (the “Notes”)

Ladies and Gentlemen:

This letter is delivered to you in connection with the transfer by ___________ (the “Transferor”) to _____________ (the “Transferee”) of Notes having an initial Outstanding Principal Balance as of ___________ __, 2016 (the “Closing Date”) of $[_________] (the “Transferred Notes”). The Notes, including the Transferred Notes, were issued pursuant to an Indenture, to be dated on or about ___________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC Funding II Corp.(the “Issuer”), Manhattan Bridge Capital, Inc. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”). All capitalized terms used but not otherwise defined herein shall have the respective meanings set forth in the Indenture. The Transferor hereby certifies, represents and warrants to you, as Note Registrar, and for the benefit of the Issuer, the Indenture Trustee and the Transferee, that:

1.            The Transferor is the lawful owner of the Transferred Notes with the full right to transfer such Notes free from any and all claims and encumbrances whatsoever.

2.           The Transferor or a person acting on its behalf has furnished, or caused to be furnished, to the Transferee all information regarding (a) the Transferred Notes and payments thereon, (b) the nature and performance of the Mortgage Loans and the Mortgaged Properties, (c) the Indenture and the Collateral, and (d) any other information with respect to the Transferred Notes, that the Transferee has requested.

Very truly yours,

(Transferor)

By:

Name:

Title:

EXHIBIT F

LIST OF AUTHORIZED SIGNATORIES

PLEDGOR

	Specimen Signature
Name
Title
Phone
E-mail Address
Name
Title
Phone
E-mail Address
SECURED PARTY
	Specimen Signature
Name
Title
Phone
E-mail Address
Name
Title
Phone
E-mail Address

EXHIBIT G

FORM OF TRUSTEE REPORT

EXHIBIT H

FORM OF ISSUER EXCEPTION REPORT

EXHIBIT I

FORM OF SERVICER NOTICE

EX-5.1 5 v429688_ex5-1.htm EXHIBIT 5.1

Exhibit 5.1

Morse, Zelnick, Rose & Lander, LLP

825 Third Avenue

New York 10022

_________ __, 201_

Manhattan Bridge Capital, Inc.

MBC Funding II Corp.

60 Cutter Mill Road

Great Neck, New York 11021

RE:      Registration on Form S-11

Gentlemen:

We have acted as special counsel to Manhattan Bridge Capital, Inc., a New York corporation (“MBC”) and MBC Funding II Corp., a New York corporation (“Funding”), in connection with the registration statement on Form S-11 (together, with the exhibits, thereto, the “Registration Statement”) to be filed on the date hereof by MBC and Funding with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to, among other things, the issuance and sale by Funding of up to $10,000,000 aggregate principal amount of its senior secured notes maturing ten years from the date of issuance (the “Notes”), the repayment of which, together with all accrued but unpaid interest thereon, will be fully and unconditionally guaranteed by MBC (the “Guarantee”). The Notes and the Guarantee will be issued by Funding and MBC, respectively, pursuant to the terms of an Indenture Agreement (together with the exhibits thereto, the “Indenture”), a form of which is included in the Registration Statement as Exhibit ___.

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

In rendering the opinions stated herein, we have examined and relied upon the following:

(i)           the Registration Statement, including all of the exhibits thereto;

(ii)          the form of Indenture filed as an exhibit to the Registration Statement;

(iii)         copies of actions by the unanimous written consent of the board of directors of Funding (the “Funding Board”), _______ __, 201_, as certified by __________, the corporate secretary of Funding;

(iv)         copies of actions by unanimous written consent of the board of directors of MBC (the “MBC Board”), dated ________ __, 2016, as certified by Stephen A. Zelnick, the assistant corporate secretary of MBC;

(v)          a certificate, dated ____________ __, 2016, from the Secretary of State of the State of New York as to Funding’s existence and good standing in such jurisdiction; and

(vi)         a certificate, dated ________ __, 2016, from the Secretary of State of the State of New York as to MBC’s existence and good standing in such jurisdiction.

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the MBC and Funding and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the MBC, Funding and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions stated below.

In our examination, we have assumed the genuineness of all signatures, including endorsements, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. In making our examination of executed documents, we have assumed that the parties thereto, other than MBC and Funding, had the power, corporate or other, to enter into, deliver and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties of such documents and, except as to the Funding or MBC, as the case may be, the validity and binding effect thereof on such parties. We have also assumed that each of MBC and Funding has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization, that MBC has duly authorized the actions taken in its capacity as the sole shareholder of Funding and that each of MBC and Funding has complied with all aspects of applicable laws of jurisdictions other than the United States of America and the State of New York in connection with the transactions contemplated by the Registration Statement to the extent a party thereto.

As to any facts relevant to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of MBC or Funding, as applicable and of public officials.

We do not express any opinion with respect to the laws of any jurisdiction other than (i) the laws of the State of New York and (ii) to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as “Opined on Law”). We do not express any opinion as to the effect of any non-Opined on Law on the opinions stated herein. The Notes and the Guarantee may be issued from time to time on a delayed or continuous basis, and this opinion is limited to the laws, including the rules and regulations, as in effect on the date hereof, which laws are subject to change with possible retroactive effect.

Based upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that:

1.    With respect to the Notes, when (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), has become effective under the Securities Act; (ii) a “final” prospectus with respect to the Notes has been prepared, delivered and filed in compliance with the Securities Act and the applicable Rules and Regulations; (iii) the underwriting agreement with respect to the Notes has been duly authorized, executed and delivered by MBC and Funding, as applicable, and the other parties thereto; (iv) all necessary action, corporate or other, including any required action by the board of directors, or any authorized committee thereof, of (A) Funding, on behalf of Funding, or (B) MBC on behalf of MBC and/or in its capacity as the sole shareholder of Funding, or (C) any other action has been taken by MBC or Funding, as applicable, to approve the issuance, sale and terms of the Notes and related matters; (v) the Indenture has been duly authorized, executed and delivered by each party thereto; (vi) the terms of the Notes and of their issuance and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or the organizational or governing documents of MBC or Funding, as applicable, or result in a default under or breach of any agreement or instrument binding upon MBC and/or Funding, as applicable, and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over MBC and/or Funding, as applicable; and (v) the Notes have been duly executed, delivered and countersigned in accordance with the provisions of the Indenture and duly issued in accordance with the Indenture, and the underwriting agreement, the Notes will constitute valid and binding obligations of the Funding, enforceable against Funding in accordance with their respective terms under the laws of the State of New York.

2.    With respect to the Guarantee, when (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), has become effective under the Securities Act; (ii) a final prospectus with respect to the Notes and the Guarantee has been prepared, delivered and filed in compliance with the Securities Act and the applicable Rules and Regulations; (iii) all necessary action, corporate or other, including any required action by the Funding Board, or any authorized committee thereof, or other action has been taken by Funding, to approve the issuance, sale and terms of the Notes; (iv) all necessary action, corporate or other, including any required action by the MBC Board, or any authorized committee thereof, on behalf of MBC and/or in its capacity as the sole shareholder of Funding, or other action has been taken by MBC, to approve the issuance, sale and terms of the Notes and the Guarantee; (v) the Indenture has been duly authorized, executed and delivered by each party thereto; (vi) the terms of the Guarantee and of its issuance and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or the organizational or governing documents of MBC, or result in a default under or breach of any agreement or instrument binding upon MBC, and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over MBC; (vii) an agreement reflecting the terms of the Guarantee has been duly executed, delivered and countersigned in accordance with the provisions of the Indenture and duly issued in accordance with the Indenture and the underwriting agreement,; and (viii) the Notes have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture and the definitive underwriting or similar agreement approved by the MBC Board and the Funding Board, upon payment of the consideration therefor provided for therein, the Guarantee will constitute valid and binding obligations of MBC, enforceable against MBC, in accordance with its terms under the laws of the State of New York.

The opinions stated herein are subject to the following qualifications:

(a)   the opinions stated herein are limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, preference and other similar laws affecting creditors’ rights generally, and by general principles of equity (regardless of whether enforcement is sought in equity or at law);

(b)   we do not express any opinion with respect to any law, rule or regulation that is applicable to any party to the applicable Indenture or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any such party or any of its affiliates as a result of the specific assets or business operations of such party of such affiliates;

(c)   except to the extent expressly stated in the opinions contained herein, we have assumed that the Indenture constitutes the valid and binding obligation of each party to such Indenture, enforceable against such party in accordance with its terms;

(d)   we do not express any opinion with respect to the enforceability of any provision contained in the Indenture relating to any indemnification, contribution, exculpation, release or waiver that may be contrary to public policy or violative of federal or state securities laws, rules or regulations;

(e)   we do not express any opinion with respect to the enforceability of any provision of the Indenture to the extent that such section purports to bind MBC and/or Funding, as applicable, to the exclusive jurisdiction of any particular federal, state or other court or courts;

(f)   we do not express any opinion as to the enforceability of the Guarantee to the extent that the terms of such Guarantee provide that the obligations of MBC are absolute and unconditional irrespective of the enforceability or genuineness of the Notes and the Indenture or the effect thereof on the opinions stated herein;

(g)   we do not express any opinion with respect to the enforceability of any provisions contained in the Indenture to the extent that such provisions limit the obligation of MBC and/or Funding under such Indenture or any right of contribution of any party with respect to the Guarantee;

(h)   we call to your attention that irrespective of the agreement of the parties to the Indenture, a court may decline to hear a case on grounds of forum non conveniens or other doctrine limiting the availability of such court as a forum for resolution of disputes; in addition, we call to your attention that we do not express any opinion with respect to the subject matter jurisdiction of the federal, state or other courts in any action arising out of or relating to the Indenture; and

(i)    to the extent that any opinion relates to the enforceability of the choice of New York law and choice of New York forum provisions contained in the Indenture, the opinions stated herein are subject to the qualification that such enforceability may be subject to, in each case, (i) the exceptions and limitations in New York General Obligations Law sections 5-1401 and 5-1402 and (ii) principles of comity or constitutionality.

In rendering the opinions set forth above, we have assumed that the execution and delivery by MBC and Funding, respectively, of the Indenture and the performance by each of MBC and Funding of their respective obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which MBC, Funding or their respective properties is subject, except for those agreements and instruments that are listed in Part II of the Registration Statement.

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also hereby consent to the reference to our firm under the heading “Legal Matters” in the prospectus forming part of the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

Very truly yours,

/s/ Morse, Zelnick, Rose & Lander, LLP

EX-8.1 6 v429688_ex8-1.htm EXHIBIT 8.1

Exhibit 8.1

Morse, Zelnick, Rose & Lander, LLP

825 Third Avenue

New York 10022

_________ __, 201_

Manhattan Bridge Capital, Inc.

MBC Funding II Corp.

60 Cutter Mill Road

Great Neck, New York 11021

RE:      Registration on Form S-11

Gentlemen:

You have requested our opinion concerning certain federal income tax matters with respect to MBC Funding II Corp. (“Funding”), a wholly-owned subsidiary of Manhattan Bridge Capital, Inc. (“MBC”) in connection with the Form S-11 registration statement of the MBC and Funding to be filed with the U.S. Securities and Exchange Commission (the “SEC”) on or about _______ __, 201_ (together with the exhibits thereto, the “Registration Statement”).

The opinions expressed below are based, in part, upon (i) various assumptions and factual representations set forth in the Registration Statement (including the prospectus relating thereto), in registration statements on Forms S-11 and S-3 previously filed by MBC with the SEC and in a letter delivered to us by the Company today (the “Representation Letter”), and (ii) our review of such other documents as we have considered necessary or appropriate as a basis for rendering this opinion. We have not made any independent investigation of the facts set forth in any of these documents. We are not, however, aware of any material facts or circumstances contrary to or inconsistent with the representations we have relied upon as described herein or other assumptions set forth herein. We have assumed that (i) all representations made in the Representation Letter to the best of the knowledge of any person are true, correct and complete as if made without such qualification and (ii) no action will be taken by the Company that is inconsistent with the Company’s status as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), for any period prior or subsequent to the date hereof. The opinions expressed below are also based upon the Code, the Treasury Regulations promulgated thereunder (including temporary and proposed regulations) and existing administrative and judicial interpretations thereof (including private letter rulings issued by the Internal Revenue Service (the “IRS”), which are not binding on the IRS except with respect to a taxpayer receiving such a ruling), all as they exist at the date of this letter. All of the foregoing statutes, regulations and interpretations are subject to change, in some circumstances with retroactive effect. Any changes to the foregoing authorities might result in modifications of our opinions contained herein.

Based on the foregoing, we are of the opinion that:

(i) Commencing with MBC’s taxable year ended December 31, 2014, MBC was organized and has been operated in conformity with the requirements for qualification and taxation as a REIT under the Code and the proposed method of operation of MBC will enable MBC to continue to meet the requirements for qualification and taxation as a REIT under the Code.

(ii) The statements contained in the Registration Statement under the captions “Material United States Federal Income Tax Consequences” and “Restrictions on Ownership of Capital Stock” that describe applicable U.S. federal income tax law and legal conclusions with respect thereto are correct in all material respects as of the date hereof.

We express no opinion with respect to the transactions described herein or in the Registration Statement other than those opinions expressly set forth herein. Furthermore, MBC’s qualification as a REIT will depend upon MBC meeting, in its actual operations, the applicable asset composition, source of income, shareholder diversification, distribution and other requirements of the Code and Treasury Regulations necessary for a corporation to qualify as a REIT. We will not review these operations and no assurance can be given that the actual operations of MBC and its affiliates will meet these requirements or the representations made to us with respect thereto for any taxable year.

This opinion letter is furnished to you for your use in connection with the Registration Statement. We hereby consent to the filing of this opinion as Exhibit 8.1 to the Registration Statement. We also consent to the references to our name in connection with the material discussed in the Registration Statement under the captions “Material United States Federal Income Tax Consequences” and “Legal Matters.” In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the SEC.

Very truly yours,

/s/ Morse, Zelnick, Rose & Lander, LLP

EX-23.1 7 v426025_ex23-1.htm EXHIBIT 23.1

Exhibit 23.1 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this registration statement on Amendment No. 1 to Form S-11 of our report dated March 18, 2015, relating to the consolidated financial statements of Manhattan Bridge Capital, Inc. as of December 31, 2014, and for the year then ended (which report expresses an unqualified opinion on the financial statements) appearing in the prospectus, which is part of this registration statement. We also consent to the reference to us under the heading “Experts” in such prospectus.

/s/ Hoberman & Lesser, CPAs, LLP

Hoberman & Lesser, CPAs, LLP

January 26, 2016

EX-23.2 8 v426025_ex23-2.htm EXHIBIT 23.2

Exhibit 23.2 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this registration statement on Amendment No. 1 to Form S-11 of our report dated March 21, 2014, relating to the consolidated financial statements of Manhattan Bridge Capital, Inc. as of December 31, 2013, and for the year then ended (which report expresses an unqualified opinion on the financial statements) appearing in the prospectus, which is part of this registration statement. We also consent to the reference to us under the heading “Experts” in such prospectus.

/s/ Hoberman, Goldstein & Lesser, CPAs, P.C.

Hoberman, Goldstein & Lesser, CPAs, P.C.

January 26, 2016

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EX-3.3

Exhibit 3.3

CERTIFICATE OF INCORPORATION

OF

MBC FUNDING II CORP.

(Pursuant to Section 402 of the Business Corporation Law)

FIRST:                 The name of the corporation is MBC Funding II Corp.

SECOND:            The corporation is formed for the following purpose or purposes:

To engage in any lawful act or activity for which corporations may be organized under the Business Corporation Law, including, without limitation or obligation, engaging in business as a real estate investment trust, or REIT, under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended, or any successor statute (the “Code”), as now or hereafter in force, provided that the corporation is not formed to engage in any act or activity requiring the consent or approval of any state official, department, board, agency or other body without such consent or approval first being obtained.

To have, in furtherance of the corporate purposes, all of the powers conferred upon corporations organized under the Business Corporation Law subject to any limitations thereof contained in this certificate of incorporation or in the laws of the State of New York.

If the corporation elects to qualify for U.S. Federal income tax treatment as a REIT, the Board of Directors, in its sole and absolute discretion, shall take such actions as it determines are necessary or appropriate to preserve the status of the corporation as a REIT; provided, however, if the Board of Directors determines, in its sole and absolute discretion, that it is no longer in the best interests of the corporation to attempt to, or continue to, qualify as a REIT, the Board of Directors may revoke or otherwise terminate the corporation’s REIT election pursuant to Section 856(g) of the Code. The Board of Directors also may determine, in its sole and absolute discretion that compliance with any restriction or limitation on stock ownership and transfers set forth in Article TWELFTH is no longer required.

THIRD:               The office of the corporation is to be located in the County of Nassau, State of New York.

FOURTH:           The corporation shall have the authority to issue one class of shares consisting of 100 common shares, par value $.001 per share (the “Common Shares”).

FIFTH:                The Secretary of State is designated as the agent of the corporation upon whom process against the corporation may be served. The post office address within the State of New York to which the Secretary of State shall mail a copy of any process against the corporation served upon him is: Morse, Zelnick, Rose & Lander, LLP, 825 Third Avenue, New York, New York 10022, Attn: Stephen A. Zelnick, Esq.

SIXTH:                The duration of the corporation is perpetual.

SEVENTH:         Any action required or permitted to be taken by the Board of Directors of the corporation or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action. Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at the meeting.

EIGHTH:             Whenever under the Business Corporation Law shareholders are required or permitted to take any action by vote, such action may be taken without a meeting on written consent, setting forth the action so taken, signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted.

NINTH:               No holder of any of the shares of any class of the capital stock of the corporation shall be entitled as of right to subscribe for, purchase, or otherwise acquire any shares of any class of the capital stock of the corporation that the corporation proposes to issue or any rights or options which the corporation proposes to grant for the purchase of any shares, bonds, securities, or obligations of the corporation which are convertible into or exchangeable for, or which carry any rights to subscribe for, purchase, or otherwise acquire shares of any class of capital stock of the corporation; and any and all of such shares, bonds, securities or obligations of the corporation, whether now or hereafter authorized or created, may be issued, or may be reissued or transferred if the same have been reacquired and have treasury status, and any and all of such rights and options may be granted by the Board of Directors to such persons, firms, corporations and associations, and for such lawful consideration, and on such terms, as the Board of Directors, in its sole and absolute discretion may determine, without first offering the same, or any thereof, to any said holder. Without limiting the generality of the foregoing stated denial of any and all preemptive rights, no holder of shares of any class of the capital stock of the corporation shall have any preemptive rights in respect of the matters, proceedings, or transaction specified in subparagraphs (1) to (6), inclusive, of paragraph (e) of Section 622 of the Business Corporation Law.

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TENTH:              (a)        Right to Indemnification.         Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigation (hereinafter a “Proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer, of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee or agent, shall be indemnified and held harmless by the corporation to the fullest extent authorized by the Business Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, employee or agent and shall incur to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) hereof, the corporation shall indemnify any such person seeking indemnification in connection with a Proceeding (or part thereof) initiated by such person only if such Proceeding (or part thereof) was authorized by the Board of Directors of the corporation. The right to indemnification conferred in this Section shall be a contract right and shall include the right to be paid by the corporation the expenses incurred in defending any such Proceeding in advance of its final disposition; provided, however, that if the Business Corporation Law requires, the payment of such expenses incurred by a director or officer (in his or her capacity as a director or officer and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a Proceeding, shall be made only upon delivery to the corporation of an undertaking, by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section or otherwise. The corporation may, by action of its Board of Directors, provide indemnification to employees and agents of the Corporation with the same scope and effect as the foregoing indemnification of directors and officers.

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(b)        Right of Claimant to Bring Suit.         If a claim under paragraph (a) of this Section is not paid in full by the corporation within thirty days after a written claim has been received by the corporation, the claimant may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any Proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the claimant has not met the standards of conduct which make it permissible under the Business Corporation Law for the corporation to indemnify the claimant for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its Board of Directors, independent legal counsel, or its shareholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Business Corporation Law, nor an actual determination by the corporation (including its Board of Directors, independent legal counsel, or its shareholders) that the claimant has not met such applicable standard or conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(c)        Non-Exclusivity of Rights.         The right to indemnification and the payment of expenses incurred in defending a Proceeding in advance of its final disposition conferred in this Article TENTH shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, by-law, agreement, vote of shareholders or disinterested directors or otherwise.

(d)        Insurance.         The corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the corporation or another corporation, partnership, joint venture, trust or other enterprise against any such expense, liability or loss, whether or not the corporation would have the power to indemnify such person against such expense, liability or loss under the Business Corporation Law.

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ELEVENTH: A director of the corporation shall not be personally liable to the corporation or its shareholders for damages for any breach of duty in such capacity, except for the liability of any director if a judgment or other final adjudication adverse to him establishes that his acts or omissions were in bad faith or involved intentional misconduct or a knowing violation of law or that he personally gained in fact a financial profit or other advantage to which he was not legally entitled or that his acts violated Section 719 of the New York Business Corporation Law.

TWELFTH: RESTRICTIONS ON TRANSFER AND OWNERSHIP OF SHARES OF CAPITAL STOCK

Section12.1.          Definitions.   For the purpose of this Article TWELFTH, the following terms shall have the following meanings:

Aggregate Stock Ownership Limit.  The term “Aggregate Stock Ownership Limit” shall mean four (4.0%) percent in value or number, whichever is more restrictive, of the aggregate of the outstanding shares of Capital Stock, or such other percentage determined by the Board of Directors in accordance with Section 12.2.8 of this Certificate of Incorporation. The value of the outstanding shares of Capital Stock shall be determined by the Board of Directors, which determination shall be final and conclusive for all purposes hereof. For purposes of determining the percentage ownership of Capital Stock by any Person, shares of Capital Stock that may be acquired upon conversion, exchange or exercise of any securities of the corporation directly or constructively held by such Person, but not shares of Capital Stock issuable with respect to the conversion, exchange or exercise of securities of the corporation held by other Persons, shall be deemed to be outstanding prior to conversion, exchange or exercise.

Beneficial Ownership.  The term “Beneficial Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 544 of the Code, as modified by Section 856(h)(1)(B) of the Code. The terms “Beneficial Owner,” “Beneficially Owns” and “Beneficially Owned” shall have the correlative meanings.

Business Day.  The term “Business Day” shall mean any day, other than a Saturday or Sunday, that is not a legal holiday or a day on which banking institutions in the State of New York are authorized or required by law, regulation or executive order to close.

Capital Stock.   The term “Capital Stock” shall mean all classes or series of stock of the corporation, including, without limitation, Common Shares.

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Charitable Beneficiary. The term “Charitable Beneficiary” shall mean one or more beneficiaries of the Trust as determined pursuant to Section 12.3.6 of this Certificate of Incorporation, provided that each such organization must be described in Section 501(c)(3) of the Code and contributions to each such organization must be eligible for deduction under each of Sections 170(b)(1)(A), 2055 and 2522 of the Code.

Common Stock Ownership Limit.  The term “Common Stock Ownership Limit” shall mean four (4.0%) percent (in value or in number of Common Shares, whichever is more restrictive) of the aggregate of the outstanding Common Shares, or such other percentage determined by the Board of Directors in accordance with Section 12.2.8 of this Certificate of Incorporation. The number and value of the outstanding Common Shares of the corporation shall be determined by the Board of Directors, which determination shall be final and conclusive for all purposes hereof. For purposes of determining the percentage ownership of Common Shares by any Person, Common Shares that may be acquired upon conversion, exchange or exercise of any securities of the corporation directly or constructively held by such Person, but not Common Shares issuable with respect to the conversion, exchange or exercise of securities of the corporation held by other Persons, shall be deemed to be outstanding prior to conversion, exchange or exercise.

Constructive Ownership.  The term “Constructive Ownership” shall mean ownership of Capital Stock by a Person, whether the interest in the shares of Capital Stock is held directly or indirectly (including by a nominee), and shall include interests that would be treated as owned through the application of Section 318(a) of the Code, as modified by Section 856(d)(5) of the Code. The terms “Constructive Owner,” “Constructively Owns” and “Constructively Owned” shall have the correlative meanings.

Excepted Holder.  The term “Excepted Holder” shall mean Assaf Ran and any other shareholder of the corporation for whom an Excepted Holder Limit is created by this Article TWELFTH or by the Board of Directors pursuant to Section 12.2.7.

Excepted Holder Limit.  The term “Excepted Holder Limit” shall mean, provided that the affected Excepted Holder agrees to comply with the requirements established by the Board of Directors pursuant to Section 12.2.7 of this Certificate of Incorporation and subject to adjustment pursuant to Sections 12.2.7 of this Certificate of Incorporation and 12.2.8 of this Certificate of Incorporation, the percentage limit established by the Board of Directors pursuant to Section 12.2.7 of this Certificate of Incorporation.

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Initial Date.   The term “Initial Date” shall mean the date of the closing of the issuance of Common Shares pursuant to the S-11 Registration Statement, SEC File No. 333-196167, filed with the Securities and Exchange Commission on May 22, 2014.

Market Price.  The term “Market Price” on any date shall mean, with respect to any class or series of outstanding shares of Capital Stock, the Closing Price for such Capital Stock on such date. The “Closing Price” on any date shall mean the last sale price for such Capital Stock, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, for such Capital Stock, in either case as reported in the principal consolidated transaction reporting system with respect to securities listed or admitted to trading on Nasdaq or, if such Capital Stock is not listed or admitted to trading on Nasdaq, as reported on the principal consolidated transaction reporting system with respect to securities listed on the principal national securities exchange on which such Capital Stock is listed or admitted to trading or, if such Capital Stock is not listed or admitted to trading on any national securities exchange, the last quoted price, or, if not so quoted, the average of the high bid and low asked prices in the over-the-counter market, as reported by the principal automated quotation system that may then be in use or, if such Capital Stock is not quoted by any such system, the average of the closing bid and asked prices as furnished by a professional market maker making a market in such Capital Stock selected by the Board of Directors or, in the event that no trading price is available for such Capital Stock, the fair market value of the Capital Stock, as determined by the Board of Directors.

Nasdaq.  The term “Nasdaq” shall mean any of the Nasdaq Capital Market, the Nasdaq Global Market or the Nasdaq Global Select Market.

Person.   The term “Person” shall mean an individual, corporation, partnership, limited liability company, estate, trust (including a trust qualified under Sections 401(a) or 501(c)(17) of the Code), a portion of a trust permanently set aside for or to be used exclusively for the purposes described in Section 642(c) of the Code, association, private foundation within the meaning of Section 509(a) of the Code, joint stock company or other entity and also includes a group as that term is used for purposes of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, and a group to which an Excepted Holder Limit applies.

Prohibited Owner.  The term “Prohibited Owner” shall mean, with respect to any purported Transfer, any Person who, but for the provisions of this Article TWELFTH, would Beneficially Own or Constructively Own shares of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation, and if appropriate in the context, shall also mean any Person who would have been the record owner of the shares that the Prohibited Owner would have so owned.

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Restriction Termination Date.  The term “Restriction Termination Date” shall mean the first day after the Initial Date on which the Board of Directors determines, in its sole and absolute discretion, that it is no longer in the best interests of the corporation to attempt to, or continue to, qualify as a REIT or that compliance with any or all of the restrictions and limitations on Beneficial Ownership, Constructive Ownership and Transfers of shares of Capital Stock set forth herein is no longer required.

Transfer.  The term “Transfer” shall mean any issuance, sale, transfer, redemption, gift, assignment, devise or other disposition, as well as any other event that causes any Person to acquire or possess Beneficial Ownership or Constructive Ownership, or any agreement to take any such action or cause any such event, of Capital Stock or the right to vote or receive dividends on Capital Stock, including (a) the granting or exercise of any option (or any disposition of any option), (b) any disposition of any securities or rights convertible into or exchangeable for Capital Stock or any interest in Capital Stock or any exercise of any such conversion or exchange right and (c) Transfers of interests in other entities that result in changes in Beneficial Ownership or Constructive Ownership of Capital Stock; in each case, whether voluntary or involuntary, whether owned of record, Constructively Owned or Beneficially Owned and whether by operation of law or otherwise. The terms “Transferring” and “Transferred” shall have the correlative meanings.

Trust.  The term “Trust” shall mean any trust provided for in Section 12.3.1 of this Certificate of Incorporation.

Trustee.  The term “Trustee” shall mean a Person unaffiliated with the corporation and a Prohibited Owner that is appointed by the corporation to serve as trustee of the Trust.

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Section12.2.        Capital Stock.

Section12.2.1.     Ownership Limitations. During the period commencing on the Initial Date and prior to the Restriction Termination Date, but subject to Section 12.4 of this Certificate of Incorporation:

(a) Basic Restrictions.

(i) No

(1) Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Aggregate Stock Ownership Limit;

(2) Person, other than an Excepted Holder, shall Beneficially Own or Constructively Own shares of Common Stock in excess of the Common Stock Ownership Limit; and

(3) Excepted Holder shall Beneficially Own or Constructively Own shares of Capital Stock in excess of the Excepted Holder Limit for such Excepted Holder.

(ii)          No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such Beneficial Ownership or Constructive Ownership of Capital Stock would result in the corporation being “closely held” within the meaning of Section 856(h) of the Code (without regard to whether the ownership interest is held during the last half of a taxable year), or otherwise failing to qualify as a REIT (including, but not limited to, Beneficial Ownership or Constructive Ownership that would result in the corporation owning (actually or Constructively) an interest in a tenant that is described in Section 856(d)(2)(B) of the Code if the income derived by the corporation from such tenant would cause the Corporation to fail to satisfy any of the gross income requirements of Section 856(c) of the Code).

(iii)        Any Transfer of shares of Capital Stock that, if effective, would result in the Capital Stock being beneficially owned by fewer than 100 Persons (determined under the principles of Section 856(a)(5) of the Code) shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock.

(iv)        No Person shall Beneficially Own or Constructively Own shares of Capital Stock to the extent that such Beneficial Ownership or Constructive Ownership of Capital Stock could result in the corporation failing to qualify as a “domestically controlled qualified investment entity” within the meaning of Section 897(h)(4)(B) of the Code.

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(b)          Transfer in Trust.         If any Transfer of shares of Capital Stock occurs which, if effective, would result in any Person Beneficially Owning or Constructively Owning shares of Capital Stock in violation of Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation, then that number of shares of the Capital Stock the Beneficial Ownership or Constructive Ownership of which otherwise would cause such Person to violate Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation (rounded up to the nearest whole share) shall be automatically transferred to a Trust for the benefit of a Charitable Beneficiary, as described in Section 12.3, effective as of the close of business on the Business Day prior to the date of such Transfer, and such Person shall acquire no rights in such shares; provided, however, if the transfer to the Trust described in first clause of this first sentence of this Section 12.2.1(b) would not be effective for any reason to prevent the violation of Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation, then the Transfer of that number of shares of Capital Stock that otherwise would cause any Person to violate Section 12.2.1(a)(i), (ii) or (iv) of this Certificate of Incorporation shall be void ab initio, and the intended transferee shall acquire no rights in such shares of Capital Stock. To the extent that, upon a transfer of shares of Capital Stock to a Trust pursuant to this Section 12.2.1(b), a violation of any provision of this Article TWELFTH would nonetheless be continuing (for example where the ownership of shares of Capital Stock by a single Trust would violate the 100 stockholder requirement applicable to REITs), then shares of Capital Stock shall be transferred to that number of Trusts, each having a distinct Trustee and a Charitable Beneficiary or Charitable Beneficiaries that are distinct from those of each other Trust, such that there is no violation of any provision of this Article TWELFTH.

Section 12.2.2.          Remedies for Breach.  If the Board of Directors shall at any time determine that a Transfer or other event has taken place that results in a violation of Section 12.2.1 of this Certificate of Incorporation or that a Person intends to acquire or has attempted to acquire Beneficial Ownership or Constructive Ownership of any shares of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation (whether or not such violation is intended), the Board of Directors or a committee thereof shall take such action as it deems advisable to refuse to give effect to or to prevent such Transfer or other event, including, without limitation, causing the corporation to redeem shares, refusing to give effect to such Transfer on the books of the corporation or instituting proceedings to enjoin such Transfer or other event; provided, however, that any Transfer or attempted Transfer or other event in violation of Section 12.2.1 of this Certificate of Incorporation shall automatically result in the transfer to the Trust described above, and, where applicable, such Transfer (or other event) shall be void ab initio as provided above irrespective of any action (or non-action) by the Board of Directors.

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Section 12.2.3.          Notice of Restricted Transfer.  Any Person who acquires or attempts or intends to acquire Beneficial Ownership or Constructive Ownership of shares of Capital Stock that will or may violate Section 12.2.1(a) of this Certificate of Incorporation or any Person who would have owned shares of Capital Stock that resulted in a transfer to the Trust pursuant to the provisions of Section 12.2.1(b) of this Certificate of Incorporation shall immediately give written notice to the corporation of such event or, in the case of such a proposed or attempted transaction, give at least fifteen (15) days prior written notice, and shall provide to the corporation such other information as the corporation may request in order to determine the effect, if any, of such Transfer on the corporation’s status as a REIT.

Section12.2.4.          Owners Required To Provide Information.  From the Initial Date until prior to the Restriction Termination Date:

(a)          every owner of four (4.0%) percent or more (or such lower percentage as required by the Code or the U.S. Treasury Department regulations promulgated thereunder) of the outstanding shares of Capital Stock, within thirty (30) days after the end of each taxable year, shall give written notice to the corporation stating the name and address of such owner, the number of shares of Capital Stock Beneficially Owned and a description of the manner in which such shares are held. Each such owner shall provide to the corporation such additional information as the corporation may request in order to determine the effect, if any, of such Beneficial Ownership on the corporation’s status as a REIT and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit; and

(b)          each Person who is a Beneficial Owner or Constructive Owner of Capital Stock and each Person (including the shareholder of record) who is holding Capital Stock for a Beneficial Owner or Constructive Owner shall provide to the Corporation such information as the corporation may request, in order to determine the Corporation’s status as a REIT and to comply with the requirements of any taxing authority or governmental authority or to determine such compliance and to ensure compliance with the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit.

Section 12.2.5.          Remedies Not Limited.  Nothing contained in this Article TWELFTH shall limit the authority of the Board of Directors to take such other action as it deems necessary or advisable to protect the corporation in preserving the corporation’s status as a REIT.

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Section 12.2.6.          Ambiguity.  In the case of an ambiguity in the application of any of the provisions of Section 12.2, Section 12.3 or any definition contained in Section 12.1 of this Certificate of Incorporation, the Board of Directors may determine the application of the provisions of such Section 12.2 or Section 12.3 or any such definition with respect to any situation based on the facts known to it. In the event Section 12.2 or Section 12.3 of this Certificate of Incorporation requires an action by the Board of Directors and this Certificate of Incorporation fails to provide specific guidance with respect to such action, the Board of Directors may determine the action to be taken so long as such action is not contrary to the provisions of Sections 12.1, 12.2 or 12.3 of this Certificate of Incorporation. Absent a decision to the contrary by the Board of Directors (which the Board of Directors may make in its sole and absolute discretion), if a Person would have (but for the remedies set forth in Section12.2.2 of this Certificate of Incorporation) acquired Beneficial Ownership or Constructive Ownership of Capital Stock in violation of Section 12.2.1 of this Certificate of Incorporation, such remedies (as applicable) shall apply first to the shares of Capital Stock that, but for such remedies, would have been actually owned by such Person, and second to shares of Capital Stock that, but for such remedies, would have been Beneficially Owned or Constructively Owned (but not actually owned) by such Person, pro rata among the Persons who actually own such shares of Capital Stock based upon the relative number of the shares of Capital Stock held by each such Person.

Section 12.2.7.          Exceptions.

(a)          Subject to Section 12.2.1(a)(ii) of this Certificate of Incorporation, the Board of Directors, in its sole and absolute discretion, may, but is not required to, exempt (prospectively or retroactively) a Person from the Aggregate Stock Ownership Limit and the Common Stock Ownership Limit, as the case may be, and may establish or increase an Excepted Holder Limit for such Person if the corporation obtains such representations and undertakings from such Person as are reasonably necessary for the Board of Directors to determine that:

(i)          no Person’s Beneficial or Constructive Ownership of such shares of Capital Stock will violate Section 12.2.1(a)(ii) of this Certificate of Incorporation at the time the Board makes the determination; and

(ii)         such Person does not and will not own, actually or Constructively, an interest in a tenant of the corporation (or a tenant of any entity owned or controlled by the corporation ) that would cause the corporation to own, actually or Constructively, a 10% or more interest (as set forth in Section 856(d)(2)(B) of the Code) in such tenant (for this purpose, a tenant shall not be treated as a tenant of the corporation if the corporation (or an entity owned or controlled by the corporation ) derives (and is expected to continue to derive) a sufficiently small amount of revenue from such tenant such that, in the determination of the Board of Directors, rent from such tenant would not, individually or in the aggregate with other revenues of the corporation , adversely affect the corporation ’s ability to qualify as a REIT).

Any violation or attempted violation of any such representations or undertakings (or other action which is contrary to the restrictions contained in Sections 12.2.1 through 12.2.6 of this Certificate of Incorporation) will result in shares of Capital Stock being automatically transferred to a Trust in accordance with Sections 12.2.1(b) and 12.3 of this Certificate of Incorporation.

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(b)          Prior to granting any exception pursuant to Section 12.2.7(a) of this Certificate of Incorporation, the Board of Directors may require a ruling from the Internal Revenue Service, or an opinion of counsel, in either case in form and substance satisfactory to the Board of Directors, in its sole and absolute discretion, as it may deem necessary or advisable in order to determine or ensure the corporation’s status as a REIT. Notwithstanding the receipt of any ruling or opinion, the Board of Directors may impose such conditions or restrictions as it deems appropriate in connection with granting such exception.

(c)          Subject to Section 12.2.1(a)(ii) of this Certificate of Incorporation, an underwriter or placement agent that participates in a public offering or a private placement of Capital Stock (or securities convertible into or exchangeable for Capital Stock) may Beneficially Own or Constructively Own shares of Capital Stock (or securities convertible into or exchangeable for Capital Stock) in excess of the Aggregate Stock Ownership Limit, the Common Stock Ownership Limit, or both such limits, but only to the extent necessary to facilitate such public offering or private placement.

(d)          The Board of Directors may only reduce the Excepted Holder Limit for an Excepted Holder: (1) with the written consent of such Excepted Holder at any time, or (2) pursuant to the terms and conditions of the agreements and undertakings entered into with such Excepted Holder in connection with the establishment of the Excepted Holder Limit for that Excepted Holder. No Excepted Holder Limit shall be reduced to a percentage that is less than the Aggregate Stock Ownership Limit or the Common Stock Ownership Limit, as the case may be.

Section 12.2.8.          Increase or Decrease in Aggregate Stock Ownership and Common Stock Ownership Limits.   Subject to Section 12.2.1(a)(ii) and this Section 12.2.8 of this Certificate of Incorporation, the Board of Directors may, in its sole and absolute discretion, from time to time increase the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit for one or more Persons and decrease the Common Stock Ownership Limit and the Aggregate Stock Ownership Limit for all other Persons. No decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit will be effective for any Person whose percentage ownership of Capital Stock is in excess of such decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable, until such time as such Person’s percentage ownership of Capital Stock equals or falls below the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable; provided, however, any further acquisition of Capital Stock by any such Person (other than a Person for whom an exemption has been granted pursuant to Section 12.2.7(a) of this Certificate of Incorporation or an Excepted Holder) in excess of the Capital Stock owned by such person on the date the decreased Common Stock Ownership Limit or Aggregate Stock Ownership Limit, as applicable, became effective will be in violation of the Common Stock Ownership Limit or Aggregate Stock Ownership Limit. No increase to the Common Stock Ownership Limit or Aggregate Stock Ownership Limit may be approved if the new Common Stock Ownership Limit and/or Aggregate Stock Ownership Limit would allow five or fewer Persons to Beneficially Own, in the aggregate more than 49.9% in value of the outstanding Capital Stock.

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Section 12.2.9.          Legend.    Each certificate for shares of Capital Stock, if certificated, or the notice in lieu of a certificate, if any, shall bear substantially the following legend:

The shares [represented by this certificate] are subject to restrictions on Beneficial Ownership and Constructive Ownership and Transfer for the purpose, among others, of the corporation’s maintenance of its status as a Real Estate Investment Trust under the Internal Revenue Code of 1986, as amended (the “Code”). Subject to certain further restrictions and except as expressly provided in the corporation’s Certificate of Incorporation, (i) no Person may Beneficially Own or Constructively Own shares of the corporation’s Common Stock in excess of the Common Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (ii) no Person may Beneficially Own or Constructively Own shares of Capital Stock of the corporation in excess of the Aggregate Stock Ownership Limit, unless such Person is an Excepted Holder (in which case the Excepted Holder Limit shall be applicable); (iii) no Person may Beneficially Own or Constructively Own Capital Stock that would result in the corporation being “closely held” under Section 856(h) of the Code or otherwise cause the corporation to fail to qualify as a REIT; (iv) no Person may Transfer shares of Capital Stock if such Transfer would result in the Capital Stock of the corporation being owned by fewer than 100 Persons; and (v) no Person may Beneficially Own or Constructively Own shares of Capital Stock that could result in the corporation failing to qualify as a “domestically controlled qualified investment entity” under Section 897(h)(4)(B) of the Code. Any Person who Beneficially Owns or Constructively Owns or attempts or intends to Beneficially Own or Constructively Own shares of Capital Stock which cause or will cause a Person to Beneficially Own or Constructively Own shares of Capital Stock in excess or in violation of the above limitations must immediately notify the corporation. If any of the restrictions on transfer or ownership provided in (i), (ii), (iii) or (v) above are violated, the shares of Capital Stock in excess or in violation of the above limitations will be automatically transferred to a Trustee of a Trust for the benefit of one or more Charitable Beneficiaries. In addition, the corporation may redeem shares upon the terms and conditions specified by the Board of Directors in its sole and absolute discretion if the Board of Directors determines that ownership or a Transfer or other event may violate the restrictions described above. Furthermore, if the ownership restriction provided in (iv) above would be violated, or upon the occurrence of certain events, attempted Transfers in violation of the restrictions described above may be void ab initio. All capitalized terms in this legend have the meanings given to them in the Certificate of Incorporation of the corporation, as the same may be amended from time to time, a copy of which, including the restrictions on transfer and ownership, will be furnished to each holder of shares of Capital Stock of the Corporation on request and without charge. Requests for such a copy may be directed to the Secretary of the corporation at its principal office.

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Instead of the foregoing legend, the certificate or notice may state that the corporation will furnish a full statement about certain restrictions on ownership and transferability to a shareholder on request and without charge.

Section 12.3.          Transfer of Capital Stock in Trust.

Section 12.3.1.          Ownership in Trust.    Upon any purported Transfer or other event described in Section 12.2.1(b) of this Certificate of Incorporation that would result in a transfer of shares of Capital Stock to a Trust, such shares of Capital Stock shall be deemed to have been transferred to the Trustee as trustee of a Trust for the exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the Trustee shall be deemed to be effective as of the close of business on the Business Day prior to the purported Transfer or other event that results in the transfer to the Trust pursuant to Section 12.2.1(b) of this Certificate of Incorporation. The Trustee shall be appointed by the corporation and shall be a Person unaffiliated with the corporation and any Prohibited Owner. Each Charitable Beneficiary shall be designated by the corporation as provided in Section 12.3.6 of this Certificate of Incorporation.

Section 12.3.2.          Status of Shares Held by the Trustee.   Shares of Capital Stock held by the Trustee shall be issued and outstanding shares of Capital Stock of the corporation. The Prohibited Owner shall have no rights in the shares held by the Trustee. The Prohibited Owner shall not benefit economically from ownership of any shares held in trust by the Trustee, shall have no rights to dividends or other distributions and shall not possess any rights to vote or other rights attributable to the shares held in the Trust.

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Section 12.3.3.          Dividend and Voting Rights.  The Trustee shall have all voting rights and rights to dividends or other distributions with respect to shares of Capital Stock held in the Trust, which rights shall be exercised for the exclusive benefit of the Charitable Beneficiary. Any dividend or other distribution paid prior to the discovery by the corporation that the shares of Capital Stock have been transferred to the Trustee shall be paid by the recipient of such dividend or distribution to the Trustee upon demand, and any dividend or other distribution authorized but unpaid shall be paid when due to the Trustee. Any dividend or distribution so paid to the Trustee shall be held in trust for the Charitable Beneficiary. The Prohibited Owner shall have no voting rights with respect to shares of Capital Stock held in the Trust and, subject to New York law, effective as of the date that the shares of Capital Stock have been transferred to the Trust, the Trustee shall have the authority (at the Trustee’s sole discretion) (i) to rescind as void any vote cast by a Prohibited Owner prior to the discovery by the corporation that the shares of Capital Stock have been transferred to the Trust and (ii) to recast such vote in accordance with the desires of the Trustee acting for the benefit of the Charitable Beneficiary; provided, however, that if the corporation has already taken irreversible corporate action, then the Trustee shall not have the authority to rescind and recast such vote. Notwithstanding the provisions of this Article TWELFTH, until the corporation has received notification that shares of Capital Stock have been transferred into a Trust, the corporation shall be entitled to rely on its stock transfer and other stockholder records for purposes of preparing lists of shareholders entitled to vote at meetings, determining the validity and authority of proxies and otherwise conducting votes and determining the other rights of shareholders.

Section 12.3.4.          Sale of Shares by Trustee.  Within twenty (20) days of receiving notice from the corporation that shares of Capital Stock have been transferred to the Trust, the Trustee of the Trust shall sell the shares held in the Trust to a person, designated by the Trustee, whose ownership of the shares will not violate the ownership limitations set forth in Section 12.2.1(a) of this Certificate of Incorporation. Upon such sale, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner and to the Charitable Beneficiary as provided in this Section 12.3.4 of this Certificate of Incorporation. The Prohibited Owner shall receive the lesser of (1) the price paid by the Prohibited Owner for the shares or, if the Prohibited Owner did not give value for the shares in connection with the event causing the shares to be held in the Trust (e.g., in the case of a gift, devise or other such transaction), the Market Price of the shares on the day of the event causing the shares to be held in the Trust and (2) the price per share received by the Trustee (net of any commissions and other expenses of sale) from the sale or other disposition of the shares held in the Trust. The Trustee may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 12.3.3 of this Certificate of Incorporation of this Article TWELFTH. Any net sales proceeds in excess of the amount payable to the Prohibited Owner shall be retained by or immediately paid to the Charitable Beneficiary. If, prior to the discovery by the corporation that shares of Capital Stock have been transferred to the Trustee, such shares are sold by a Prohibited Owner, then (i) such shares shall be deemed to have been sold on behalf of the Trust and (ii) to the extent that the Prohibited Owner received an amount for such shares that exceeds the amount that such Prohibited Owner was entitled to receive pursuant to this Section 12.3.4, such excess shall be paid to the Trustee upon demand.

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Section 12.3.5.          Purchase Right in Stock Transferred to the Trustee.   Shares of Capital Stock transferred to the Trustee shall be deemed to have been offered for sale to the corporation, or its designee, at a price per share equal to the lesser of (i) the price per share in the transaction that resulted in such transfer to the Trust (or, in the case of a devise or gift, the Market Price at the time of such devise or gift) and (ii) the Market Price on the date the corporation, or its designee, accepts such offer. The corporation may reduce the amount payable to the Prohibited Owner by the amount of dividends and distributions which have been paid to the Prohibited Owner and are owed by the Prohibited Owner to the Trustee pursuant to Section 12.3.3 of this Article TWELFTH. The corporation may pay the amount of such reduction to the Trustee for the benefit of the Charitable Beneficiary. The corporation shall have the right to accept such offer until the Trustee has sold the shares held in the Trust pursuant to Section 12.3.4. Upon such a sale to the corporation, the interest of the Charitable Beneficiary in the shares sold shall terminate and the Trustee shall distribute the net proceeds of the sale to the Prohibited Owner.

Section 12.3.6.          Designation of Charitable Beneficiaries.  By written notice to the Trustee, the corporation shall designate one or more nonprofit organizations to be the Charitable Beneficiary or Charitable Beneficiaries of the interest in the Trust such that the shares of Capital Stock held in the Trust would not violate the restrictions set forth in Section 12.2.1(a) of this Certificate of Incorporation in the hands of such Charitable Beneficiary or Charitable Beneficiaries. Neither the failure of the corporation to make such designation nor the failure of the corporation to appoint the Trustee before the automatic transfer provided in Section 12.2.1(b) shall make such transfer ineffective, provided that the corporation thereafter makes such designation and appointment.

Section 12.4.          Nasdaq Transactions.  Nothing in this Article TWELFTH shall preclude the settlement of any transaction entered into through the facilities of Nasdaq or any other national securities exchange or automated inter-dealer quotation system. The fact that the settlement of any transaction occurs shall not negate the effect of any other provision of this Article TWELFTH and any transferee in such a transaction shall be subject to all of the provisions and limitations set forth in this Article TWELFTH.

Section 12.5.          Enforcement.   The corporation is authorized specifically to seek equitable relief, including injunctive relief, to enforce the provisions of this Article TWELFTH.

Section 12.6.          Non-Waiver.   No delay or failure on the part of the corporation or the Board of Directors in exercising any right hereunder shall operate as a waiver of any right of the corporation or the Board of Directors, as the case may be, except to the extent specifically waived in writing.

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IN WITNESS WHEREOF, I hereto sign my name and affirm that the statements made herein are true under the penalties of perjury, this 3rd day of December 2015.

MBC Funding II Corp.
By:	/s/ Assaf Ran
	Assaf Ran, Incorporator
	60 Cutter Mill Road, Great Neck, New York 11021

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CERTIFICATE OF INCORPORATION

OF

MBC FUNDING II CORP.

(Pursuant to Section 402 of the Business Corporation Law)

Filer:

John C. Hui, Esq.

Morse, Zelnick, Rose & Lander LLP

825 Third Ave

New York, New York 10022

EX-3.4

Exhibit 3.4

B Y L A W S

of

MBC FUNDING II CORP.

ARTICLE I

OFFICES

Section 1. Principal Office - The principal office of the Corporation shall be as set forth in its Certificate of Incorporation.

Section 2. Additional Offices - The Corporation may have such additional offices at such other place within or without the State of New York as the Board of Directors may from time to time determine or as the business of the Corporation may require.

ARTICLE II

SHAREHOLDERS' MEETING

Section 1. Annual Meeting - An annual meeting of shareholders shall be held annually on such day during the period from May 1 through October 31, other than a Saturday, Sunday or a legal holiday in the state of New York, at the time and place (either within or without the State of New York) as shall be fixed by the Board of Directors and specified in the notice of meeting for the purpose of electing directors and transacting such other business as may properly be brought before the meeting.

Section 2. Special Meeting - A special meeting of shareholders may be called at any time by the President and shall be called by the President at the request in writing of a majority of the Board of Directors then in office or at the request in writing filed with the Secretary by the holders of a majority of the issued and outstanding shares of the capital stock of the Corporation entitled to vote at such meeting. Any such request shall state the purpose or purposes of the proposed meeting. Special meetings shall be held at such time and place (either within or without the State of New York) as shall be specified in the notice thereof. Business transacted at any special meeting of shareholders shall be confined to the purposes set forth in the notice thereof.

Section 3. Notice of Meetings - Written notice of the time, and place and purpose of every meeting of shareholders (and, if other than an annual meeting, indicating the person or persons at whose discretion the meeting is being convoked), shall be given by the President, a Vice-President or by the Secretary to each shareholder of record entitled to vote at such meeting and to each shareholder who, by reason of any action proposed at such meeting, would be entitled to have his stock appraised if such action were taken, not less than ten nor more than fifty days prior to the date set for the meeting, either personally or by mailing said notice by first class mail to each shareholder at his address appearing on the stock book of the Corporation or at such other address supplied by him in writing to the Secretary of the Corporation for the purpose of receiving notice. Notice by mail shall be deemed to be given when deposited, postage prepaid, in a post office or official depository under the exclusive care and custody of the United States Post Office Department. The record date for determining the shareholders entitled to such notice shall be determined by the Board of Directors in accordance with Section 6 of ARTICLE SIXTH of these Bylaws.

If the directors shall adopt, amend or repeal a by-law regulating an impending election of directors, the notice of the next meeting of shareholders for the election of directors shall set forth the by-law so adopted, amended or repealed together with a concise statement of the changes made as required by Section 601(b) of the Business Corporation Law. If any action is proposed to be taken which would, if taken, entitle shareholders to receive payment for their shares, the notice of meeting shall include a statement to such effect.

A written waiver of notice setting forth the purposes of the meeting for which notice is waived, signed by the person or persons entitled to such notice, whether before or after the time of the meeting stated therein, shall be deemed equivalent to the giving of such notice. The attendance by a shareholder at a meeting either in person or by proxy without protesting the lack of notice thereof shall constitute a waiver of notice of such shareholder.

All notice given with respect to an original meeting shall extend to any and all adjournments thereof and such business as might have been transacted at the original meeting may be transacted at any adjournment thereof; no notice of any adjourned meeting need be given if an announcement of the time and place of the adjourned meeting is made at the original meeting.

Section 4. Quorum - The holders of a majority of the shares of stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall be requisite and shall constitute a quorum at all meetings of shareholders for the transaction of business except as otherwise provided by statute or the Certificate of Incorporation. If, however, a quorum shall not be present or represented at any meeting of shareholders, the shareholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. When a quorum is once present to organize a meeting, such quorum is not deemed broken by the subsequent withdrawal of any shareholders.

Section 5. Voting - Every shareholder entitled to vote at any meeting shall be entitled to one vote for each share of stock entitled to vote and held by him of record on the date fixed as the record date for said meeting and may so vote in person or by proxy. At all elections of directors when a quorum is present, a plurality of the votes cast by the holders of shares entitled to vote shall elect and any other corporate action, when a quorum is present, shall be authorized by a majority of the votes cast by the holders of shares entitled to vote thereon except as may otherwise be provided by statute or the Certificate of Incorporation.

Section 6. Proxies - Every proxy must be signed by the shareholder entitled to vote or by his duly authorized attorney-in-fact and shall be valid only if filed with the Secretary of the Corporation or with the Secretary of the meeting prior to the commencement of voting on the matter in regard to which said proxy is to be voted. No proxy shall be valid after the expiration of eleven months from the date of its execution unless otherwise expressly provided in the proxy. Every proxy shall be revocable at the pleasure of the person executing it except as otherwise provided by Section 609 of the Business Corporation Law. Unless the proxy by its terms provides for a specific revocation date and except as otherwise provided by statute, revocation of a proxy shall not be effective unless and until such revocation is executed in writing by the shareholder who executed such proxy and the revocation is filed with the Secretary of the Corporation or with the Secretary of the Meeting prior to the voting of the proxy.

Section 7. Shareholders' List - A list of shareholders as of the record date, certified by the Secretary of the Corporation or by a transfer agent appointed by the Board of Directors shall be prepared for every meeting of shareholders and shall be produced by the Secretary or some other officer of the Corporation thereat.

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Section 8. Inspectors at Meetings - In advance of any shareholders' meeting, the Board of Directors may appoint one or more inspectors to act at the meeting or at any adjournment thereof and if not so appointed the person presiding at any such meeting may, and at the request of any shareholder entitled to vote thereat shall, appoint one or more inspectors. Each inspector, before entering upon the discharge of his duties as set forth in Section 611 of the Business Corporation Law, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his ability.

Section 9. Conduct of Meeting - All meetings of shareholders shall be presided over by the President, or if he is not present, by a Vice-President, or if neither the President nor any Vice-President is present, by a chairman thereby chosen by the shareholders at the meeting. The Secretary of the Corporation, or in his absence, an Assistant Secretary, shall act as secretary of every meeting but if neither the Secretary nor the Assistant Secretary is present, the chairman of the meeting shall appoint any person present to act as secretary of the meeting.

ARTICLE III

BOARD OF DIRECTORS

Section 1. Function and Definition - The business and property of the Corporation shall be managed by its Board of Directors who may exercise all the powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws directed or required to be exercised or done by the shareholders.

Section 2. Number and Qualification - The number of directors constituting the entire Board shall be one. The phrase "entire Board" as used herein means the total number of directors which the Corporation would have if there were no vacancies. Unless and until a different number shall be so fixed by resolution of the Board of Directors, provided that any such action of the Board shall require the vote of a majority of the entire Board, or by the shareholders entitled to vote for the election of directors, the Board shall consist of one director. The term of any incumbent director shall not be shortened by any such action by the Board of Directors or by the shareholders.

Each director shall be at least twenty-one years of age. A director need not be a shareholder, a citizen of the United States or a resident of the State of New York.

Section 3. Election Term and Vacancies - Except as otherwise provided in this Section, all directors shall be elected at the annual meeting of shareholders and all directors who are so elected or who are elected in the interim to fill vacancies and newly created directorships, shall hold office until the next annual meeting of shareholders and until their respective successors have been elected and qualified.

In the interim between annual meetings of shareholders, newly-created directorships resulting from an increase in the number of directors or from vacancies occurring in the Board, but not, except as hereinafter provided, in the case of a vacancy occurring by reason of removal of a director by the shareholders, may be filled by the vote of a majority of the directors, then remaining in office, although less than a quorum may exist.

In the case of a vacancy occurring in the Board of Directors by reason of the removal of one or more directors by action of the shareholders, such vacancy may be filled by the shareholders at a special meeting duly called for such purpose.

In the event a vacancy is not filled by such election by shareholders, whether or not the vacancy resulted from the removal of a director with or without cause, a majority of the directors then remaining in office, although less than a quorum, may fill any such vacancy.

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Section 4. Removal - The Board of Directors may, at any time, with cause, remove any director.

The shareholders entitled to vote for the election of directors may, at any time, remove any or all of the directors with cause.

Section 5. Meetings - The annual meeting of the Board of Directors for the election of officers and the transaction of such other business as may come before the meeting, shall be held, without notice, immediately following the annual meeting of shareholders, at the same place at which such shareholders' meeting is held.

Regular meetings of the Board of Directors shall be held at such time and place, within or outside the State of New York, as may be fixed by resolution of the Board, and when so fixed, no further notice thereof need be given. Regular meetings not fixed by resolution of the Board may be held on notice at such time and place as shall be determined by the Board.

Special meetings of the Board of Directors may be called on notice at any time by the President, and shall be called by the President at the written request of a majority of the directors then in office.

Section 6. Notice of Meetings - No notice shall be required for regular meetings for which the time and place have been fixed. Written, oral, or any other mode of notice of the time and place shall be given for special meetings in sufficient time for the convenient assembly of the directors thereat. Notice need not be given to any director or to any member of a committee of directors who submits a written waiver of notice signed by him before or after the time stated therein. Attendance of any such person at a meeting shall constitute a waiver of notice of such meeting, except when he attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the directors need be specified in any written waiver of notice.

Section 7. Conduct of Meetings - The President, if present, shall preside at all meetings of directors. At all meetings at which the President is not present any other director chosen by the Board shall preside.

Section 8. Quorum, Adjournment, Voting - Except as otherwise provided by the Certificate of Incorporation, a majority of the entire Board shall be requisite and shall constitute a quorum at all meetings of the Board of Directors for the transaction of business. Where a vacancy or vacancies prevents such majority, a majority of the directors then in office shall constitute a quorum.

A majority of the directors present at any meeting, whether or not a quorum is present, may adjourn the meeting to another time and place without further notice other than an announcement at the meeting.

Except as otherwise provided by the Certificate of Incorporation, when a quorum is present at any meeting, a majority of the directors present shall decide any questions brought before such meeting and the act of such majority shall be the act of the Board.

Section 9. Action Without Meeting - Any action required or permitted to be taken by the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board of Directors or of any committee thereof consent in writing to the adoption of a resolution authorizing the action.

Any one or more members of the Board of Directors or of any committee thereof may participate in a meeting of said Board or of any such committee by means of a conference telephone or similar communications equipment allowing all persons participating in the meeting to hear each other at the same time, and participation by such means shall constitute presence in person at the meeting.

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Section 10. Compensation of Directors - Directors, as such, shall not receive any stated salary for their services, but, by resolution of the Board, a fixed sum and expenses of attendance, if any, may be allowed for attendance at any meeting of the Board of Directors or of any committee thereof. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving reasonable compensation therefor.

Section 11. Committees - The Board of Directors, by resolution of a majority of the directors present at a meeting or of all of the directors if acting by written consent, may designate from among its members one or more committees, each consisting of one or more directors, and each of which, to the extent provided in such resolution, shall have all the authority of the Board except that no such committee shall have authority as to any of the following matters:

(a)       the submission to stockholders of any action as to which stockholders' authorization or approval is required by statute, the Certificate of Incorporation or by these Bylaws;

(b)       the filing of vacancies in the Board of Directors or in any committee thereof;

(c)       the fixing of compensation of the directors for serving on the Board or on any committee thereof;

(d)       the amendment or repeal of these Bylaws or the adoption of new Bylaws; and

(e)       the amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable.

The Board may designate one or more directors as alternate members of any such committee who may replace any absent member or members at any meeting of such committee.

Each such committee shall serve at the pleasure of the Board. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, or to discharge any such committee. Committees shall keep minutes of their proceedings and shall report the same to the Board of Directors at the meeting of the Board next succeeding, and any action by the committee shall be subject to revision and alteration by the Board of Directors, provided that no rights of a third party shall be affected in any such revision or alteration.

ARTICLE IV

OFFICES

Section 1. Executive Officers - The Officers of the Corporation shall be a President, one or more Vice-Presidents, a Treasurer and a Secretary and such Assistant Treasurers and Assistant Secretaries and other officers as the Board of Directors may determine. Any two or more offices may be held by the same person, except the offices of President and Secretary, unless all of the issued and outstanding shares of capital stock of the Corporation are owned by one person, in which event such person may hold all or any combination of offices.

Section 2. Election - The President, one or more Vice-Presidents, the Treasurer and Secretary shall be elected by the Board of Directors to hold office until the meeting of the Board held immediately following the next annual meeting of shareholders and shall hold office for the term for which elected and until their successors have been elected and qualified. The Board of Directors may from time to time appoint all such other officers as it may determine and such officers shall hold office from the time of their appointment and qualifications until the time at which their successors are appointed and qualified. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the Board of Directors.

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Section 3. Removal - Any officer may be removed from office by the Board at any time with or without cause.

Section 4. Delegation of Powers - The Board of Directors may from time to time delegate the power or duties of any officer of the Corporation, in the event of his absence or failure to act otherwise, to any other officer or director or person whom they may select.

Section 5. Compensation - The compensation of each officer shall be such as the Board of Directors may from time to time determine.

Section 6. Chief Executive Officer - The Board of Directors shall designate the President as the chief executive officer of the Corporation who shall have general charge of the business and affairs of the Corporation, subject, however, to the right of the Board of Directors to confer specified powers on officers and subject generally to the direction of the Board.

Unless otherwise ordered by the Board of Directors, the Chief Executive Officer, or in the event of his inability to act, any other officer designated by the Board, shall have full power and authority on behalf of the Corporation to attend and to act and to vote at any meetings of security holders of corporations in which the Corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities, and which, as the owner thereof, the Corporation might have possessed and exercised, if present. The Board of Directors by resolution from time to time may confer like powers upon any other person or persons.

Section 7. President The President, if not designated as Chief Executive Officer, shall have such duties as the Board may prescribe.

Section 8. Vice-President - The Vice-President shall have such powers and perform such duties as the Board of Directors may from time to time prescribe. In the absence or inability of the Chief Executive Officer to perform his duties or exercise his powers, the Vice-President or, if there be more than one, a Vice-President designated by the Board, shall exercise the powers and perform the duties of the President subject to the direction of the Board of Directors.

Section 9. Secretary - The Secretary shall keep the minutes of all meetings and record all votes of shareholders, the Board of Directors and committees in a book to be kept for that purpose. He shall give or cause to be given any required notice of meetings of shareholders, the Board of Directors or any committee, and shall be responsible for preparing or obtaining from a transfer agent appointed by the Board, the list of shareholders required by Article II, Section 7 thereof. He shall be the custodian of the seal of the Corporation and shall affix or cause to be affixed the seal to any instrument requiring it and attest the same and exercise the powers and perform the duties incident to the office of Secretary subject to the direction of the Board of Directors.

Section 10. Treasurer - Subject to the direction of the Board of Directors, the Treasurer shall have charge of the general supervision of the funds and securities of the Corporation and the books of account of the Corporation and shall exercise the powers and perform the duties incident to the office of the Treasurer. If required by the Board of Directors, he shall give to the Corporation a bond in such sum and with such sureties as may be satisfactory to the Board of Directors for the faithful discharge of his duties.

Section 11. Other Officers - All other officers, if any, shall have such authority and shall perform such duties as may be specified from time to time by the Board of Directors.

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ARTICLE V

RESIGNATIONS

Any director or officer of the Corporation or any member of any committee of the Board of Directors of the Corporation may resign at any time by giving written notice to the Board of Directors, the President or the Secretary. Any such resignation shall take effect at the time specified therein or, if the time is not specified therein, upon the receipt thereof, irrespective of whether any such resignation shall have been accepted.

ARTICLE VI

CERTIFICATES REPRESENTING SHARES

Section 1. Form of Certificates - Each shareholder shall be entitled to a certificate or certificates in such form as prescribed by the Business Corporation Law and by any other applicable statutes, which Certificate shall represent and certify the number, kind and class of shares owned by him in the Corporation. The Certificates shall be numbered and registered in the order in which they are issued and upon issuance the name in which each Certificate has been issued together with the number of shares represented thereby and the date of issuance shall be entered in the stock book of the Corporation by the Secretary or by the transfer agent of the Corporation. Each certificate shall be signed by the President or a Vice-President and countersigned by the Secretary or Assistant Secretary and shall be sealed with the Corporate Seal or a facsimile thereof. The signature of the officers upon a certificate may also be facsimiles if the certificate is countersigned by a transfer agent or registered by a registrar other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer before the certificate is issued, such certificate may be issued by the Corporation with the same effect as if the officer had not ceased to be such at the time of its issue.

Section 2. Consideration - A certificate representing shares shall not be issued until the full amount of consideration therefor has been paid to the Corporation, except if otherwise permitted by Section 504 of the Business Corporation Law.

Section 3. Lost Certificates - The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation, alleged to have been lost, mutilated, stolen or destroyed, upon the making of an affidavit of that fact by the person so claiming and upon delivery to the Corporation, if the Board of Directors shall so require, of a bond in such form and with such surety or sureties as the Board may direct, sufficient in amount to indemnify the Corporation and its transfer agent against any claim which may be made against it or them on account of the alleged loss, destruction, theft or mutilation of any such certificate or the issuance of any such new certificate.

Section 4. Fractional Share Interests - The Corporation may issue certificates for fractions of a share where necessary to effect transactions authorized by the Business Corporation Law; or it may pay in cash the fair market value of fractions of a share as of the time when those entitled to receive such fractions are determined; or it may issue scrip in registered or bearer form over the manual or facsimile signature of an officer of the Corporation or of its agent, exchangeable as therein provided for full shares, but such scrip shall not entitle the holder to any rights of a shareholder except as therein provided.

Section 5. Share Transfers - Upon compliance with provisions restricting the transferability of shares, if any, transfers of shares of the Corporation shall be made only on the share record of the Corporation by the registered holder thereof, or by his duly authorized attorney, upon the surrender of the certificate or certificates for such shares properly endorsed with payment of all taxes thereon.

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Section 6. Record Date for Shareholders - For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or to express consent or dissent from any proposal without a meeting, or for the purpose of determining the shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action, the Board of Directors may fix, in advance, a date as the record date for any such determination of shareholders. Such date shall not be more than fifty nor less than ten days before the date of any meeting nor more than fifty days prior to any action taken without a meeting, the payment of any dividend or the allotment of any rights, or any other action. When a determination of shareholders of record entitled to notice of or to vote at any meeting of shareholders has been made as provided in this Section, such determination shall apply to any adjournment thereof, unless the Board fixes a new record date under this Section for the adjourned meeting.

Section 7. Shareholders of Record - The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of New York.

ARTICLE VII

STATUTORY NOTICES

The Board of Directors may appoint the Treasurer or any other officer of the Corporation to cause to be prepared and furnished to shareholders entitled thereto any special financial notice and/or statement which may be required by Sections 510, 511, 515, 516, 517, 519 and 520 of the Business Corporation Law or by any other applicable statute.

ARTICLE VIII

FISCAL YEAR

The fiscal year of the Corporation shall be fixed, and shall be subject to change from time to time, by the Board of Directors.

ARTICLE IX

CORPORATE SEAL

The Corporate seal shall have inscribed thereon the name of the Corporation, the year of its incorporation and the words "Corporate Seal" and "New York" and shall be in such form and contain such other words and/or figures as the Board of Directors shall determine. The Corporate seal may be used by printing, engraving, lithographing, stamping or otherwise making, placing or affixing, or causing to be printed, engraved, lithographed, stamped or otherwise made, placed or affixed, upon any paper or document, by any process whatsoever, an impression, facsimile or other reproduction of said Corporate seal.

ARTICLE X

BOOKS AND RECORDS

There shall be maintained at the principal office of the Corporation books of account of all the Corporation's business and transactions.

There shall be maintained at the principal office of the corporation or at the office of the Corporation's transfer agent a record containing the names and addresses of all shareholders, the number and class of shares held by such and the dates when they respectively became the owners of record thereof.

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ARTICLE XI

INDEMNIFICATION OF DIRECTORS, OFFICERS,

EMPLOYEES AND AGENTS

Any person made or threatened to be made a party to an action or proceeding, whether civil or criminal, by reason of the fact that he, his testator or intestate, then is or was a director, officer, employee or agent of the Corporation, or then serves or has served any other corporation in any capacity at the request of the Corporation, shall be indemnified by the Corporation against reasonable expenses, judgments, fines and amounts actually and necessarily incurred in connection with the defense of such action or proceeding or in connection with an appeal therein, to the fullest extent permissible by the laws of the State of New York. Such right of indemnification shall not be deemed exclusive of any other rights to which such person may be entitled.

ARTICLE XII

AMENDMENTS

The shareholders entitled at the time to vote in the election of directors and the Board of Directors by vote of a majority of the entire Board, shall have the power to amend or repeal these By-Laws and to adopt new By-Laws, provided, however, that any by-law adopted, amended or repealed by the Board of Directors may be amended or repealed by the shareholders entitled to vote thereon as herein provided.

EFFECTIVE: December 7, 2015

EX-4.5

Exhibit 4.5

INDENTURE

Dated as of ________________ __, 2016

___________________

BETWEEN

MBC FUNDING II CORP.,

as Issuer,

MANHATTAN BRIDGE CAPITAL, INC.

and

[TRUSTEE TBD],

as Indenture Trustee

Senior Secured Notes

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION		2
Section 1.01	Definitions	2
Section 1.02	Rules of Construction	22
ARTICLE II THE NOTES		23
Section 2.01	Forms; Denominations	23
Section 2.02	Execution, Authentication, Delivery and Dating	24
Section 2.03	Certification of Receipt of the Collateral	25
Section 2.04	Repurchase or Transfer and Exchange of Mortgage Loans for Document Defects and Breaches of Representations and Warranties	26
Section 2.05	The Notes Generally	27
Section 2.06	Registrar and Paying Agent	28
Section 2.07	Registration of Transfer and Exchange of Notes	28
Section 2.08	CUSIP Number	29
Section 2.09	Deposit of Moneys	30
Section 2.10	Book-Entry Notes	30
Section 2.11	Mutilated, Destroyed, Lost or Stolen Notes	31
Section 2.12	Noteholder Lists	32
Section 2.13	Persons Deemed Owners	32
Section 2.14	Payment Account	32
Section 2.15	Payments on the Notes	33
Section 2.16	Final Payment Notice	35
Section 2.17	Compliance with Withholding Requirements	35
Section 2.18	Cancellation	36
Section 2.19	Tax Treatment of the Notes and the Issuer	36
Section 2.20	Representations and Warranties with Respect to the Issuer	36
Section 2.21	Representations and Warranties With Respect to Mortgaged Properties and Mortgage Loans	39
ARTICLE III SATISFACTION AND DISCHARGE		46
Section 3.01	Satisfaction and Discharge of Indenture	46
Section 3.02	Application of Trust Money	47
ARTICLE IV EVENTS OF DEFAULT; REMEDIES		47
Section 4.01	Events of Default	47
Section 4.02	Acceleration of Maturity; Rescission and Annulment	49
Section 4.03	Collection of Indebtedness and Suits for Enforcement by Indenture Trustee	50
Section 4.04	Remedies	52
Section 4.05	Application of Money Collected	53
Section 4.06	Limitation on Suits,	53

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Section 4.07	Unconditional Right of Noteholders to Receive Principal and Interest	54
Section 4.08	Restoration of Rights and Remedies	54
Section 4.09	Rights and Remedies Cumulative	54
Section 4.10	Delay or Omission Not Waiver	54
Section 4.11	Control by Requisite Majority	55
Section 4.12	Waiver of Past Defaults	55
Section 4.13	Undertaking for Costs	55
Section 4.14	Waiver of Stay or Extension Laws	56
Section 4.15	Sale of Collateral	56
Section 4.16	Action on Notes	57
ARTICLE V THE INDENTURE TRUSTEE		57
Section 5.01	Certain Duties and Responsibilities	57
Section 5.02	Notice of Defaults	61
Section 5.03	Certain Rights of Indenture Trustee	61
Section 5.04	Compensation; Reimbursement; Indemnification	63
Section 5.05	Corporate Indenture Trustee Required; Eligibility	65
Section 5.06	Authorization of Indenture Trustee	65
Section 5.07	Merger, Conversion, Consolidation or Succession to Business	65
Section 5.08	Resignation and Removal; Appointment of Successor	66
Section 5.09	Acceptance of Appointment by Successor	67
Section 5.10	Unclaimed Funds	68
Section 5.11	Illegal Acts	68
Section 5.12	Communications by the Indenture Trustee	68
Section 5.13	Separate Indenture Trustees and Co-Trustees	68
ARTICLE VI REPORTS TO NOTEHOLDERS		70
Section 6.01	Reports to Noteholders and Others	70
Section 6.02	Access to Certain Information	70
ARTICLE VII REDEMPTION		71
Section 7.01	Optional Redemption	71
Section 7.02	Purchase of Notes at Holders’ Option	73
ARTICLE VIII SUPPLEMENTAL INDENTURES; AMENDMENTS		75
Section 8.01	Supplemental Indentures or Amendments Without Consent of Noteholders	75
Section 8.02	Supplemental Indentures With Consent	76
Section 8.03	Delivery of Supplements and Amendments	77
Section 8.04	Execution of Supplemental Indentures, Etc.	77
ARTICLE IX COVENANTS; WARRANTIES		78
Section 9.01	Maintenance of Office or Agency	78
Section 9.02	Existence and Good Standing	78
Section 9.03	Payment of Taxes and Other Claims	78

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Section 9.04	Title to the Collateral; Lien	79
Section 9.05	Protection of Collateral Pool	79
Section 9.06	Limitation on Sales of Assets	80
Section 9.07	Repurchase at the Option of Holders upon Change of Control	83
Section 9.08	Covenants	84
Section 9.09	Statement as to Compliance	85
Section 9.10	Reports by Independent Public Accountants	86
Section 9.11	Reports to the Indenture Trustee	86
Section 9.12	Mergers and Consolidations	88
Section 9.13	Litigation	88
Section 9.14	Notice of Default	88
Section 9.15	Cooperate in Legal Proceedings	88
Section 9.16	Insurance Benefits	88
Section 9.17	Costs of Enforcement	88
Section 9.18	Performance of Issuer’s Duties by MBC	89
Section 9.19	Payment of Debts	89
Section 9.20	Capitalization of the Issuer	89
Section 9.21	Employees	89
Section 9.22	Performance by the Issuer	89
Section 9.23	Use of Proceeds	90
Section 9.24	Other Rights, Etc.	90
Section 9.25	Books and Records	90
Section 9.26	Overhead Expenses	90
ARTICLE X COVENANTS REGARDING MORTGAGE LOANS		90
Section 10.01	Collection of Mortgage Loan Payments; Collection Account; Release Account	90
Section 10.02	Withdrawals From the Collection Account	91
Section 10.03	Investment of Funds in the Collection Account	92
Section 10.04	Mortgage Loans	93
Section 10.05	Compliance With Laws	94
Section 10.06	Other Rights, Etc.	94
Section 10.07	Right to Release Any Portion of the Collateral Pool	94
Section 10.08	Mortgage Loan Matters	95
Section 10.09	Perfection of Security Interest	96
ARTICLE XI TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS		97
Section 11.01	Exchange of Mortgage Loans	97
Section 11.02	Release of Mortgaged Property by the Issuer	98
Section 11.03	Mortgage Loan Substitution	98
Section 11.04	Release, Sale and Exchange of Defaulted Mortgage Loans	99
Section 11.05	Servicing Agent	100
Section 11.06	Servicing	102
Section 11.07	Termination of Servicing Duties	103

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ARTICLE XII COSTS		103
Section 12.01	Performance at the Issuer’s Expense	103
ARTICLE XIII MISCELLANEOUS		104
Section 13.01	Execution Counterparts	104
Section 13.02	Compliance Certificates and Opinions, Etc.	104
Section 13.03	Form of Documents Delivered to Indenture Trustee	104
Section 13.04	No Oral Change	105
Section 13.05	Acts of Noteholders	105
Section 13.06	Computation of Percentage of Noteholders	106
Section 13.07	Notice to the Indenture Trustee, the Issuer and Certain Other Persons	106
Section 13.08	Notices to Noteholders; Notification Requirements and Waiver	106
Section 13.09	Successors and Assigns	106
Section 13.10	Interest Charges; Waivers	107
Section 13.11	Severability Clause	107
Section 13.12	Governing Law	107
Section 13.13	Effect of Headings and Table of Contents	107
Section 13.14	Benefits of Indenture	107
Section 13.15	Trust Obligation	108
Section 13.16	Inspection	108
Section 13.17	Method of Payment	108
Section 13.18	Trust Indenture Act Controls	108

Exhibits

Exhibit A	Mortgage Loan Schedule
Exhibit B-1	Form of Global Senior Secured Note
Exhibit B-2	Form of Definitive Global Senior Secured Note
Exhibit C	Form of Interim Receipt
Exhibit D	Form of Receipt of Collateral
Exhibit E	Form of Transferor Certificate
Exhibit F	List of Authorized Signatories
Exhibit G	Form of Trustee Report
Exhibit H	Form of Issuer Exception Report
Exhibit I	Form of Servicer Notice

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INDENTURE, dated as of ________________ __, 2016, between MBC FUNDING II CORP., a New York corporation, as issuer, MANHATTAN BRIDGE CAPITAL, INC., a New York corporation, and [Trustee TBD], a [type of organization], not in its individual capacity, but solely as Indenture Trustee under this Indenture.

PRELIMINARY STATEMENT

The Issuer (as defined herein) has duly authorized the execution and delivery of this Indenture to provide for the issuance of the Senior Secured Notes (collectively, the “Notes”), to be issued pursuant to this Indenture.

All things necessary to make the Notes, when the Notes are executed by the Issuer, authenticated by the Authenticating Agent and delivered by the Indenture Trustee hereunder and duly issued by the Issuer, the valid and legally binding obligations of the Issuer enforceable in accordance with their terms, and to make this Indenture a valid and legally binding agreement of the Issuer enforceable in accordance with its terms, have been done.

GRANTING CLAUSE

The Issuer hereby Grants to the Indenture Trustee on the Closing Date or Transfer Date, as applicable, for the benefit of the Indenture Trustee and the Noteholders, all of the Issuer’s right, title and interest in and to the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”), including, without limitation, (a) all Receivables; (b) all general intangibles; (c) all contract rights, rights of payment which have been earned under a contract right, instruments, investment property, documents, chattel paper, warehouse receipts, deposit accounts, money and securities; (d) all Mortgage Loan Collateral and all payments required thereunder on and after the Closing Date or Transfer Date, as applicable; (e) all Securities; (f) all Leasehold Interests; (g) all commercial tort claims; (h) any guarantees of and security for the Mortgagor Customers’ obligations under the Mortgage Loans, including any security deposits thereunder; (i) all of the Issuer’s rights (but none of its obligations) under the Asset Transfer Agreements; (j) the Collection Account, the Payment Account and any other accounts established under the Transaction Documents for purposes of receiving, retaining and distributing amounts received in respect of the Collateral Pool and making payments to the Holders of the Notes and making distributions to the Holders of the Notes, and all funds as may from time to time be deposited therein; (k) all present and future claims, demands and causes of action in respect of the foregoing; (l) all additional amounts due to the Issuer from any Mortgagor Customer relating to the Receivables, (m)  if and when obtained by the Issuer, all real and personal property of third parties in which the Issuer has been granted a lien or security interest as security for the payment or enforcement of Receivables, (n) all supporting obligations that secure payment or performance of any account, chattel paper, document, general intangible, instrument or investment property, (o) all Extraordinary Receipts, (p) any other goods, personal property or real property now owned or hereafter acquired in which the Issuer has expressly granted a security interest or may in the future grant a security interest to the Indenture Trustee hereunder, or in any amendment or supplement hereto or thereto, or under any other agreement between the Indenture Trustee and the Issuer and (q) any and all indebtedness owing to the Issuer and any and all Collateral securing such indebtedness; (r) all of the Issuer’s ledger sheets, ledger cards, files, correspondence, records, books of account, business papers, computers, computer software (owned by the Issuer or in which it has an interest), computer programs, tapes, disks and documents relating to clauses (a) through (q) hereof; and (s) all proceeds of the foregoing of every kind and nature whatsoever, including, without limitation, all proceeds of the conversion thereof, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment of any and every kind and other forms of obligations and receivables, insurance proceeds (including hazard, flood and credit insurance), security agreements, documents, eminent domain proceeds, condemnation proceeds, tort claim proceeds, instruments and other property that at any time constitute all or part of or are included in the proceeds of the foregoing.  

The foregoing Grants are made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture.

GENERAL COVENANT

IT IS HEREBY COVENANTED AND DECLARED that the Notes are to be authenticated by the Authenticating Agent and delivered by the Indenture Trustee on the Closing Date, that the Collateral is to be held by or on behalf of the Indenture Trustee and that moneys in or from the Collateral Pool are to be applied by the Indenture Trustee for the benefit of the Noteholders, subject to the further covenants, conditions and trusts hereinafter set forth, and the Issuer does hereby represent and warrant, and covenant and agree, to and with the Indenture Trustee, for the equal and proportionate benefit and security of each Noteholder, as follows:

ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION

Section 1.01         Definitions.

Whenever used in this Indenture, including in the Preliminary Statement, the Granting Clause and the General Covenant hereinabove set forth, the following words and phrases, unless the context otherwise requires, shall have the meanings specified in this Section 1.01.

“1933 Act”:  The Securities Act of 1933, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“1939 Act”:  The Trust Indenture Act of 1939, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“1940 Act”:  The Investment Company Act of 1940, as amended, and the rules, regulations and published interpretations of the SEC promulgated thereunder from time to time.

“Account Control Agreement”: An agreement with respect to a deposit account or a securities account, in form and substance satisfactory to the Indenture Trustee, pursuant to which the institution at which such account is maintained agrees to follow the instructions or entitlement orders, as the case may be, of the Indenture Trustee with respect thereto.

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“Accrual Period”:  With respect to the Notes and any Payment Date, the period from and including the immediately preceding Payment Date (or, with respect to the initial Accrual Period, from and including the __________ __, 2016¹) to, but excluding, such Payment Date.

“Act”:  As defined in Section 13.05.

“Affiliate”:  With respect to any specified Person, any other Person controlling or controlled by or under common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“ALTA”:  The American Land Title Association.

“Applicable Laws”:  As defined in Section 10.05(a).

“Appraised Value”:  With respect to a Mortgaged Property, the value set forth in an appraisal made in connection with the origination of the related Mortgage Loan as the value of such Mortgaged Property.

“Asset Sale”:  Any direct or indirect sale, conveyance, transfer, lease (that has the effect of a disposition) or other disposition (including, without limitation, any merger, consolidation or sale/leaseback transaction or upon any condemnation, eminent domain or similar proceedings) to any Person other than the Issuer, MBC or their respective wholly-owned subsidiaries, in one transaction or a series of related transactions, of:

(i)          any Capital Stock of any subsidiary;

(ii)         any assets of the Issuer or MBC or any of their respective subsidiaries which constitute substantially all of an operating unit or line of business of the applicable transferor; or

(iii)        any other assets or asset (including, without limitation, any Mortgage Loans or intellectual property) of the Issuer or MBC;

in each case, other than:

(1)         sales of property or equipment that, in the reasonable determination of the Issuer, MBC or any such subsidiary, as the case may be, has become worn out, obsolete or damaged or otherwise unsuitable for use in connection with the business of the Issuer, MBC or such subsidiary;

¹ TBD (3 months after the Closing Date).

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(2)         with respect to MBC, any transaction between or among MBC and one or more of its subsidiaries, but not including a sale of assets by the Issuer to MBC; or

(3)         any transaction constituting a Change of Control.

“Asset Transfer Agreement”:  The Asset Transfer Agreement dated as of the Closing Date between MBC and the Issuer, pursuant to which MBC shall transfer (whether by sale or contribution) to the Issuer Eligible Mortgage Loans on the Closing Date and may from time to time transfer (whether by sale or contribution) to the Issuer Eligible Mortgage Loans after the Closing Date.

“Authenticating Agent”:  As defined in Section 2.02(b).

“Authorized Officer”:  With respect to the Issuer, any Person who is authorized to act for the Issuer and who is identified on the list delivered by the Issuer to the Indenture Trustee on the Closing Date (as such list may be modified or supplemented from time to time thereafter).  

“Authorized Persons”: As defined in Section 5.03(q).

“Available Amount”: The Available Amount for any Payment Date will consist of (a) all amounts received in respect of the Collateral Pool during the related Collection Period, (b) all amounts on deposit in the Collection Account on the related Determination Date, including amounts earned, if any, on the investment of funds on deposit in the Collection Account and the Release Account during the related Collection Period, (c) Unscheduled Proceeds, (d) amounts received on account of payments under any Mortgage Loan Guaranties, and (e) amounts received on account of payments under the Guaranty, which amounts Indenture Trustee shall promptly deposit into the Collection Account to the extent received from the Guarantor under the Guaranty, and amounts received in connection with a Redemption Payment; provided, however, that the following amounts will be excluded from Available Amount:  (i) amounts on deposit in the Release Account and not transferred to the Collection Account for such Payment Date and (ii) amounts withdrawn from the Collection Account to reimburse the Indenture Trustee for any unreimbursed expenses.

“Best’s”:  Best’s Key Rating Guide, as the same shall be amended from time to time.

“Board of Directors”:  With respect to any Person, (a) in the case of any corporation, the board of directors of such Person, (b) in the case of any limited liability company, the board of managers, if any, of such Person, (c) in the case of any partnership, the Board of Directors of the general partner of such Person and (d) in any other case, the functional equivalent of the foregoing.

“Book-Entry Custodian”:  Initially, the Indenture Trustee and thereafter, such other bank or trust company as the Indenture Trustee shall appoint pursuant to Section 2.10(a).

“Book-Entry Note”:  Any Note registered in the name of the Depository or its nominee.

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“Business Day”:  Any day other than a Saturday, a Sunday or a day on which banking institutions are authorized or obligated by law or executive order to remain closed in New York, New York or any other city in which the principal office of the Issuer or the Indenture Trustee’s Office is located.

“Capital Stock”:  Any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) corporate stock or other equity participations, including partnership interests, whether general or limited, in any Person, including any Capital Stock which is preferred as to the payment of dividends or distributions, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such Person, over Capital Stock of any other class in such Person and any right or interest which is classified as equity in accordance with GAAP, but excluding any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash”:  Coin or currency of the United States or immediately available federal funds, including such funds delivered by wire transfer.

“Change of Control” means the occurrence of any of the following events:

(a)          any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be deemed to have beneficial ownership of all shares that such Person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Issuer, MBC or any of its subsidiaries; or

(b)          the Issuer or MBC consolidates with, or merges with or into, another Person (other than with or into the Issuer, MBC or a wholly-owned subsidiary of the Issuer or MBC) other than any such transaction where immediately after such transaction the Person or Persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction, directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Issuer, MBC or any of its subsidiaries “beneficially own or owns” (as so determined), directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the surviving Person;

(c)          MBC, directly or indirectly through its subsidiaries, sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets (determined on a consolidated basis) to any Person (other than the Issuer, MBC or a wholly owned subsidiary of the Issuer or MBC), other than any such transaction where immediately after such transaction the Person or Persons that “beneficially owned” (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) immediately prior to such transaction, directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the Company, “beneficially own or owns” (as so determined), directly or indirectly, Voting Stock representing 50% or more of the total voting power of all outstanding Voting Stock of the transferee Person; or

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(d)          during any consecutive two-year period, the Continuing Directors cease for any reason to constitute a majority of the Board of Directors of the Issuer, MBC or any such subsidiary; or

(e)          the adoption of a plan of liquidation or dissolution of the Issuer or MBC.

“Change of Control Date”:  As defined in Section 9.07(a).

“Change of Control Offer”:  As defined in Section 9.07(a).

“Change of Control Purchase Date”:  As defined in Section 9.07(a).

“Change of Control Purchase Price”:  As defined in Section 9.07(b).

“Closing Date”:  ________________ __, 2016.

“Code”:  The Internal Revenue Code of 1986, as amended.

“Collateral”:  As defined in the Granting Clause hereto.

“Collateral Assignment”:  A collateral assignment by a Mortgagor Customer to the Issuer of all rents, issues and profits of the related Mortgaged Property.

“Collateral Defect”:  As defined in Section 2.04(a).

“Collateral Pool”:  As defined in the Granting Clause hereto.

“Collateral Transfer”:  Any voluntary or involuntary sale, transfer, exchange, conveyance, mortgage, grant, bargain, encumbrance, pledge, assignment, grant of any options with respect to, or any other transfer or disposition of (directly or indirectly, voluntarily or involuntarily, by operation of law or otherwise, and whether or not for consideration or of record).

“Collection Account”: The segregated account or accounts created and maintained by the Issuer pursuant to Section 10.01(b) and, in each case, pledged to the Indenture Trustee for the benefit of the Noteholders, which shall be entitled “[MBC Funding II Corp., Blocked Collection Account]”.

“Collection Period”: With respect to any Payment Date, the period commencing on the day immediately following the preceding Determination Date (or, in the case of the initial Payment Date, commencing immediately following the Closing Date) and ending on and including the related Determination Date.

“Condemnation Proceeds”: All proceeds received in connection with any condemnation or eminent domain proceeding with respect to any Mortgaged Property other than proceeds applied to the restoration of such Mortgaged Property or released to the related Mortgagor Customer.

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“Continuing Directors”:  As of any date of determination with respect to any Person, any member of the Board of Directors of such Person who was (a) a member of such Board of Directors on the Closing Date or (b) nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

“Control Person”:  With respect to any Person, any other Person that constitutes a “controlling person” within the meaning of Section 15 of the 1933 Act.

“Default”:  Any event which is, or after notice, or direction of the Requisite Majority or lapse of time would become, an Event of Default with respect to the Notes.

“Defaulted Mortgage Loan”:  A Mortgage Loan with respect to which a Mortgage Loan Payment is overdue for more than 90 consecutive days (without taking into account the required giving of notices under such Mortgage Loan).

“Definitive Note”:  As defined in Section 2.10(a).

“Department of Labor Regulations”:  Regulations at 29 C.F.R. 2510.3-101.

“Depository”:  The Depository Trust Company or any successor depository hereafter named as contemplated by Section 2.08.  The nominee of the initial Depository, for purposes of registering such Notes that are Book-Entry Notes, is Cede & Co.  The Depository shall at all times be a “clearing corporation” as defined in Section 8-102(4) of the Uniform Commercial Code of the State of New York and a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

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

“Designated Participation Loan”:  Any Mortgage Loan (a) with respect to which participations have been sold or which the Issuer own less than 100% and (b) in aggregate principal amount of not more than $[4,000,000] as of the Closing Date.

“Determination Date”:  As to any Payment Date, the 4^th Business Day preceding such Payment Date.

“Determination Date Report”: As defined in Section 9.11(a).

“Document Defect”:  As defined in Section 2.03(e).

“Early Amortization Period”:  An Early Amortization Period will commence as of any Determination Date if an Event of Default, after giving effect to any grace period, shall have occurred and shall not have been cured or waived in accordance with the terms hereof.

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“Eligible Account”:  Any of (a) a segregated account maintained with a federal- or state-chartered depository institution or trust company, the long-term deposit or long-term unsecured debt obligations of which (or of such institution’s parent holding company) are rated “AA-” or better by S&P, if the deposits are to be held in the account for more than 30 days, or the short-term deposit or short-term unsecured debt obligations of which (or of such institution’s parent holding company) are rated “A-1” by S&P if the deposits are to be held in the account for 30 days or less, in any event at any time funds are on deposit therein, or (b) a segregated trust account maintained with a federal- or state-chartered depository institution or trust company acting in its fiduciary capacity, which, in the case of a state-chartered depository institution or trust company is subject to regulations regarding fiduciary funds on deposit therein substantially similar to 12 C.F.R. § 9.10(b), and which, in either case, has a combined capital and surplus of at least $50,000,000 and is subject to supervision or examination by federal or state authority; provided, that in the event that any of the accounts no longer qualifies as an Eligible Account under this definition, the Issuer shall promptly, and in no event later than thirty (30) calendar days following such account failing to qualify as an Eligible Account, direct the Indenture Trustee to remit all funds in such account to a specified Eligible Account.  Eligible Accounts may bear interest.

“Eligible Mortgage Loans”:  Mortgage Loans secured by a first mortgage lien on real property, (a) as to which the representations and warranties in Section 2.21 are correct, and (b) as to which the Mortgage Loan File has been delivered to Indenture Trustee; provided that, in no event shall (i) any Eligible Mortgage Loan be a security for purposes of any securities or blue-sky laws, and (ii) any Defaulted Mortgage Loan or Designated Participation Loan be an Eligible Mortgage Loan.

“Embargoed Person”:  As defined in Section 2.20(n).

“Environmental Laws”:  Any and all local, state, federal or other governmental authority, statute, ordinance, code, order, decree, law, rule or regulation pertaining to or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up including, without limitation, the Comprehensive Environmental Response, Compensation and Liability Act, as amended, the Resource Conservation and Recovery Act, as amended, the Emergency Planning and Community Right-to-Know Act of 1986, as amended, the Hazardous Substances Transportation Act, as amended, the Solid Waste Disposal Act, as amended, the Clean Water Act, as amended, the Clean Air Act, as amended, the Toxic Substance Control Act, as amended, the Safe Drinking Water Act, as amended, the Occupational Safety and Health Act, as amended, any state super-lien and environmental statutes and all rules and regulations adopted in respect to the foregoing laws whether presently in force or coming into being and/or effectiveness hereafter.

“ERISA”:  The Employee Retirement Income Security Act of 1974, as amended.

“Event of Default”:  As defined in Section 4.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

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“Exchanged Loan” or “Exchanged Loans”:  A Mortgage Loan or Mortgage Loans that are exchanged for a Qualified Substitute Loan or Qualified Substitute Loans, in each case, in a transaction with a third party or MBC and subject to the conditions and limitations described in this Indenture.

“Extraordinary Receipts”:  Any cash proceeds received by the Issuer not in the ordinary course of business, including, without limitation, (a) foreign, United States, state or local tax refunds, (b) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, (c) condemnation awards (and payments in lieu thereof), (d) indemnity payments and (e) any adjustment received in connection with any purchase price in respect of an acquisition.

“Fair Market Value”:  At any time, with respect to any Mortgage Loan, a price determined by Issuer in accordance with the Servicing Standard to be the most probable price which such Mortgage Loan should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and the seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus.  In making any such determination, the Issuer may obtain an MAI appraisal of the related Mortgaged Property and shall assume the consummation of a sale as of a specified date and the passing of title from the seller to the buyer under conditions whereby:  (a) the buyer and the seller are typically motivated; (b) both parties are well informed or well advised, and acting in what they consider their best interests; (c) payment is made in terms of cash in United States dollars or in financial arrangements comparable thereto; and (d) the price represents the normal consideration for such Mortgaged Property unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

“FDIC”:  Federal Deposit Insurance Corporation or any successor.

“FHLMC”:  The Federal Home Loan Mortgage Corporation, or any successor thereto.

“Final Payment Date”:  With respect to the Notes, the Payment Date on which the final payment on the Notes is made hereunder by reason of all principal, interest and other amounts due and payable on the Notes having been paid.

“FNMA”:  The Federal National Mortgage Association, or any successor thereto.

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“Foreclosure Proceeding”:  Any proceeding, non-judicial sale or power of sale or other proceeding (judicial or non-judicial) for the foreclosure, sale or assignment of any Mortgaged Property or Mortgage Loan or any other Collateral under any Mortgage.

“GAAP”:  Such accounting principles as are generally accepted in the United States.

“Governmental Authority” shall mean any nation or government, any state or other political subdivision thereof or any entity exercising the legislative, judicial, regulatory or administrative functions of or pertaining to a government.

“Grant”:  To mortgage, pledge, bargain, sell, warrant, alienate, demise, convey, assign, transfer, create and grant a security interest in and right of set-off against, deposit, set over and confirm.  A Grant of Collateral shall include all rights, powers and options (but none of the obligations) of the granting party thereunder, including, without limitation, the immediate and continuing right to claim for, collect, receive and give receipt for principal and interest payments in respect of such Collateral and all other moneys and proceeds payable thereunder, to give and receive notices and other communications, to make waivers or other agreements, to exercise all rights and options, to bring Proceedings in the name of the granting party or otherwise, and generally to do and receive anything which the granting party is or may be entitled to do or receive thereunder or with respect thereto.

“Guarantor” shall mean any Person who may hereafter guarantee payment or performance of the whole or any part of the Issuer’s obligations under this Indenture, the Notes or any other Transaction Document.

“Guaranty” shall mean any guaranty of the payment or performance of the whole or any part of Issuer’s obligations under this Indenture, the Notes or any other Transaction Document, in whole or in part, executed at any time by a Guarantor in favor of the Indenture Trustee for the ratable benefit of the Noteholders.

“Hazardous Substances”:  Any hazardous and/or toxic, dangerous and/or regulated, substances, wastes, materials, raw materials which include hazardous constituents, pollutants or contaminants including without limitation, petroleum, tremolite, anthlophylie, actinolite or polychlorinated biphenyls and any other substances or materials which are included under or regulated by Environmental Laws or which are considered by scientific opinion to be otherwise dangerous in terms of the health, safety and welfare of humans.

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

“Indenture Trustee”:  [Trustee TBD], a [type of organization], in its capacity as trustee under this Indenture, or its successor in interest, or any successor trustee appointed as provided in this Indenture.

“Indenture Trustee Fee”:  With respect to any Determination Date, an amount on a monthly basis equal to [TBD].

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“Indenture Trustee’s Office”:  The corporate trust office of the Indenture Trustee at which at any particular time this Indenture shall be administered, which office at the date of the execution of this Indenture is located at (a) solely for purposes of the transfer, surrender or exchange of Notes, [address], and (b) for all other purposes, [address], Attention: Agency and Trust — MBC Funding II Corp., or at such other address as the Indenture Trustee or Note Registrar may designate from time to time.

“Independent”:  When used with respect to any specified Person, any such Person who (a) is in fact independent of the Indenture Trustee, the Issuer and any and all Affiliates thereof, (b) does not have any direct financial interest in or any material indirect financial interest in any of the Indenture Trustee, the Issuer or any Affiliate thereof, and (c) is not connected with the Indenture Trustee, the Issuer or any Affiliate thereof as an officer, employee, promoter, underwriter, trustee, partner, director or Person performing similar functions; provided, however, that a Person shall not fail to be Independent of the Indenture Trustee or the Issuer or any Affiliate thereof merely because such Person is the beneficial owner of 2% or less of any class of securities issued by the Indenture Trustee, the Issuer or any Affiliate thereof, as the case may be.  The Indenture Trustee may rely, in the performance of any duty hereunder, upon the statement of any Person contained in any certificate or opinion that such Person is Independent according to this definition.

“Initial Principal Balance”:  $___________________.

“Insurance Proceeds”:  Proceeds paid under any Property Insurance Policy, to the extent such proceeds are not applied to the restoration of the related Mortgaged Property in accordance with the related Mortgage Loan.

“Interested Person”:  The Issuer, MBC or an Affiliate of any such Person.

“Issuer”:   MBC Funding II Corp., a New York corporation.

“Issuer Order”:  A written order signed in the name of the Issuer by a Responsible Officer.

“Issuer Request”:  A written request signed in the name of the Issuer by a Responsible Officer.

“Issuer’s Office”:  The principal office of the Issuer, located at 60 Cutter Mill Road, Suite 205, Great Neck, New York  11021, or at such other address as the Issuer may designate from time to time.

“Leasehold Interests” shall mean all of the Issuer’s right, title and interest in and to any real property owned by a Person other than the Issuer, whether as tenant, lessee, licensee, operator or otherwise.

“Legal Requirements”: With respect to each Mortgaged Property, all federal, state, county, municipal and other governmental statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting such Mortgaged Property or any part thereof, or the construction, use, alteration or operation thereof, or any part thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto.

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“Letter of Representations”:  With respect to the Notes, the Letter of Representations, dated the Closing Date, among the Depository, the Indenture Trustee and the Issuer.

“Liquidation Proceeds”:  All net proceeds realized by the Issuer in respect of the purchase or sale of a Mortgage Loan.

“LTV”:  With respect to any Mortgage Loan, the ratio of the original outstanding principal amount of such Mortgage Loan to (a) in the case of a Mortgage Loan the proceeds of which were used to acquire the related Mortgaged Property, the lesser of (i) the Appraised Value of the related Mortgaged Property at origination or (ii) if such Mortgaged Property was purchased within 12 months of the origination of such Mortgage Loan, the purchase price of such Mortgaged Property and (b) in the case of a Mortgage Loan the proceeds of which were used to finance construction of the related Mortgaged Property, the related construction costs.

“MAI”: A designation signifying that the designee is a Member of the Appraisal Institute.

“Mandatory Principal Payment”:  With respect to each Payment Date, an amount equal to the result of (a) 120% of the Outstanding Principal Balance as of the last Business Day of the most recently completed calendar month preceding such Payment Date, minus (b) the sum of the aggregate principal amount of Eligible Mortgage Loans plus amounts on deposit in the Collection Account and other deposit accounts of the Issuer subject to Account Control Agreements, in each case as of such last Business Day; provided that if such result is less than zero, the Mandatory Principal Payment for such Payment Date shall be zero.

“Maturity”:  With respect to any Note, the date as of which the principal of and interest on such Note has become due and payable as herein provided, whether on the Final Payment Date, by acceleration or otherwise.

“MBC”:  Manhattan Bridge Capital, Inc., a New York corporation.

“Mortgage”:  With respect to any Mortgaged Property, a mortgage (or deed of trust or deed to secure debt), assignment of Mortgage Loans and rents, security agreement and fixture filing or similar document executed by a Mortgagor Customer pursuant to which such Mortgagor Customer grants a lien on its interest in such Mortgaged Property in favor of the Issuer (whether as assignee of MBC or otherwise).

“Mortgage Interest Rate”:  With respect to a Mortgage Note, the annual rate of interest borne on such Mortgage Note.

“Mortgage Loan”:  A mortgage loan provided to a Mortgagor Customer and which mortgage loan includes, without limitation, (a) a Mortgage Note, the related Mortgage and all other Mortgage Loan Documents and (b) all right, title and interest of the Issuer in and to the Mortgaged Property covered by such Mortgage.

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“Mortgage Loan Collateral”:  All of the Issuer’s right, title and interest in, to and under each of the following items of property, whether now owned or hereafter acquired, now existing or hereafter created and wherever located:

(a)          all Mortgage Loans;

(b)          all Mortgage Loan Documents, including without limitation all promissory notes, and all Servicing Records (as defined in Section 11.06(b)), servicing agreements and any other collateral pledged or otherwise relating to such Mortgage Loans, together with all files, documents, instruments, surveys, certificates, correspondence, appraisals, computer programs, computer storage media, accounting records and other books and records relating thereto;

(c)          all mortgage guaranties and insurance (issued by governmental agencies or otherwise) and any mortgage insurance certificate or other document evidencing such mortgage guaranties or insurance relating to any Mortgage Loan and all claims and payments thereunder;

(d)          all other insurance policies and insurance proceeds relating to any Mortgage Loan or the related Mortgaged Property;

(e)          all interest rate protection agreements, relating to or constituting any and all of the foregoing;

(f)          all deposit accounts or collection accounts to which payments on account of any Mortgage Loan are deposited or remitted and all monies from time to time on deposit therein;

(g)          all “general intangibles”, “accounts” and “chattel paper” as defined in the Uniform Commercial Code relating to or constituting any and all of the foregoing; and

(h)          any and all replacements, substitutions, distributions on or proceeds of any and all of the foregoing.

“Mortgage Loan Documents”:  With respect to a Mortgage Loan, the documents comprising the Mortgage Loan File for such Mortgage Loan.

“Mortgage Loan File”:  For any Mortgage Loan, (a) the original Mortgage Note bearing all intervening endorsements, duly endorsed to the Indenture Trustee, (b) the original Mortgage(s) securing each Mortgage Note with evidence of recording thereon or copies certified by the related recording office, (c) the Collateral Assignment, if any, executed in connection with such Mortgage(s), (d) any original stock certificates (accompanied by applicable stock powers), instruments, chattel paper or other collateral securing any Mortgage Loan in which the perfection of the Issuer’s lien is based upon the Issuer’s possession thereof, (e) the valuation or appraisal, if any, of the subject Mortgaged Property prepared by a third party valuation or appraisal service, (f) the Related Title Policy, (g) the evidence of liability and property/casualty coverage relating to the Mortgaged Property, and (h) an opinion, if any, of counsel, addressed to the Issuer (or its predecessor in interest) that the Mortgage Note, the Mortgage(s) and the Collateral Assignments, if any, are the valid and binding obligations of the parties thereto enforceable in accordance with their terms and have been duly and validly endorsed or assigned to the Issuer (or its predecessor in interest).

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“Mortgage Loan Guarantor”: Any guarantor under any Mortgage Loan Guaranty.

“Mortgage Loan Guaranty”:  With respect to any Mortgage Loan, the guaranty related to such Mortgage Loan executed by an Affiliate or parent of the related Mortgagor Customer in favor of MBC or the Issuer.

“Mortgage Loan Payment”:  With respect to a Mortgage Loan, the scheduled payment of principal and/or interest on such Mortgage Loan required to be made pursuant to the provisions of the related Mortgage Note.

“Mortgage Loan Schedule”:  The list of Mortgage Loans attached as Exhibit A hereto setting forth the following information with respect to each Mortgage Loan:

(i)          the Mortgagor Customer;

(ii)         the termination or maturity date for such Mortgage Loan;

(iii)        the street address (including city, state and zip code) of the Mortgaged Property;

(iv)        the applicable Mortgaged Property number as it appears on the tax maps of the municipality in which such Mortgaged Property is situated;

(v)         the Appraised Value, if available, of such Mortgaged Property;

(vi)        the initial principal amount and the then current outstanding principal amount of such Mortgage Loan;

(vii)       the Mortgage Interest Rate at which such Mortgage Loan accrues interest; and

(viii)      the monthly interest payment with respect to such Mortgage Loan.

“Mortgage Note”:  The original executed promissory note or other evidence of the indebtedness of a Mortgagor Customer with respect to a Mortgage Loan.

“Mortgaged Property”:  The real property (including all improvements, buildings, fixtures, building equipment and personal property thereon and all additions, alterations and replacements made at any time with respect to the foregoing) and all other collateral securing repayment of the debt evidenced by a Mortgage Note.

“Mortgagor Customer”:  With respect to each Mortgage Loan, the obligor on the related Mortgage Note.

“Net Cash Proceeds”:  The aggregate proceeds in the form of cash or Permitted Investments received by the Issuer, MBC or their respective subsidiaries in respect of any Asset Sale, including all cash or Permitted Investments received upon any sale, liquidation or other exchange of proceeds of Asset Sales received in a form other than cash or Permitted Investments, net of:

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(i)          the direct costs relating to such Asset Sale (including, without limitation, reasonable legal, accounting and investment banking fees, brokerage fees and sales commissions) and any relocation expenses incurred as a result thereof;

(ii)         taxes paid or payable directly as a result thereof;

(iii)        with respect to an Asset Sale by MBC, amounts required to be applied to the repayment of indebtedness secured by a lien on the asset or assets that were the subject of such Asset Sale; and

(iv)        amounts deemed, in good faith, by the Board of Directors of the Issuer or MBC, as the case may be (or a duly authorized committee thereof), to be set aside as a reserve, in accordance with GAAP, against any liabilities associated with such assets which are the subject of such Asset Sale; provided that the amount of any such reserves shall be deemed to constitute Net Cash Proceeds at the time such reserves shall have been released or are not otherwise required to be retained as a reserve.

“Net Investment Earnings”: The amount by which the aggregate of all interest and other income realized during such Collection Period on funds held in the Collection Account, Release Account and any other accounts established from time to time, if any, exceeds the aggregate of all losses, if any, incurred during such Collection Period in connection with the investment of such funds in accordance with Section 10.03.

“Net Proceeds Offer”:  As defined in Section 9.06(e).

“Net Proceeds Offer Payment Date”:  As defined in Section 9.06(e).

“Net Proceeds Trigger Date”:  As defined in Section 9.06(e).

“Note”:  Any of the Issuer’s Senior Secured Notes, executed, authenticated and delivered hereunder, substantially in the forms attached as Exhibit B hereto.

“Note Interest”:  On any Payment Date, the interest accrued during the related Accrual Period at the Note Rate, applied to the Outstanding Principal Balance of the Notes before giving effect to any payments of principal on such Payment Date.  The Note Interest with respect to the Notes will be calculated on an actual/360 basis.

“Note Owner”:  With respect to a Book-Entry Note, the Person who is the beneficial owner of such Note as reflected on the books of the Depository, a Depository Participant or an indirect participating brokerage firm for which a Depository Participant acts as agent.  With respect to a Definitive Note, the Person who is the holder of such Note as reflected on the Note Register.

“Note Rate”:  With respect to the Notes, ____ percent (__%) per annum.

“Note Register”:  As defined in Section 2.06(a).

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“Note Registrar”:  Initially, the Indenture Trustee and thereafter, such other bank or trust company as the Indenture Trustee shall appoint pursuant to Section 2.06(a).

“Noteholder” or “Holder”:  With respect to any Note, the Person in whose name such Note is registered on the Note Register maintained pursuant to Section 2.06.  All references herein to “Noteholders” shall reflect the rights of Note Owners as they may indirectly exercise such rights through the Depository and the Depository Participants, except as otherwise specified herein; provided, however, that the parties hereto shall be required to recognize as a “Noteholder” or “Holder” only the Person in whose name a Note is registered in the Note Register as of the related Record Date.

“Notice of Default”:  As defined in Section 5.02.

“Officer’s Certificate”:  A certificate signed by any Responsible Officer of the Issuer or of the Indenture Trustee, as the case may be.

“Opinion of Counsel”:  A written opinion of counsel (which shall be rendered by counsel that is Independent) in form and substance reasonably acceptable to and delivered to the addressees thereof.

“Outstanding”:  When used with respect to Notes, means, as of any date of determination, any Note theretofore authenticated and delivered under this Indenture, except:

(i)          Notes theretofore canceled by the Note Registrar or delivered to the Note Registrar for cancellation (other than any Note as to which any amount that has become due and payable in respect thereof has not been paid in full); and

(ii)         Notes in exchange for or in lieu of which other Notes have been authenticated and delivered pursuant to this Indenture, other than any such Notes in respect of which there shall have been presented to the Note Registrar proof satisfactory to it that such Notes are held by a bona fide purchaser in whose hands such Notes are valid obligations of the Issuer;

provided, however, that in determining whether the Holders of the requisite amount or percentage have given any request, demand, authorization, vote, direction, notice, consent or waiver hereunder, Notes owned by an Interested Person shall be disregarded and deemed not to be Outstanding (other than with respect to a request for consent pursuant to Section 8.02 or unless any such Person or Persons owns all such Notes), except that, in determining whether the Indenture Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Notes which the Note Registrar knows to be so owned shall be so disregarded.  Notes owned by an Interested Person which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Note Registrar in its sole discretion the pledgee’s right to act with respect to such Notes and that the pledgee is not an Interested Person.

“Outstanding Principal Balance”:  With respect to the Notes and any date of determination, the Initial Principal Balance less the sum of all principal payments actually distributed to the Holders of the Notes as of such date of determination.

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“Ownership Interest”:  As to any Note, any ownership or security interest in such Note as held by the Holder thereof and any other interest therein, whether direct or indirect, legal or beneficial, as owner or as pledgee.

“Patriot Act”  The USA Patriot Act Title III of 107 Public Law 56 (October 26, 2001) and in other statutes and all orders, rules and regulations of the United States government and its various executive departments, agencies and 150 offices, related to the subject matter thereof, including Executive Order 13224 effective September 24, 2001.

“Payment Account”:  The segregated account established in the name of the Indenture Trustee pursuant to Section 2.14(a).

“Payment Date”:  The 15^th day of each calendar month, commencing on ___________ 15, 2016; provided that if such 15th day is not a Business Day, the Payment Date shall be the next succeeding Business Day.

“Paying Agent”:  As defined in Section 2.06(b).

“Payoff Amount”: With respect to any Released Loan, an amount equal to the then current unpaid principal amount thereof, plus interest thereon, related to such Released Loan.

“Permitted Encumbrances”:  As defined in Section 2.21(i).

“Permitted Investments”:  Any one or more of the following obligations or securities:

(i)          direct obligations of, or obligations fully guaranteed as to timely payment of principal and interest by, the United States of America or any agency or instrumentality thereof, provided that such obligations are backed by the full faith and credit of the United States of America and have a predetermined, fixed amount of principal due at maturity (that cannot vary or change) and that each such obligation has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread;

(ii)         obligations of agencies or instrumentalities of the United States of America that are not backed by the full faith and credit of the United States of America, provided that such obligations have a predetermined, fixed amount of principal due at maturity (that cannot vary or change), do not have an “r” highlight attached to any rating and that each such obligation has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread;

(iii)        uncertificated certificates of deposit, time deposits, bankers’ acceptances and repurchase agreements having maturities of not more than 365 days, of any bank or trust company organized under the laws of the United States of America or any state thereof, provided that such items are rated in the highest short-term debt rating category of the applicable Rating Agencies (or, if not rated by the applicable Rating Agency, have a comparable rating from another nationally recognized statistical rating organization), do not have an “r” highlight affixed to its rating and have a predetermined fixed amount of principal due at maturity (that cannot vary or change);

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(iv)        commercial paper (having original maturities of not more than 365 days) of any corporation incorporated under the laws of the United States of America or any state thereof (or of any corporation not so incorporated, provided that the commercial paper is denominated in United States dollars and amounts payable thereunder are not subject to any withholding imposed by any non-United States jurisdiction) that is rated in the highest short-term debt rating category of the applicable Rating Agencies, does not have an “r” highlight affixed to its rating, has a predetermined fixed amount of principal due at maturity (that cannot vary or change) and has a fixed interest rate or has its interest rate tied to a single interest rate index plus a single fixed spread, or any demand notes that constitute vehicles for commercial paper rated in the highest unsecured commercial or finance company paper rating category of the applicable Rating Agencies;

(v)         units of money market funds that have as one of their investment objectives the maintenance of a constant net asset value and that are rated in the highest applicable rating category of the applicable Rating Agencies; and

(vi)        repurchase agreements collateralized by United States Treasury securities or securities guaranteed by FNMA or FHLMC with any registered broker/dealer subject to SIPC jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer or bank has an uninsured, unsecured and unguaranteed obligation rated by the applicable Rating Agencies in their highest short-term category.

“Person”:  Any individual, corporation, partnership, limited liability company, joint venture, joint-stock company, estate, trust, association, unincorporated organization, or any federal, state, county or municipal government or any political subdivision thereof.

“Plan”:  Any one of:  (a) (i) an “employee benefit plan”, as defined in Section 3(3) of ERISA that is subject to the provisions of Title I of ERISA, or (ii) a “plan”, as defined in Section 4975 of the Code, that is subject to the provisions of Section 4975 of the Code; (b) an entity whose underlying assets include assets of any such employee benefit plan or plan as set forth in clause (a) of this definition by reason of an investment in such entity by such employee benefit plan or plan; or (c) a governmental or church plan that is subject to any federal, state or local law that is materially similar to the provisions of Section 406 of ERISA or Section 4975 of the Code.

“Prime Rate”:  The “prime rate” published in the “Money Rates” section of The Wall Street Journal, as such “prime rate” may change from time to time.  If The Wall Street Journal ceases to publish the “prime rate,” then the Indenture Trustee shall select an equivalent publication that publishes such “prime rate”; and if such “prime rate” is no longer generally published or is limited, regulated or administered by a governmental or quasi-governmental body, then the Indenture Trustee shall select a comparable interest rate index.  In either case, such selection shall be made by the Indenture Trustee in its sole discretion and the Indenture Trustee shall notify the Issuer in writing of its selection.

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

“Property Insurance Policy”: With respect to any Mortgaged Property, any hazard insurance policy, flood insurance policy, or other insurance policy that is maintained from time to time in respect of such Mortgaged Property (including, without limitation, any blanket insurance policy maintained by or on behalf of the applicable Mortgagor Customer).

“Prospectus”:  Collectively, the preliminary Prospectus dated ____________ __, 2016 and the final Prospectus dated ____________ __, 2016, in each case with respect to the Notes.

“Put Right Purchase Date”:  As defined in Section 7.02(a)(a).

“Put Right Purchase Price”:  As defined in Section 7.02(a)(a).

“Qualified Insurer”:  With respect to any Mortgaged Property, an insurance company duly qualified as such under the laws of the states in which such Mortgaged Property is located, duly authorized and licensed in such states to transact the applicable insurance business and to write the insurance provided, and approved as an insurer by FNMA and FHLMC and whose claims paying ability is rated in the two highest rating categories by any of the rating agencies with respect to primary mortgage insurance and in the two highest rating categories by Best’s with respect to hazard and flood insurance.

“Qualified Substitute Loan”:  (a) A Mortgage Loan acquired by the Issuer in substitution for any Exchanged Loan that, on the date of such substitution, (i) has an Outstanding Principal Balance that, when combined with the Outstanding Principal Balance of all other Qualified Substitute Loans to be acquired by the Issuer on such date of substitution, is at least equal to the Outstanding Principal Balance of all Exchanged Loans on the date of substitution, (ii) complies, in all material respects, with all of the representations and warranties made with respect to Mortgage Loans under this Indenture (with each date therein referring to the date of substitution), and (iii) has the same or greater Mortgage Interest Rate as the Exchanged Loans, or (b) a Mortgage Loan acquired by the Issuer with proceeds deposited in the Release Account that, on the date of such acquisition, complies, in all material respects, with all of the representations  and warranties made with respect to Mortgage Loans under this Indenture (with each date therein referring to the date of acquisition).

“Rating Agency”:  S&P, any other nationally recognized statistical rating organization and their respective successors in interest.

“Receivables” shall mean and include, as to the Issuer, all of the Issuer’s accounts, contract rights, instruments (including those evidencing indebtedness owed to the Issuer by its Affiliates), documents, chattel paper (including electronic chattel paper), general intangibles relating to accounts, drafts and acceptances (including payment intangibles), and all other forms of obligations owing to the Issuer arising out of or in connection with a Mortgage Loan, all guarantees and other security therefor, whether secured or unsecured, now existing or hereafter created, and whether or not specifically assigned to the Indenture Trustee hereunder.

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“Record Date”:  As to any Payment Date with respect to Book-Entry Notes, the Business Day immediately preceding such Payment Date.  As to any Payment Date with respect to Definitive Notes, the last Business Day of the prior calendar month or, in the case of the initial Payment Date, the Closing Date.

“Redemption Date”:  As defined in Section 7.01.

“Redemption Payment”:  A Mandatory Principal Payment, Voluntary Prepayment, Change of Control Purchase Price or payment in connection with a Net Proceeds Offer.

“Related Business” means those businesses in which the Issuer or MBC is engaged on the Closing Date, or that are reasonably related, ancillary, incidental or complementary thereto, as determined by the Issuer’s or MBC’s, as the case may be, board of directors.

“Related Title Policy”:  with respect to a Mortgaged Property, a policy of title insurance insuring the first priority of a Mortgage, in the form described in Section 2.21(n).

“Release Account”: The segregated account established and maintained by the Indenture Trustee on behalf of the Noteholders and the Issuer for the deposit of cash proceeds from the sale of any Mortgage Loan.

“Release Price”: With respect to any Mortgage Loan, an amount equal to (a) with respect to any Defaulted Mortgage Loan or any Released Loan, the greater of (i) the Fair Market Value of such Mortgage Loan and (ii) the outstanding principal amount of such Mortgage Loan, (b) the Payoff Amount with respect to any Mortgaged Property released due to a Collateral Defect, or (c) the Fair Market Value for any Released Loan sold to a third party; provided that the Release Price for a Mortgage Loan that has been paid in full shall be zero if all payments on account of such Mortgage Loan have been deposited to the Collection Account.

“Released Loan”:  As defined in Section 11.02(a).

“Remittance Date”: The Business Day preceding each Payment Date.

“Removed Mortgage Loan”:  A Released Loan or Exchanged Loan that has either been released or substituted that is removed from the Collateral pursuant to Section 2.04 and ARTICLE XI.

“Required Conditions”:  With respect to any proposed substitution, release, exchange or lease transfer of a Mortgage Loan, the Required Conditions will be satisfied if the Issuer shall submit to the Indenture Trustee, not less than ten (10) days prior to the date of such release, a release of lien of the Mortgage for such Mortgage Loan for execution by the Indenture Trustee.  Such release shall be in a form appropriate in each jurisdiction in which the Mortgage Loan is located.  In addition, the Issuer shall provide all other documentation that is reasonably required to be delivered by any party hereto in connection with such substitution, release, exchange or lease transfer, together with an Officer’s Certificate certifying that such documentation (a) is in compliance with all Legal Requirements, and (b) will effect such release in accordance with the terms of this Indenture.

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“Requisite Majority”:  The Noteholders representing more than 50% of the Outstanding Principal Balance; provided that Interested Persons shall not be considered Noteholders and the Outstanding Principal Balance shall be reduced by the principal amount of Notes owned by Interested Persons in each case for purposes of this definition.

“Resolution”:  With respect to the Issuer, a copy of a resolution certified by an Authorized Officer to have been duly adopted by the Issuer and to be in full force and effect on the date of such certification.

“Responsible Officer”:  With respect to the Indenture Trustee, any officer of the Indenture Trustee assigned to its [Corporate Trust Services Group], customarily performing functions with respect to corporate trust matters and having direct responsibility for the administration of this Indenture and, with respect to a particular corporate trust matter under this Indenture, any other officer to whom such matter is referred because of such officer’s knowledge of and familiarity with the particular subject, in each case, having direct responsibility for the administration of this Indenture; and, with respect to the Issuer, any officer or number of officers or other Person or number of Persons duly authorized to perform the indicated action on behalf of the Issuer.

“S&P”:  Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc.

“SEC”:  The Securities and Exchange Commission.

“Securities”:  All marketable securities and investment property owned by the Issuer, whether now existing or hereafter created, including any held by any intermediary in any “street” name, pursuant to any custody arrangement or otherwise.

“Servicing Standard”:  To service the Mortgage Loans  in the same manner in which, and with the same care, skill, prudence and diligence with which, MBC or the Issuer, as the case may be, services and administers similar Mortgage Loans for their own account and the account of their Affiliates or any third-party portfolios, to the extent applicable, in material compliance with all applicable laws, but without regard to (i) any known relationship that MBC or the Issuer, an Affiliate of MBC or the Issuer may have with any Mortgagor Customer, any of their respective Affiliates or any other party to the Transaction Documents or (ii) the ownership, or servicing or management for others, by MBC of any other Mortgage Loans or real properties.

“Taxes”:  As defined in Section 9.03(a).

“Transaction Documents”:  This Indenture, the Asset Transfer Agreements, the organizational documents of the Issuer, each Account Control Agreement, each Guaranty, the Webster Guaranty and any related supplements or amendments to the Transaction Documents, and any and all other agreements, documents and instruments executed and delivered by or on behalf or in support of the Issuer with respect to the issuance and sale of the Notes, as the same may from time to time be amended, modified, supplemented or renewed.

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“Transfer”:  Any direct or indirect transfer, sale, pledge, hypothecation or other form of assignment of any Ownership Interest in a Note.

“Transfer Date”:  The date on which a Mortgaged Property is acquired by the Issuer.

“Treasury Regulations”:  Temporary, final or proposed regulations (to the extent that by reason of their proposed effective date such proposed regulations would apply to the Issuer) of the United States Department of the Treasury.

“Trustee Report”:  As defined in Section 6.01(a).

“UCC”:  The Uniform Commercial Code as in effect in any applicable jurisdiction.

“UCC Financing Statement”:  A financing statement executed and in form sufficient for filing pursuant to the UCC, as in effect in the relevant jurisdiction.

“Underwriter”:  Aegis Capital Corp.

“Unscheduled Principal Payment”:  On any Payment Date, the Unscheduled Proceeds deposited into the Collection Account for such Payment Date.

“Unscheduled Proceeds”: Collectively, without duplication, Liquidation Proceeds, Condemnation Proceeds, Insurance Proceed, and Payoff Amounts received in connection with releases and sales of Mortgage Loans and related Mortgaged Properties.

“Unutilized Net Cash Proceeds”:  As defined in Section 9.06(e).

“Voluntary Prepayment”:  Any voluntary prepayment of the Notes, in whole or in part, in accordance with the procedures set forth in Section 7.01.

“Voting Stock”:  Capital Stock in a corporation or other Person with voting power under ordinary circumstances entitling the holders thereof to elect the Board of Directors or other comparable governing body of such corporation or Person.

“Webster Credit Agreement”:  The Credit and Security Agreement dated as of February 27, 2015 between MBC and Webster Business Credit Corporation.

“Webster Guaranty”:  The guaranty made by the Issuer for the benefit of Webster Business Credit Corporation with respect the obligations of MBC under the Webster Credit Agreement.

Section 1.02         Rules of Construction.

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

(a)          the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular;

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(b)          all accounting terms not otherwise defined herein have the meanings assigned to them in accordance with GAAP, and, except as otherwise herein expressly provided, the terms “generally accepted accounting principles” or “GAAP” with respect to any computation required or permitted hereunder means such accounting principles as are generally accepted in the United States;

(c)          the word “including” shall be construed to be followed by the words “without limitation”;

(d)          article and section headings are for the convenience of the reader and shall not be considered in interpreting this Indenture or the intent of the parties hereto;

(e)          the definition of or any reference to any agreement, document or instrument herein shall be construed as referring to such agreement, document or instrument as from time to time amended, restated, supplemented or otherwise modified;

(f)          references to any law, constitution, statute, treaty, regulation, rule or ordinance, including any section or other part thereof, shall refer to such law, constitution, statute, treaty, regulation, rule or ordinance as amended from time to time, and shall include any successor thereto;

(g)          references herein to any Person shall be construed to include such Person’s successors and permitted assigns;

(h)          the words “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; and

(i)          the pronouns used herein are used in the masculine and neuter genders but shall be construed as feminine, masculine or neuter, as the context requires.

ARTICLE II
THE NOTES

Section 2.01         Forms; Denominations.

(a)          The Notes shall be designated as the “Senior Secured Notes”.  The Notes may be issued with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon consistent herewith, as determined by the officers executing the Notes, as evidenced by their execution thereof.  Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The number of Notes which may be created by this Indenture is not limited.

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Section 2.02         Execution, Authentication, Delivery and Dating.

(a)          The Notes shall be executed by manual or facsimile signature on behalf of the Issuer by any Authorized Officers of the Issuer.  Notes bearing the manual or facsimile signatures of individuals who were at any time the Authorized Officers of the Issuer shall be entitled to all benefits under this Indenture, subject to the following sentence, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes.  No Note shall be entitled to any benefit under this Indenture, or be valid for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein, executed by the Indenture Trustee by manual signature, and such certificate of authentication upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder.  All Notes shall be dated the respective dates of their authentication.

(b)          At the election of the Indenture Trustee, the Indenture Trustee may appoint one or more agents (each, an “Authenticating Agent”) with power to act on its behalf and subject to its direction in the authentication of Notes in connection with transfers and exchanges under Section 2.06 and Section 2.11, as fully to all intents and purposes as though each such Authenticating Agent had been expressly authorized under those Sections to authenticate the Notes.  For all purposes of this Indenture, the authentication of Notes by an Authenticating Agent shall be deemed to be the authentication of such Notes “by the Indenture Trustee.”  The Indenture Trustee shall be the initial Authenticating Agent.

Any corporation, bank, trust company or association into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation, bank, trust company or association resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation, bank, trust company or association succeeding to the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, without the execution or filing of any further act on the part of the parties hereto or such Authenticating Agent or such successor corporation, bank, trust company or association.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Indenture Trustee and the Issuer.  The Indenture Trustee may at any time terminate the agency of any Authenticating Agent by giving written notice of termination to such Authenticating Agent and the Issuer.  Upon receiving such notice of resignation or upon such a termination, the Indenture Trustee may promptly appoint a successor Authenticating Agent, and give written notice of such appointment to the Issuer and to the Noteholders.  Upon the resignation or termination of the Authenticating Agent and prior to the appointment of a successor, the Indenture Trustee shall act as Authenticating Agent.

Each Authenticating Agent shall be entitled to all limitations on liability, rights of reimbursement and indemnities that the Indenture Trustee is entitled to hereunder as if it were the Indenture Trustee.

(c)          The Indenture Trustee shall upon Issuer Request authenticate and deliver Notes for original issue in an aggregate amount equal to the Initial Principal Balance.

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Section 2.03         Certification of Receipt of the Collateral.

(a)          The Indenture Trustee, by its execution and delivery of this Indenture, acknowledges receipt by it of all assets Granted to it and included in the Collateral Pool, in good faith and without notice of any adverse claim, and declares that it holds and will hold such assets on behalf of the present and future Noteholders.

(b)          In addition, with respect to the Notes, the Indenture Trustee hereby certifies to the Issuer and the Noteholders that, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached to the Interim Receipt (in the form attached as Schedule D hereto, (i) the Mortgage Loan Files of each related Mortgage Loan are in its possession and (ii) such Mortgage Loan Files appear regular on their face and appear to relate to the Mortgage Properties included in the Collateral.  Not later than the 15^th day following the Closing Date, the Indenture Trustee shall deliver to the Issuer an executed certificate in the form of Exhibit D to the effect that, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached as a schedule thereto, and other than any Mortgage Loan that has become a Liquidated Mortgage Loan or any Mortgage Loan specifically identified in any exception report annexed thereto as not being covered by such certification, (i) the original or a physical or electronic copy (certified to be true, correct and complete by the Issuer) of each Mortgage Loan is in its possession and (ii) such Mortgage Loan has been reviewed by it, appears regular on its face and appear to relate to such Mortgage Loan.  Not later than the 75^th day following the Closing Date (and if any exceptions are noted, again not later than the first anniversary of the Closing Date), the Indenture Trustee shall deliver to the Issuer an executed certificate in the form of Exhibit D to the effect that, as to each Mortgage Loan listed on the Mortgage Loan Schedule, except as specifically identified in the Schedule of Mortgage Loan Exceptions attached as a schedule thereto, and other than any Mortgage Loan specifically identified in any exception report annexed thereto as not being covered by such certification, (i) all documents specified in the definition of “Mortgage Loan File” are in its possession, (ii) all such documents received by it with respect to such Mortgage Loan have been reviewed by it, appear to be regular on their face and appear to relate to such Mortgage Loan, and (iii) based on the examinations referred to in this Section 2.03 and only as to the foregoing documents, the information set forth in such Mortgage Loan Schedule accurately reflects the information set forth in the Mortgage Loan File.

(c)          The Indenture Trustee shall not be under any duty or obligation to inspect, review or examine any of the documents, instruments, certificates or other papers relating to the Mortgage Loans delivered to it to determine that the same are valid, legal, effective, genuine, enforceable, in recordable form, sufficient or appropriate for the represented purpose or that they are other than what they purport to be on their face.

(d)          The Indenture Trustee shall not assign, sell, dispose of or transfer any interest in the Mortgaged Properties or Mortgage Loans or any other asset (except as expressly provided herein) or knowingly permit the Mortgaged Properties or Mortgage Loans or any other asset included in the Collateral to be subjected to any lien, claim or encumbrance arising by, through or under the Indenture Trustee or any Person claiming by, through or under the Indenture Trustee other than the liens created pursuant to the Mortgages and this Indenture.

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(e)          If any party hereto discovers that any document constituting a part of a Mortgage Loan File has not been properly executed, is missing, contains information that does not conform in any respect with the corresponding information set forth in the Mortgage Loan Schedule (and the terms of such document have not been modified by written instrument contained in the Mortgage Loan File) or does not appear to be regular on its face (each, a “Document Defect”), such party shall give prompt written notice thereof to the other parties thereto. If the Issuer does not correct any Document Defect within 90 days of its receipt of such notice and such Document Defect materially and adversely affects the value of, or the interests of the Issuer in, the related Mortgage Loan or Mortgaged Property, the Issuer shall, subject to the provisions of Section 2.04 (to the same extent as if such Document Defect were a Collateral Defect), exercise such rights and remedies as the Issuer has under Section 2.04 with respect to such Document Defect. Notwithstanding the foregoing, the delivery of a commitment to issue a policy of owner’s title insurance in lieu of the delivery of the actual policy of owner’s title insurance shall not be considered a Document Defect with respect to any Mortgage Loan File if such actual policy of insurance is delivered to the Indenture Trustee not later than 270 days after the Closing Date or Transfer Date, as applicable.

Section 2.04         Repurchase or Transfer and Exchange of Mortgage Loans for Document Defects and Breaches of Representations and Warranties.

(a)          If any party hereto discovers or receives notice that any required document is missing or of a breach of any representation or warranty relating to any Mortgage Loan or Mortgaged Property set forth in Section 2.21 that materially and adversely affects (i) the interests of the Issuer in, or the value of, such Mortgage Loan or the related Mortgaged Property or (ii) the collectability or enforceability of such Mortgage Loan (a “Collateral Defect”), the party discovering such Collateral Defect shall give prompt written notice thereof to the other parties hereto. Promptly upon becoming aware of any such Collateral Defect, the Issuer, not later than 60 days from the receipt by the Issuer of such notice or the Issuer’s knowledge of such Collateral Defects, as applicable, shall (1) cure such Collateral Defect in all material respects, (2) cause such Mortgage Loan to be released from the Collateral in accordance with Section 11.02, or (3) substitute one or more Qualified Substitute Loans for the subject Mortgage Loan in accordance with the procedures set forth in Section 11.01; provided that if (A) such Collateral Defect is capable of being cured but not within such 60-day period, (B) the Issuer has commenced and is diligently proceeding with the cure of such Collateral Defect within such 60-day period, and (C) the Issuer shall have delivered to the Indenture Trustee a certification executed on behalf of Issuer by an officer thereof setting forth the reason such Collateral Defect is not reasonably capable of being cured within an initial 60-day period and what actions the Issuer is pursuing in connection with the cure thereof and stating that the Issuer anticipates that such Collateral Defect will be cured within an additional period not to exceed 60 more days, then Issuer shall have up to an additional 60 days commencing on the 61st day from receipt by Issuer of such request to complete such cure.

(b)          If the Issuer has elected to release or to substitute one or more of the Mortgage Loans and the Issuer has delivered the Officer’s Certificates referenced in Section 11.01 and Section 11.02, respectively, the Issuer shall prepare, execute and deliver the endorsements, assignments and other documents contemplated by Section 11.01 or Section 11.02 necessary to effectuate an exchange or release pursuant to Section 2.04(a). In connection with any such release or substitution by the Issuer, the Indenture Trustee shall concurrently deliver the related Mortgage Loan File to the Issuer.

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Section 2.05         The Notes Generally.

(a)          Each Note shall rank pari passu with each other Note and be equally and ratably secured by the Collateral included in the Collateral Pool. All Notes shall be substantially identical except as to denominations and as expressly permitted in this Indenture.

(b)          This Indenture, together with the related Mortgages, shall evidence a continuing lien on and security interest in the Collateral Granted hereunder or subsequently included in the Collateral Pool to secure the full payment of the principal, interest and other amounts on the Notes, which shall in all respects be equally and ratably secured hereby for payment as provided herein, and without preference, priority or distinction on account of the actual time or times of the authentication and delivery of the Notes, all in accordance with the terms and provisions of this Indenture.

(c)          The issuance of the Notes shall be subject to the satisfaction of the following conditions:

(i)          receipt by the Indenture Trustee of the Issuer Order authorizing the execution and authentication of the Notes;

(ii)         receipt by the Indenture Trustee of the Transaction Documents duly executed and delivered by the parties thereto and being in full force and effect, free of any breach or waiver;

(iii)        all Mortgage Loan Files with respect to the Collateral Pool, as set forth herein, shall have been delivered to the Indenture Trustee or a custodian on its behalf together with all UCC Financing Statements, documents of similar import in other jurisdictions, and other documents reasonably necessary to perfect the Indenture Trustee’s security interest in such Collateral for the benefit of the Noteholders;

(iv)        receipt by the Indenture Trustee of Opinions of Counsel relating to (1) corporate and enforceability matters, as well as securities law matters, reasonably acceptable to the Underwriter and its counsel and (2) the creation and perfection of the Indenture Trustee’s security interest;

(v)         the Issuer has delivered a certificate of the Issuer to the Indenture Trustee, dated the Closing Date, to the effect that the Issuer is solvent; and

(vi)        receipt by the Indenture Trustee of an Officer’s Certificate from the Issuer, upon which the Indenture Trustee shall be permitted to fully rely and shall not have any liability for so relying, stating that the conditions precedent to such issuance have been fulfilled.

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Section 2.06         Registrar and Paying Agent.

(a)          At all times during the term of this Indenture, there shall be maintained at the office of the Note Registrar a “Note Register” in which, subject to such reasonable regulations as the Note Registrar may prescribe, the Note Registrar shall provide for the registration of Notes and of transfers and exchanges of Notes as herein provided. The offices of the Note Registrar shall be initially located (as of the Closing Date) at [Trustee TBD], [address] Attention: __________________. The Indenture Trustee is hereby initially appointed (and hereby agrees to act in accordance with the terms hereof) as “Note Registrar” for the purpose of registering Notes and transfers and exchanges of Notes as herein provided. The Indenture Trustee may appoint, by a written instrument delivered to the Issuer, any other bank or trust company to act as Note Registrar under such conditions as the predecessor Indenture Trustee may prescribe; provided, that the Indenture Trustee shall not be relieved of any of its duties or responsibilities hereunder by reason of such appointment. If the Indenture Trustee resigns or is removed in accordance with the terms hereof, the successor trustee shall immediately succeed to its predecessor’s duties as Note Registrar. The Issuer and the Indenture Trustee shall have the right to inspect the Note Register or to obtain a copy thereof at all reasonable times, and to rely conclusively upon a certificate of the Note Registrar as to the information set forth in the Note Register. Upon written request of any Noteholder made for purposes of communicating with other Noteholders with respect to their rights under this Indenture, the Note Registrar shall promptly furnish such Noteholder with a list of the other Noteholders of record identified in the Note Register at the time of the request.

(b)          The Issuer shall maintain an office or agency where Notes may be presented for payment (the “Paying Agent”) and an office or agency where notices and demands to or upon the Issuer, if any, in respect of the Notes and this Indenture may be served. The Issuer may have one or more additional Paying Agents. The term “Paying Agent” includes any additional Paying Agent. Neither the Issuer nor any Affiliate thereof may act as Paying Agent. The Issuer may change the Paying Agent without prior notice to the Holders. The Company initially appoints the Indenture Trustee as Paying Agent and agent for service of notices and demands in connection with the Notes and this Indenture.

(c)          The Issuer shall enter into an appropriate agency agreement, which shall incorporate the provisions of the 1939 Act, with any Agent that is not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Issuer shall notify the Trustee of the name and address of any such Agent. If the Issuer fails to maintain a Registrar or Paying Agent or fails to give the foregoing notice, the Trustee shall act as such and shall be entitled to appropriate compensation in accordance with this Indenture.

Section 2.07         Registration of Transfer and Exchange of Notes.

(a)          A Noteholder or Note Owner may Transfer a Book-Entry Note or Ownership Interest therein only in accordance with the rules and procedures of the Depository and the Depository Participants.

(b)          If any Transfer of a Note or an Ownership Interest therein is to be held by the related transferee in the form of a Definitive Note, then the Note Registrar shall refuse to register such Transfer unless it receives (and, upon receipt, may conclusively rely upon) an executed transferor certificate from the transferor substantially in the form attached as Exhibit E (subject to Section 13.03).

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(c)          Subject to the preceding provisions of this Section 2.07, upon surrender for registration of transfer of any Note at the offices of the Note Registrar maintained for such purpose, the Issuer shall execute, and the Indenture Trustee shall cause to be authenticated and delivered, in the name of the designated transferee or transferees, one or more new Notes.

(d)          Every Note presented or surrendered for transfer or exchange shall (if so required by the Note Registrar) be duly endorsed by, or be accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder thereof or his attorney duly authorized in writing.

(e)          No service charge shall be imposed for any transfer or exchange of Notes, but the Indenture Trustee or the Note Registrar 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 Notes.

(f)          All Notes surrendered for transfer and exchange shall be physically canceled by the Note Registrar, and the Note Registrar shall dispose of such canceled Notes in accordance with its customary procedures.

(g)          The Note Registrar or the Indenture Trustee shall provide to the Issuer upon reasonable written request and at the expense of the requesting party a current copy of the Note Register.

(h)          Each transferee of a Note or an Ownership Interest therein will be deemed to have represented, warranted and agreed (or, in the case of Definitive Notes, shall represent, warrant and agree) that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii) (1) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (2) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

Section 2.08         CUSIP Number.

The Issuer in issuing the Notes may use one or more “CUSIP” numbers, and if so, such CUSIP numbers shall be included in notices of redemption or exchange as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness or accuracy of the CUSIP numbers printed in the notice or on the Notes, and that reliance may be placed only on the other identification numbers printed on the Notes. The Issuer shall promptly notify the Indenture Trustee of any such CUSIP numbers used by the Issuer in connection with the issuance of the Notes and of any change in the CUSIP numbers.

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Section 2.09         Deposit of Moneys.

Prior to 10:00 a.m., New York City time, on each Payment Date, the Issuer shall have deposited to such account as directed by the Paying Agent immediately available funds in an amount sufficient to make cash payments, if any, due on such Payment Date. The principal and interest on Book-Entry Notes shall be payable to the Depository or its nominee, as the case may be, as the sole registered owner and the sole Holder of the Book-Entry Notes represented thereby. The principal and interest on Definitive Notes shall be payable, either in person or by mail, at the office of the Paying Agent.

Section 2.10         Book-Entry Notes.

(a)          The Book-Entry Notes shall be delivered as one or more Notes held by the Book-Entry Custodian or, if appointed to hold such Notes as provided below, the Depository, and registered in the name of the Depository or its nominee and, except as otherwise provided in Section 2.10(c), transfer of such Notes may not be registered by the Note Registrar unless such transfer is to a successor Depository that agrees to hold such Notes for the respective Note Owners with Ownership Interests therein. Except as provided in Section 2.10(c), such Note Owners shall hold and transfer their respective Ownership Interests in and to such Notes through the book-entry facilities of the Depository and, except as provided in Section 2.10(c), shall not be entitled to definitive, fully registered Notes (“Definitive Notes”) in respect of such Ownership Interests. All transfers by Note Owners of their respective Ownership Interests in the Book-Entry Notes to be held by the related transferees as Book-Entry Notes shall be made in accordance with the procedures established by the Depository Participant or brokerage firm representing each such Note Owner. Each Depository Participant shall only transfer the Ownership Interests in the Book-Entry Notes of Note Owners it represents or of brokerage firms for which it acts as agent in accordance with the Depository’s normal procedures. The Indenture Trustee is hereby initially appointed as the Book-Entry Custodian and hereby agrees to act as such in accordance herewith and in accordance with the agreement that it has with the Depository authorizing it to act as such. Neither the Indenture Trustee nor the Note Registrar shall have any responsibility to monitor or restrict the transfer of any Book-Entry Note transferable through the book-entry facilities of the Depository. The Book-Entry Custodian may, and, if it is no longer qualified to act as such, the Book-Entry Custodian shall, appoint, by a written instrument delivered to the Issuer, and, if the Indenture Trustee is not the Book-Entry Custodian, the Indenture Trustee, any other transfer agent (including the Depository or any successor Depository) to act as Book-Entry Custodian under such conditions as the predecessor Book-Entry Custodian and the Depository or any successor Depository may prescribe; provided, that the predecessor Book-Entry Custodian shall not be relieved of any of its duties or responsibilities by reason of any such appointment other than with respect to an appointment of the Depository. If the Indenture Trustee resigns or is removed in accordance with the terms hereof, the successor trustee or, if it so elects, the Depository shall immediately succeed to its predecessor’s duties as Book-Entry Custodian. The Issuer shall have the right to inspect, and to obtain copies of, any Notes held as Book-Entry Notes by the Book-Entry Custodian.

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(b)          The Issuer, the Indenture Trustee and the Note Registrar may for all purposes, including the making of payments due on the Book-Entry Notes, deal with the Depository as the Noteholder and the authorized representative of the Note Owners with respect to such Notes for the purposes of exercising the rights of Noteholders hereunder. The rights of Note Owners with respect to the Book-Entry Notes shall be limited to those established by law and agreements between such Note Owners and the Depository Participants and brokerage firms representing such Note Owners. Multiple requests and directions from, and votes of, the Depository as holder of the Book-Entry Notes with respect to any particular matter shall not be deemed inconsistent if they are made with respect to different Note Owners. The Indenture Trustee may establish a reasonable record date in connection with solicitations of consents from or voting by Noteholders and shall give notice to the Depository of such record date.

(c)          If (i) the Issuer advises the Indenture Trustee and the Note Registrar in writing that the Depository is no longer willing or able to properly discharge its responsibilities with respect to the Book-Entry Notes (or any portion thereof), and (ii) the Issuer is unable to locate a qualified successor, the Note Registrar shall notify all affected Note Owners, through the Depository, of the occurrence of any such event and of the availability of Definitive Notes to such Note Owners requesting the same. Upon surrender to the Note Registrar of the Book-Entry Notes (or any portion thereof) by the Book-Entry Custodian or the Depository, as applicable, and the delivery of registration instructions from the Depository for registration of transfer, the Issuer shall execute, and the Indenture Trustee shall cause to be authenticated and delivered, the Definitive Notes in respect of such Notes to the Note Owners identified in such instructions. None of the Issuer, the Indenture Trustee or the Note Registrar shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions.

(d)          Upon the issuance of Definitive Notes, for purposes of evidencing ownership of any Notes, the registered holders of such Definitive Notes shall be recognized as Noteholders hereunder and, accordingly, shall be entitled directly to receive payments on, to exercise voting and consent rights with respect to, and to transfer and exchange such Definitive Notes.

(e)          The Issuer shall provide an adequate inventory of Definitive Notes to the Indenture Trustee.

Section 2.11         Mutilated, Destroyed, Lost or Stolen Notes.

If any mutilated Note is surrendered to the Note Registrar, the Issuer shall execute and the Indenture Trustee shall cause to be authenticated and delivered, in exchange therefor, a new Note of the same principal amount and bearing a number not contemporaneously outstanding.

If there shall be delivered to the Issuer, the Indenture Trustee and the Note Registrar (i) evidence to their satisfaction of the destruction (including mutilation tantamount to destruction), loss or theft of any Note and the ownership thereof, and (ii) indemnity as may be reasonably required by them to hold each of them and any of their agents harmless, then, in the absence of notice to the Issuer or the Note Registrar that such Note has been acquired by a bona fide purchaser, the Issuer shall execute and the Indenture Trustee shall cause to be authenticated and delivered, in lieu of any such destroyed, lost or stolen Note, a new Note of the same tenor and denomination registered in the same manner, dated the date of its authentication and bearing a number not contemporaneously outstanding.

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Upon the issuance of any new Note under this Section 2.11, the Issuer, the Indenture Trustee and the Note Registrar may require the payment by the Noteholder of an amount sufficient to pay or discharge any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Authenticating Agent and the Indenture Trustee) in connection therewith.

Every new Note issued pursuant to this Section 2.11 in lieu of any destroyed, mutilated, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the destroyed, mutilated, lost or stolen Note shall be at any time enforceable by any Person, and such new Note shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder.

The provisions of this Section 2.11 are exclusive and shall preclude (to the extent permitted by applicable law) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes.

Section 2.12         Noteholder Lists.

The Note Registrar shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of the Noteholders, which list, upon request, will be made available to the Indenture Trustee insofar as the Indenture Trustee is no longer the Note Registrar. Upon written request of any Noteholder made for purposes of communicating with other Noteholders with respect to their rights under this Indenture, the Note Registrar shall promptly furnish such Noteholder at such Noteholder’s expense with a list of the Noteholders of record identified in the Note Register at the time of the request. Every Noteholder, by receiving such access, or by receiving a Note or an interest therein, agrees with the Note Registrar that the Note Registrar will not be held accountable in any way by reason of the disclosure of any information as to the names and addresses of any Noteholder regardless of the source from which such information was derived.

Section 2.13         Persons Deemed Owners.

The Issuer, the Indenture Trustee, the Note Registrar and any of their agents, may treat the Person in whose name a Note is registered as the owner of such Note as of the related Record Date for the purpose of receiving payments of principal, interest and other amounts in respect of such Note and for all other purposes, whether or not such Note shall be overdue, and none of the Issuer, the Indenture Trustee, the Note Registrar or any agents of any of them, shall be affected by notice to the contrary.

Section 2.14         Payment Account.

(a)          On or prior to the Closing Date, the Indenture Trustee shall establish and maintain one or more segregated trust accounts (collectively, the “Payment Account”) at [Trustee TBD] (or at such other financial institution as necessary to ensure that the Payment Account is at all times an Eligible Account or a sub-account of an Eligible Account, in each case subject to an Account Control Agreement), in its name, as Indenture Trustee, bearing a designation clearly indicating that such account and all funds deposited therein are held for the exclusive benefit of the Noteholders and the Issuer as their interests may appear. On each Remittance Date, the Indenture Trustee shall deposit or cause to be deposited in the Payment Account the Available Amount for such Payment Date. Except as provided in this Indenture, the Indenture Trustee, in accordance with the terms of this Indenture, shall have exclusive control and sole right of withdrawal with respect to the Payment Account. Funds in the Payment Account shall not be commingled with any other moneys. All moneys deposited from time to time in the Payment Account shall be held by and under the control of the Indenture Trustee in the Payment Account for the benefit of the Noteholders and the Issuer as herein provided.

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(b)          Amounts in the Payment Account shall be held uninvested.

(c)          The Indenture Trustee is authorized to make withdrawals from the Payment Account to make payments on the Notes and to other parties as set forth in the priorities of payments pursuant to Section 2.15(b) of this Indenture.

(d)          Upon the satisfaction and discharge of this Indenture pursuant to Section 3.01, the Indenture Trustee shall pay to the Issuer all amounts, if any, held by it remaining as part of the Collateral Pool.

Section 2.15         Payments on the Notes.

(a)          Subject to Section 2.15(b), the Issuer agrees to pay:

(i)          on each Payment Date prior to the Final Payment Date (but only to the extent of the Available Amount pursuant to Section 2.15(b)), interest on and, to the extent payable on such Payment Date pursuant to the terms of this Indenture or the Notes, principal of such Notes in the amounts and in accordance with the priorities set forth in Section 2.15(b); and

(ii)         on the Final Payment Date, the entire Outstanding Principal Balance, together with all accrued and unpaid interest thereon.

Amounts properly withheld under the Code by any Person from a payment to any Holder of a Note of interest, principal or other amounts, or any such payment set aside on the Final Payment Date for such Note as provided in Section 2.15(b), shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture.

(b)          With respect to each Payment Date, any interest, principal and other amounts payable on the Notes shall be paid to each Person that is a registered holder thereof at the close of business on the related Record Date; provided, however, that interest, principal and other amounts payable at the Final Payment Date of any Note shall be payable only against surrender thereof at the Indenture Trustee’s Office or such other address as may be specified in the notice of final payment. Payments of interest, principal and other amounts on the Notes to be made on any Payment Date other than the Final Payment Date shall be made, subject to applicable laws and regulations, by wire transfer to such accounts as each such Noteholder shall designate by written instruction received by the Indenture Trustee not later than the Record Date related to such Payment Date or otherwise by check mailed on or before such Payment Date to the Person entitled thereto at such Person’s address appearing on the Note Register as of the related Record Date. The Indenture Trustee shall pay each Note in whole or in part as provided herein on its Final Payment Date in immediately available funds from funds in the Payment Account as promptly as possible after presentation to the Indenture Trustee of such Note at the Indenture Trustee’s Office, but in no event later than the next Business Day after the day of such presentation. If presentation is made after 3:30 p.m., New York City time, on any day, such presentation shall be deemed to have been made on the immediately succeeding Business Day.

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Each payment with respect to a Book-Entry Note shall be paid to the Depository, as holder thereof, and the Depository shall be responsible for crediting the amount of such payment to the accounts of its Depository Participants in accordance with its normal procedures. Each Depository Participant shall be responsible for disbursing such payments to the related Note Owners that it represents and to each indirect participating brokerage firm for which it acts as agent. Each brokerage firm shall be responsible for disbursing funds to the related Note Owners that it represents. None of the parties hereto shall have any responsibility therefor except as otherwise provided by this Indenture or applicable law. The Issuer and the Indenture Trustee shall perform their respective obligations under each Letter of Representations.

Except as provided in the following sentence, if a Note is issued in exchange for any other Note during the period commencing at the close of business at the office or agency where such exchange occurs on any Record Date and ending before the opening of business at such office or agency on the related Payment Date, no interest, principal or other amounts will be payable on such Payment Date in respect of such new Note, but will be payable on such Payment Date only in respect of the prior Note. Interest, principal and other amounts payable on any Note issued in exchange for any other Note during the period commencing at the close of business at the office or agency where such exchange occurs on the Record Date immediately preceding the Final Payment Date and ending on the Final Payment Date, shall be payable to the Person that surrenders the new Note as provided in this Section 2.15(b).

All payments of interest, principal and other amounts made with respect to the Notes will be allocated pro rata among the Outstanding Notes as set forth below.

If any Note on which the final payment was due is not presented for payment on the Final Payment Date, then the Indenture Trustee shall set aside such payment in a segregated, non-interest bearing account (and shall remain uninvested) separate from the Payment Account (but which may be a sub-account thereof) but which constitutes an Eligible Account (or a sub-account of an Eligible Account), and the Indenture Trustee and the Issuer shall act in accordance with Section 5.10 in respect of the unclaimed funds.

On each Payment Date, the Available Amount for such Payment Date will be applied by the Indenture Trustee in the following manner and order of priority:

(1)         to the Indenture Trustee, the earned and unpaid Indenture Trustee Fee;

(2)         to the Noteholders, the Note Interest, plus unpaid Note Interest from any prior Payment Date, together with interest on any such unpaid Note Interest at the Note Rate;

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(3)         (I) for so long as no Early Amortization Period has commenced or Event of Default has occurred and is continuing, to the Noteholders (until the Outstanding Principal Balance of the Notes has been reduced to zero), an amount up to the sum of the Mandatory Principal Payment allocable to the Notes for such Payment Date; or (II) if an Early Amortization Period has commenced or Event of Default has occurred and is continuing, to the Noteholders, all remaining Available Amounts until the Outstanding Principal Balance of the Notes has been reduced to zero;

(4)         to the Issuer, all remaining Available Amounts.

Notwithstanding the provisions of this Section 2.15(b), the Issuer may, subject to Section 9.06, at any time advance funds to the Indenture Trustee for the purpose of allowing the Indenture Trustee to make required payments on the Notes without right of reimbursement.

(c)          In connection with making any payments pursuant to Section 2.15(b), the Indenture Trustee shall make available to the Issuer on the related Payment Date via the Indenture Trustee’s internet website specified in Section 6.01(a), a written statement detailing the amounts so paid; provided, that if such information is not so available on the Indenture Trustee’s internet website for any reason, the Indenture Trustee shall provide the Issuer with such written statement by facsimile transmission, confirmed in writing by first class mail or overnight courier.

Section 2.16         Final Payment Notice.

(a)          Notice of final payment under Section 2.15(b) shall be given by the Indenture Trustee as soon as practicable, but not later than two (2) Business Days prior to the Final Payment Date, to each Noteholder as of the close of business on the Record Date in the calendar month preceding the Final Payment Date at such Noteholder’s address appearing in the Note Register and to the Issuer.

(b)          All notices of final payment in respect of the Notes shall state (i) the Final Payment Date, (ii) the amount of the final payment for the Notes and (iii) the place where the Notes are to be surrendered for payment.

(c)          Notice of final payment of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Indenture Trustee. Failure to give notice of final payment, or any defect therein, to any Noteholder shall not impair or affect the validity of the final payment of any other Note.

Section 2.17         Compliance with Withholding Requirements.

Notwithstanding any other provision of this Indenture, the Indenture Trustee shall comply with all federal withholding requirements with respect to payments to Noteholders of interest, original issue discount, or other amounts that the Indenture Trustee reasonably believes are applicable under the Code or any other applicable federal law. The consent of Noteholders shall not be required for any such withholding.

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Section 2.18         Cancellation.

The Issuer may at any time deliver to the Note Registrar for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever, and all Notes so delivered shall be promptly canceled by the Note Registrar.

All Notes delivered to the Indenture Trustee for payment shall be forwarded to the Note Registrar. All such Notes and all Notes surrendered for transfer and exchange in accordance with the terms hereof shall be canceled and disposed of by the Note Registrar in accordance with its customary procedures.

Section 2.19         Tax Treatment of the Notes and the Issuer.

The Issuer has entered into this Indenture, and the Notes will be issued, with the intention that, for purposes of any federal, state and local income or franchise tax and any other taxes imposed on or measured by income, the Notes will qualify as indebtedness of the Issuer. The Issuer, by entering into this Indenture, each Noteholder, by acceptance of its Note, and each Note Owner, by purchasing or otherwise acquiring an Ownership Interest in a Note, agree to treat the Notes and such Ownership Interests for purposes of any federal, state and local income or franchise tax and any other taxes imposed on or measured by income, as indebtedness of the Issuer.

Section 2.20         Representations and Warranties with Respect to the Issuer.

The Issuer hereby represents and warrants to the other parties hereto as follows:

(a)          The Issuer is a corporation duly created and validly existing in good standing under the laws of the State of New York and has full power, authority and legal right to execute and deliver the Indenture and the other Transaction Documents to which the Issuer is a party, to issue the Notes, to pledge the Collateral included in the Collateral Pool to the Indenture Trustee and to perform its obligations under the Indenture and the other Transaction Documents to which it is a party.

(b)          The execution and delivery by the Issuer of the Indenture and the performance by the Issuer of its obligations under the Indenture and the other Transaction Documents to which the Issuer is a party has been duly and validly authorized and will not violate the organizational documents of the Issuer, nor will such execution, delivery or performance require the authorization, consent or approval of, the giving of notice to, the filing or registration with, or the taking of any other action by, any arbitrator, court or other Governmental Authority (other than the SEC) or conflict with, or result in a breach or violation of, any provision of any law or regulation governing the Issuer or any order, writ, judgment or decree of any arbitrator, court or other Governmental Authority applicable to the Issuer or any of its assets, any indenture, mortgage, deed of trust, partnership agreement or other agreement or instrument to which the Issuer is a party or by which the Issuer or all or any portion of the Collateral is bound, which breach or violation would materially adversely affect either the ability of the Issuer to perform its obligations under this Indenture and the other Transaction Documents to which it is a party or the financial condition of the Issuer or the value of any Mortgaged Property as security for the Notes.

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(c)          The Issuer has requisite power and authority to own the Mortgage Loans and other Collateral and to transact the businesses in which it is now engaged. The Issuer is duly qualified to do business and is in good standing in each jurisdiction where it is required to be so qualified in connection its business and operations. The Issuer possesses all rights, licenses, permits and authorizations, governmental or otherwise, necessary to entitle it to own the Mortgage Loans and to transact the businesses in which it is now engaged, the failure of which to obtain would result in a material adverse effect on either the ability of the Issuer to perform its obligations under this Indenture and the other Transaction Documents to which it is a party or the financial condition of the Issuer or the value of any Mortgage Loan as security for the Notes.

(d)          This Indenture and the other Transaction Documents (including the Notes when issued) have been duly executed and delivered by the Issuer and, assuming due authorization, execution and delivery by each of the other parties hereto and thereto, constitutes (and the Notes when issued will constitute) a valid, legal and binding obligation of the Issuer, enforceable against the Issuer in accordance with the terms hereof, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law.

(e)          The Issuer has no employee benefit plans and is not required to make any contributions to any Plans.

(f)          The Issuer (i) has not entered into the Indenture or any of the other Transaction Documents with the actual intent to hinder, delay, or defraud any creditor and (ii) has received reasonably equivalent value in exchange for its obligations under the Indenture. Giving effect to the issuance of the Notes, the fair saleable value of all of the Issuer’s assets will, immediately following the execution and delivery of the Transaction Documents, exceed the Issuer’s total liabilities, including, without limitation, subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of the Issuer’s assets will, immediately following the execution and delivery of the Transaction Documents, be greater than the Issuer’s probable liabilities, including the maximum amount of its contingent liabilities or debts as such debts become absolute and mature. The Issuer’s assets immediately following the execution and delivery of the Transaction Documents will not constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. The Issuer does not intend to, and does not believe that it will, incur debts and liabilities (including, without limitation, contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of the Issuer).

(g)          The Issuer is not: (i) an “investment company” or a company “controlled” by an “investment company,” within the meaning of the 1940 Act; (ii) a “holding company” or a “subsidiary company” of a “holding company” or an “affiliate” of either a “holding company” or a “subsidiary company” within the meaning of the Public Utility Holding Company Act of 1935, as amended; or (iii) subject to any other federal or state law or regulation which prevents the Issuer from entering into the Indenture. As of the Closing Date, this Indenture is not required to be qualified under the 1939 Act.

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(h)          The Transaction Documents and the Prospectus do not contain any untrue statement of a material fact or omit to state any material fact necessary to make statements contained herein or therein not misleading.

(i)          No Default or Event of Default under the Indenture has occurred and is continuing.

(j)          Neither the Issuer nor MBC is contemplating the filing of a petition by the Issuer or MBC, as applicable, under any state or federal bankruptcy or insolvency laws or the liquidation of all or a major portion of the Issuer’s or MBC’s assets or property, and the Issuer has no knowledge of any Person contemplating the filing of any such petition against the Issuer or MBC.

(k)          The Issuer is not a “foreign person” within the meaning of Section 1445(f)(3) of the Code and the related Treasury Regulations, including temporary regulations.

(l)          The Issuer has not incurred any indebtedness, secured or unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation), that has not been repaid in full, other than (i) the Notes, (ii) trade and operational debt incurred in the ordinary course of business with trade creditors and in amounts as are normal and reasonable under the circumstances (including the expenses relating to the transactions contemplated by this Indenture) and (iii) the Webster Guaranty.

(m)          The Issuer has good title to, and is the sole owner of, all Collateral included in the Collateral Pool, free and clear of any pledge, lien, encumbrance or security interest other than Permitted Encumbrances and the liens created hereby. This Indenture creates a valid and continuing security interest in each such item of the Collateral Pool in which a security interest may be created under Article 9 of the UCC in favor of the Indenture Trustee. The Issuer has caused the filing of an appropriate financing statement with the Secretary of State of the State of New York in order to perfect the security interests in the Collateral granted to the Indenture Trustee hereunder. Upon the issuance of the Notes and the proper filing of such financing statements, the Indenture Trustee will have a valid and enforceable perfected lien or perfected security interest, as applicable, in the Collateral, which lien or security interest is prior to all other liens, encumbrances and security interests, other than Permitted Encumbrances, and is enforceable as such against creditors of and purchasers from the Issuer.

(n)          As of the Closing Date and at all times throughout the term of the Notes, (i) none of the funds or other assets of the Issuer constitute property of, or are beneficially owned, directly or indirectly, by any Person subject to trade restrictions under U.S. law, including but not limited to, the Patriot Act (including the anti-terrorism provisions thereof), the International Emergency Economic Powers Act, 50 U.S.C. Sections 1701, et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder (such person, an “Embargoed Person”), with the result that the investment in the Notes (whether directly or indirectly) is prohibited by law, (ii) no Embargoed Person has any interest of any nature whatsoever in the Issuer, with the result that the investment in the Notes (whether directly or indirectly) is prohibited by law, and (iii) none of the funds of the Issuer have been derived from any unlawful activity with the result that the investment in the Issuer (whether directly or indirectly) is prohibited by law.

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(o)          No part of the proceeds of the Notes will be used for the purpose of purchasing or acquiring any “margin stock” within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose which would be inconsistent with such Regulation U or any other Regulations of such Board of Governors, or for any purposes prohibited by Legal Requirements or by the terms and conditions of the Indenture or the other Transaction Documents.

Section 2.21         Representations and Warranties With Respect to Mortgaged Properties and Mortgage Loans.

The Issuer shall make the following representations and warranties, as of the Closing Date or Transfer Date, with respect to the Mortgage Loans (and the related Mortgage, Mortgage Note, Collateral Assignment, if any, and Mortgaged Property) added to the Collateral Pool by the Issuer in connection with the issuance of the Notes or as Qualified Substitute Loans:

(a)          The information set forth in the Mortgage Loan Schedule with respect to the Mortgage Loans is complete, true and correct in all material respects.

(b)          All payments made with respect to the Mortgage Loans under the terms of the applicable Mortgage Notes have been properly applied to the amount intended to be paid by the related Mortgagor Customers. No payment required under any Mortgage Loan is more than 60 days past due nor has any payment under any Mortgage Loan been more than 60 days past due at any time since the origination of such Mortgage Loan. The first Mortgage Loan Payment shall be made, or shall have been made, with respect to each Mortgage Loan on its due date or within the grace period, all in accordance with the terms of the related Mortgage Note.

(c)          Neither MBC, the Issuer nor any Affiliate of either thereof has advanced funds to, or induced, solicited or knowingly received any advance of funds from a party other than the applicable Mortgagor Customer, directly or indirectly, for the payment of any amount required under the related Mortgage Loan.

(d)          The terms of the Mortgage Notes and Mortgages have not been waived, altered or modified in any respect, from the date of origination, except by a written instrument which has been recorded, if necessary to protect the interests of the Indenture Trustee and the Noteholders, and which has been delivered to the Indenture Trustee and the terms of which are reflected in the Mortgage Loan Schedule. No Mortgagor Customer in respect of a Mortgage Loan has been released, in whole or in part, except in connection with an assumption agreement, which assumption agreement is part of the Mortgage Loan File delivered to the Indenture Trustee and the terms of which are reflected in the Mortgage Loan Schedule.

(e)          No Mortgagor Customer has asserted any right of rescission, set-off, counterclaim or defense, including without limitation the defense of usury with respect to the related Mortgage Loan. No Mortgagor Customer in respect of any Mortgage Loan was a debtor in any state or Federal bankruptcy or insolvency proceeding at the time such Mortgage Loan was originated or is a debtor in any state or federal bankruptcy or insolvency proceeding.

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(f)          Each Mortgaged Property is insured by a fire and extended perils insurance policy, issued by a Qualified Insurer, and such other hazards as are customary in the area where such Mortgaged Property is located in an amount not less than the outstanding principal balance of such Mortgage Loan. If any portion of such Mortgaged Property is in an area identified by any federal Governmental Authority as having special flood hazards, and flood insurance is available, a flood insurance policy meeting the current guidelines of the Federal Emergency Management Agency is in effect with a generally acceptable insurance carrier, in an amount representing coverage not less than the lesser of (1) the outstanding principal balance of the Mortgage Loan and (2) the maximum amount of insurance available under the National Flood Insurance Act of 1968, as amended by the Flood Disaster Protection Act of 1974. All such insurance policies (collectively, the “hazard insurance policy”) contain a standard mortgagee clause naming the Issuer, its successors and assigns (including without limitation, subsequent owners of the Mortgage Loan), as mortgagee, and may not be reduced, terminated or canceled without 30 days’ prior written notice to the mortgagee. No such notice has been received by MBC or Funding. All premiums on such insurance policy have been paid. The related Mortgage obligates the related Mortgagor Customer to maintain all such insurance and, at such Mortgagor Customer’s failure to do so, authorizes the mortgagee to maintain such insurance at such Mortgagor Customer’s cost and expense and to seek reimbursement therefor from such Mortgagor Customer. Where required by state law or regulation, the Mortgagor Customer has been given an opportunity to choose the carrier of the required hazard insurance, provided the policy is not a “master” or “blanket” hazard insurance policy covering a condominium, or any hazard insurance policy covering the common facilities of a planned unit development. Neither MBC nor the Issuer has engaged in, and has no knowledge of any Mortgagor Customer’s having engaged in, any act or omission which would impair the coverage of any such policy, the benefits of the endorsement provided for herein, or the validity and binding effect of either including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Issuer.

(g)          Any and all requirements of any federal, state or local law applicable to the Mortgage Loans have been complied with in all material respects, including the Patriot Act and the rules and regulations of the U.S. Treasury Department’s Office of Foreign Assets Control.

(h)          The Mortgage has not been satisfied, canceled, subordinated or rescinded, in whole or in part, and the related Mortgaged Property has not been released from the lien of the related Mortgage, in whole or in part, nor has any instrument been executed that would affect any such release, cancellation, subordination or rescission. Neither MBC nor the Issuer has waived the performance by any Mortgagor Customer of any action, if such Mortgagor Customer’s failure to perform such action would cause the related Mortgage Loan to be in default, nor has MBC or the Issuer waived any default resulting from any action or inaction by any Mortgagor Customer.

(i)          Each Mortgage is a valid, enforceable and perfected first lien, on the related Mortgaged Property, including all buildings on such Mortgaged Property and all installations and mechanical, electrical, plumbing, heating and air conditioning systems located in or annexed to such buildings, and all additions, alterations and replacements made at any time with respect to the foregoing. The lien of each Mortgage is subject only to:

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(i)          in the case of a construction loan, the lien of the Issuer (or its predecessor in interest) on such Mortgaged Property securing the Mortgage Loan made to the related Mortgagor Customer the proceeds of which were used to acquire such Mortgaged Property;

(ii)         any lien for real property taxes and assessments with respect to which a notice of lien has not been filed against such Mortgaged Property;

(iii)        covenants, conditions and restrictions, rights of way, easements and other matters of the public record as of the date of recording acceptable to prudent mortgage lending institutions generally and specifically referred to in the lender’s title insurance policy delivered to the originator of the related Mortgage Loan; and

(iv)        other matters to which like properties are commonly subject which do not materially interfere with the benefits of the security intended to be provided by such Mortgage or the use, enjoyment, value or marketability of such Mortgaged Property (any of the foregoing described in subparagraph (i), (ii), (iii) or (iv), a “Permitted Encumbrance” and, collectively, the “Permitted Encumbrances”).

(j)          Each Mortgage Note, each Mortgage and any other agreement executed and delivered by a Mortgagor Customer or a Mortgage Loan Guarantor, if applicable, in connection with a Mortgage Loan is genuine, is the legal, valid and binding obligation of the maker thereof enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity, regardless of whether such enforcement is considered in a proceeding in equity or at law. All parties to each Mortgage Note, each Mortgage and any other such related agreement had legal capacity to enter into the related Mortgage Loan and to execute and deliver such Mortgage Note, such Mortgage and any such other agreements, and such Mortgage Note, such Mortgage and any other such agreements have been duly and properly executed by such parties. No fraud, error, omission, misrepresentation, negligence or similar occurrence with respect to any Mortgage Loan has taken place on the part of any Person, including, without limitation, the Mortgagor Customer or any other party involved in the origination of the related Mortgage Loan. MBC or the Issuer has reviewed all of the documents constituting the Mortgage Loan File and has made such inquiries as it deems necessary to make and confirm the accuracy of the representations set forth herein.

(k)          Each Mortgage Loan has been closed and the proceeds of such Mortgage Loan have been fully disbursed and there is no further requirement for future advances thereunder, except in the case of construction loans. All costs, fees and expenses incurred in making or closing each Mortgage Loan and the recording of the related Mortgage were paid, and the related Mortgagor Customer is not entitled to any refund of any amounts paid or due under the related Mortgage Note or such Mortgage.

(l)          The Issuer is the sole owner and holder of each Mortgage Loan. No Mortgage Loan has been assigned or pledged by the Issuer, and the Issuer has good, indefeasible and marketable title thereto, and has full right and authority to transfer, pledge and assign each Mortgage Loan pursuant to this Indenture to the Indenture Trustee free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest, and following the pledge of each Mortgage Loan pursuant to this Indenture, the Indenture Trustee will hold such Mortgage Loan free and clear of any encumbrance, equity, participation interest, lien, pledge, charge, claim or security interest.

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(m)          No Mortgage Loan has an LTV greater than (i) in the case of a Mortgage Loan the proceeds of which were used to acquire the related Mortgaged Property, 75% and (ii) in the case of a Mortgage Loan the proceeds of which were used to finance construction of the related Mortgaged Property, 80%.

(n)          Each Mortgage Loan is covered by either an ALTA lender’s title insurance policy or other generally acceptable form of policy or insurance acceptable to FNMA or FHLMC and each such title insurance policy is issued by a title insurer acceptable to FNMA or FHLMC and qualified to do business in the jurisdiction where such Mortgaged Property is located, insuring the Issuer (or its predecessor in interest), its successors and assigns, as to the first priority lien of the related Mortgage in the original principal amount of such Mortgage Loan (or to the extent the related Mortgage Note provides for negative amortization, the maximum amount of negative amortization in accordance with such Mortgage), subject only to Permitted Encumbrances, and any other matters that MBC or the Issuer agreed to allow to be outstanding against such Mortgaged Property, provided that such matters, would not affect the recovery of funds in the event of foreclosure, and in the case of adjustable rate Mortgage Loans, against any loss by reason of the invalidity or unenforceability of the lien resulting from the provisions of the Mortgage providing for adjustment to the related Mortgage Interest Rate and the related Mortgage Loan Payment. Where required by state law or regulation, each Mortgagor Customer has been given the opportunity to choose the carrier of the related required mortgage title insurance. Additionally, such lender’s title insurance policy affirmatively insures ingress and egress and against encroachments by or upon the related Mortgaged Property or any interest therein. Such lender’s title insurance policy does not contain any special exceptions (other than the standard exclusions) for zoning and uses. The Issuer (or its predecessor in interest), its successors and assigns, are the sole insureds of such lender’s title insurance policy, and such lender’s title insurance policy is valid and remains in full force and effect and will be in force and effect upon the consummation of the transactions contemplated by this Indenture. No claims have been made under such lender’s title insurance policy, and no prior holder or servicer of the related Mortgage, including MBC or the Issuer, has done, by act or omission, anything which would impair the coverage of such lender’s title insurance policy, including, without limitation, no unlawful fee, commission, kickback or other unlawful compensation or value of any kind has been or will be received, retained or realized by any attorney, firm or other Person, and no such unlawful items have been received, retained or realized by the Issuer.

(o)          Neither MBC nor the Issuer has knowledge of any mechanics’ or similar liens or claims which have been filed for work, labor or material (and to their knowledge no rights are outstanding that under the law could give rise to such liens) affecting any Mortgaged Property which are or may be liens prior to, or equal or coordinate with, the lien of the related Mortgage.

(p)          Each Mortgage Note has a stated maturity. The stated maturity of each Mortgage Note does not exceed twelve (12) months and does not provide for, or have, any extension beyond forty-eight (48) months from the original due date of such Mortgage Note. Each Mortgage contains customary and enforceable provisions such as to render the rights and remedies of the holder thereof adequate for the realization against the related Mortgaged Property of the benefits of the security provided thereby. Upon default by a Mortgagor Customer on a Mortgage Loan and foreclosure on, or trustee’s sale of, the related Mortgaged Property pursuant to the proper procedures, the holder of such Mortgage Loan will be able to deliver good and marketable title to such Mortgaged Property. There is no homestead or other exemption available to a Mortgagor Customer which would interfere with the right to sell the related Mortgaged Property at a trustee’s sale or the right to foreclose the related Mortgage.

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(q)          Each Mortgage Loan was underwritten in the ordinary course of business of MBC or the Issuer, as the case may be. Neither MBC nor the Issuer has made any representations to a Mortgagor Customer that are inconsistent with the mortgage instruments used.

(r)          To the best of MBC’s and the Issuer’s knowledge, all permits, licenses and other governmental authorizations necessary for the renovation or construction of any building on each Mortgaged Property have been obtained by the related Mortgagor Customer or by any Person managing such renovation or construction. Neither MBC nor the Issuer has received notification from any Governmental Authority that any such renovation or construction is in material non-compliance with any applicable law, ordinance, regulation, standard, permit, license or other governmental authorization which the related Mortgagor Customer is not endeavoring to cure.

(s)          The Mortgage Note, the Mortgage and any other documents required to be delivered under this Indenture for each Mortgage Loan have been delivered to the Indenture Trustee. The Issuer or its agent is in possession of a complete, true and accurate Mortgage Loan File for each Mortgage Loan, except for such documents the originals of which have been delivered to Indenture Trustee.

(t)          Each Mortgage contains an enforceable provision for the acceleration of the payment of the unpaid principal balance of the related Mortgage Loan in the event that the related Mortgaged Property is sold or transferred without the prior written consent of the mortgagee thereunder.

(u)          No Mortgage Loan contains provisions pursuant to which Mortgage Loan Payments are paid or partially paid with funds deposited in any separate account established by the Issuer, the Mortgagor Customer or anyone on behalf of the Issuer or the Mortgagor Customer, or paid by any source other than the Mortgagor Customer, nor does any Mortgage Loan contain any other similar provisions which may constitute a “buydown” provision. No Mortgage Loan is a graduated payment mortgage loan and no Mortgage Loan has a shared appreciation or other contingent interest feature.

(v)         All advances made to a Mortgagor Customer with respect to a construction loan are evidenced by a single Mortgage Note in the stated principal amount equal to the maximum amount of advances such Mortgagor Customer is permitted to borrow under the related Mortgage Loan and all such advances are secured by the related Mortgage and bear a single interest rate and single repayment term. The lien of the related Mortgage securing the consolidated principal amount is expressly insured as having first lien priority, subject only to any acquisition loan made to such Mortgagor Customer with respect to the same Mortgaged Property, by a title insurance policy, an endorsement to the policy insuring the mortgagee’s consolidated interest or by other title evidence acceptable to FNMA and FHLMC.

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(w)          There have not been any condemnation proceedings with respect to any Mortgaged Property.

(x)          The origination and collection practices used by MBC and the Issuer with respect to each Mortgage Loan have been in all respects in compliance with applicable laws and regulations, and have been in all respects legal and proper and in the ordinary course of business. All Mortgage Interest Rate adjustments have been made in strict compliance with state and federal law and the terms of the related Mortgage Note. Any interest required to be paid pursuant to state, federal and local law has been properly paid and credited.

(y)          No Mortgage Note by its terms provides for the capitalization or forbearance of interest.

(z)          No document relating to any Mortgage Loan provides for any contingent or additional interest in the form of participation in the cash flow of the related Mortgaged Property or a sharing in the appreciation of the value of such Mortgaged Property. The indebtedness evidenced by each Mortgage Note is not convertible to an ownership interest in the related Mortgaged Property or the related Mortgagor Customer and neither MBC nor the Issuer has financed nor does MBC or the Issuer own, directly or indirectly, any equity of any form in such Mortgaged Property or such Mortgagor Customer.

(aa)         The proceeds of the Mortgage Loans have not been and shall not be used to satisfy, in whole or in part, any debt owed or owing by the related Mortgagor Customers to MBC, the Issuer or any Affiliate of MBC or the Issuer.

(bb)         Each Mortgage either has been or will promptly be submitted for recordation in the appropriate governmental recording office of the jurisdiction where the related Mortgaged Property is located.

(cc)         Except as previously disclosed to the Indenture Trustee by the Issuer and approved by Indenture Trustee in writing, no Mortgage Loan has been rejected for purchase by a whole loan buyer.

(dd)         To the best of MBC’s and the Issuer’s knowledge, each Mortgaged Property is free from any and all Hazardous Substances and there exists no violation of any Environmental Laws.

(ee)         Neither MBC nor the Issuer has knowledge of any circumstances existing that should reasonably be expected to adversely affect the value or the marketability of any Mortgaged Property or any Mortgage Loan.

(ff)         No Mortgage Loan is (i) subject to the provisions of the Homeownership and Equity Protection Act of 1994 as amended (“HOEPA”), (ii) a “high cost” mortgage loan, “covered” mortgage loan or “predatory” mortgage loan or any other comparable term, no matter how defined under any federal, state or local law, or (iii) subject to any comparable federal, state or local statutes or regulations or any other statute or regulation providing assignee liability to holders of such mortgage loans.

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(gg)         No predatory, abusive or deceptive lending practices, including but not limited to, the extension of credit to a Mortgagor Customer without regard for such Mortgagor Customer’s ability to repay the related Mortgage Loan and the extension of credit to such Mortgagor Customer which has no tangible net benefit to such Mortgagor Customer, were employed in connection with the origination of such Mortgage Loan.

(hh)         The principal amount of each Mortgage Loan is less than One Million Five Hundred Thousand Dollars ($1,500,000); provided, that (i) up to three (3) Mortgage Loans originated in any calendar year may be in a principal amount not to exceed Two Million Dollars ($2,000,000.00) and (ii) the aggregate principal amount of all Eligible Mortgage Loans owing at any time by any Mortgagor Customer (together with Affiliates of such Mortgagor Customer (including common Mortgage Loan Guarantors and/or related entities)) to the Issuer or any Affiliate of the Issuer shall not exceed Three Million Dollars ($3,000,000).

(ii)         To the best of MBC’s and the Issuer’s knowledge, there is no pending action or proceeding involving any Mortgaged Property in which the compliance with any lead paint law, rule or regulation is an issue. Nothing further remains to be done to satisfy in full all requirements of each such law, rule or regulation that constitutes a prerequisite to the use and enjoyment of such property.

(jj)         To the best of MBC’s and the Issuer’s knowledge, there are no pending actions, suits or proceedings, arbitrations or governmental investigations against any Mortgagor Customer or any Mortgaged Property, an adverse outcome of which would materially affect (i) such Mortgagor Customer’s performance under the related Mortgage Note and other related Mortgage Loan Documents, or the use of such Mortgaged Property for the use currently being made thereof, the operation of such Mortgaged Property as currently being operated or the value of such Mortgaged Property or (ii) the collectability or enforceability of the related Mortgage with respect to such Mortgaged Property or the related Mortgage Loan.

(kk)         To the best of MBC’s and the Issuer’s knowledge, no asbestos is located on any Mortgaged Property except as may have been disclosed in the Phase I environmental reports delivered to the Indenture Trustee.

(ll)         All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable law in connection with the transfer of the Mortgage Loans and Mortgage Loan Documents to the Issuer have been paid. All mortgage, mortgage recording, stamp, intangible or other similar tax required to be paid by any Person under applicable law in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Mortgage Loan Documents, including, without limitation, the Mortgages, have been paid.

(mm)         Each Mortgagor Customer under a Mortgage Loan or related Mortgage Loan Documents (which document does not negate other representations and warranties set forth herein) has been instructed to make payments directly to the Collection Account; provided that, with respect to any Mortgage Loan acquired by the Issuer from MBC pursuant to the Asset Transfer Agreement, the Issuer shall have ten (10) days after the date of such acquisition to direct, in writing, each related Mortgagor Customer to make payments directly to the Collection Account and a breach of this subsection (mm) with respect to such Mortgage Loan shall occur only if such written direction is not so delivered to such Mortgagor Customer.

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(nn)         The obligations of each Mortgagor Customer under the related Mortgage Note and other Mortgage Loan Documents are not affected by reason of: (i) any damage to or destruction of any portion of a related Mortgaged Property; (ii) any taking of such Mortgaged Property; or (iii) any prohibition, limitation, interruption, cessation, restriction, prevention or interference of such Mortgagor Customer’s use, occupancy or enjoyment of such Mortgaged Property.

ARTICLE III
SATISFACTION AND DISCHARGE

Section 3.01         Satisfaction and Discharge of Indenture.

This Indenture shall cease to be of further effect except as to (a) any surviving rights herein expressly provided for, (b) in the case of clause (1)(B) below, the rights of the Noteholders hereunder to receive payment of the Outstanding Principal Balance of and interest on the Notes and any other rights of the Noteholders hereunder, and (c) the provisions of Section 3.02, when:

(1)         either: (A) all Notes theretofore authenticated and delivered (other than (I) Notes which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.11 and (II) Notes for which payment of money has theretofore been deposited in the Payment Account by the Indenture Trustee and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 5.10) have been delivered to the Note Registrar for cancellation; or (B) all such Notes not theretofore delivered to the Note Registrar for cancellation (I) have become due and payable or (II) will become due and payable on the next Payment Date, and in the case of clause (B)(I) or (B)(II) above, cash in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Note Registrar for cancellation or sufficient to pay the Outstanding Principal Balance thereof and any interest thereon accrued to the date of such deposit (in the case of Notes which have become due and payable) or to the end of the related Accrual Period for the next Payment Date has been deposited with the Indenture Trustee as trust funds in trust for these purposes;

(2)         the Issuer has paid or caused to be paid all other sums payable or reasonably expected to become payable by the Issuer to the Indenture Trustee, each of the other Persons to which amounts are payable hereunder and each of the Noteholders (in each case, if any); and

(3)         the Issuer has delivered to the Indenture Trustee an Officer’s Certificate of the Issuer (upon which the Indenture Trustee may rely) stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with;

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provided, however, that if, at any time after the payment that would have otherwise resulted in the satisfaction and discharge of this Indenture and such obligations, such payment is rescinded or must otherwise be returned for any reason, effective upon such rescission or return such satisfaction and discharge of this Indenture and such obligations shall automatically be deemed never to have occurred and this Indenture and such obligations shall be deemed to be in full force and effect.

Notwithstanding the foregoing, the obligations of the Issuer to the Indenture Trustee under Section 5.04 and the obligations of the Indenture Trustee to the Noteholders under Section 3.02 shall survive satisfaction and discharge of this Indenture.

Section 3.02         Application of Trust Money.

Subject to the provisions of Section 2.15, Section 5.10 and Section 7.01, all Cash deposited with the Indenture Trustee pursuant to Section 3.01 shall be held in the Payment Account and applied by the Indenture Trustee, in accordance with the provisions of the Notes and this Indenture, to pay to the Persons entitled thereto the amounts to which such Persons are entitled pursuant to the provisions hereof.

ARTICLE IV
EVENTS OF DEFAULT; REMEDIES

Section 4.01         Events of Default.

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

(a)          the failure of the Issuer to pay interest on the Notes on any Payment Date or any other amount on account of the Notes (other than a payment default under subsection (b)) and such failure continues unremedied for a period of thirty (30) days;

(b)          the failure of the Issuer to pay any Redemption Payment or retire the Notes on the Final Payment Date;

(c)          (i) any material default in the observance or performance of any material covenant or agreement of the Issuer or MBC made in this Indenture or any other Transaction Documents to which it is a party (other than a covenant or agreement, a default in the observance or performance of which is elsewhere in this Section 4.01 specifically dealt with), which default shall continue unremedied for a period of thirty (30) days after there shall have been given to the Issuer by the Indenture Trustee, or to the Issuer and the Indenture Trustee by the Noteholders holding at least 25% of the Outstanding Principal Balance, a written notice specifying such default and requiring it to be remedied; (ii) any monetary default by the Issuer under any Transaction Document, other than this Indenture or the Notes, which monetary default continues beyond any applicable cure period set forth in such Transaction Document, or if no cure period is set forth in such document, such default continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee; or (iii) any material default in the observance or performance of any non-monetary covenant or agreement on the part of the Issuer or MBC contained in any Transaction Document, other than this Indenture or the Notes, which continues unremedied for a period of thirty (30) days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee, provided, however, if such default under this clause (iii) is reasonably susceptible of cure, but not within such thirty (30) day period, then the Issuer or MBC, as applicable, may be permitted an additional forty-five (45) days to cure such default provided the Issuer or MBC, as applicable, diligently and continuously pursues such cure;

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(d)          (i) the impairment of the validity or effectiveness of this Indenture or the material impairment of the validity or effectiveness of any other security document purporting to grant a lien to the Indenture Trustee, the subordination of the lien of the Indenture Trustee on any part of the Collateral Pool, the creation of any lien or other encumbrance on any part of the Collateral Pool in addition to the lien of the Indenture Trustee or the failure of the lien of the Indenture Trustee to constitute a valid first priority perfected security interest in the Collateral included in the Collateral Pool, in each case, that has a material adverse effect with respect to the Collateral Pool, subject to Permitted Encumbrances; provided, that if susceptible of cure, no Event of Default shall arise pursuant to this subsection (d) until the continuation of any such default unremedied for a period of thirty (30) days after receipt by the Issuer of notice thereof; or (ii) the creation of any mechanic’s, materialman’s or other lien or encumbrance, other than a Permitted Encumbrance, on any part of the Collateral, which lien is not removed of record or otherwise insured over to Indenture Trustee’s satisfaction within forty-five (45) days of the filing or recording of such lien;

(e)          a material breach of the representations and warranties of the Issuer contained in the Indenture (other than as set forth in Section 2.21) that materially and adversely affects the interests of the Indenture Trustee, on behalf of the Noteholders, which continues unremedied for a period of thirty (30) days after the date on which written notice of such breach, requiring the same to be remedied, shall have been given to the Issuer by the Indenture Trustee;

(f)          a decree or order of a court or agency or supervisory authority having jurisdiction in an involuntary case under any present or future federal or state bankruptcy, insolvency or similar law or appointing a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities and reorganization or similar proceedings, or for the winding up or liquidation of its affairs, shall have been entered against the Issuer or MBC and such decree or order shall have remained in force undischarged or unstayed for a period of ninety (90) days;

(g)          the Issuer or MBC shall voluntarily file a petition for bankruptcy, reorganization, assignment for the benefit of creditors or similar proceeding or consent to the appointment of a conservator or receiver or liquidator in any insolvency, readjustment of debt, marshaling of assets and liabilities, or similar proceedings of, or relating to, the Issuer or MBC or of, or relating to, all or substantially all of the assets of the Issuer or MBC;

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(h)          any Collateral is subject to a Collateral Transfer other than as provided in this Indenture;

(i)          any default under any other Transaction Document (that is deemed an “Event of Default under the Indenture” pursuant to the terms of such other Transaction Document);

(j)          a Guaranty ceases to be in full force and effect or is declared to be null and void and unenforceable or a Guaranty is found to be invalid or a Guarantor denies its liability under its Guaranty or gives notice to that effect (other than by reason of release of the Guarantor in accordance with the terms of this Indenture);

(k)          the rendering of a final judgment or judgments (not subject to appeal) of a court of competent jurisdiction against the Issuer or MBC which could be reasonably expected to have a material adverse effect on (i) the condition, operations, assets, business or prospects of the Issuer or MBC, as applicable, (ii) the Issuer’s ability to make any payments under this Indenture, the Notes or the other Transaction Document in accordance with the terms hereof or thereof, (iii) MBC’s ability to make payments under the Guaranty, (iv) the value of the Collateral, or the Indenture Trustee’s liens on the Collateral or the priority of any such lien or (v) the practical realization of the benefits of the Indenture Trustee’s rights and remedies under this Indenture and the Transaction Documents;

(l)          MBC or any Guarantor shall fail to pay any principal or interest, regardless of amount, due in respect indebtedness exceeding $250,000 when and as the same shall become due and payable, or any other event or circumstance which would permit the holder of any such indebtedness to accelerate such indebtedness (and/or the obligations of MBC or such Guarantor thereunder) prior to the scheduled maturity or termination thereof, shall occur (regardless of whether the holder of such indebtedness shall actually accelerate, terminate or otherwise exercise any rights or remedies with respect to such indebtedness); or

(m)          the Issuer or MBC shall cease doing business as conducted on the Closing Date.

Section 4.02         Acceleration of Maturity; Rescission and Annulment.

If an Event of Default (other than with respect to clause (f), clause (g) or clause (i) of the definition thereof) should occur and be continuing, at the written direction of the Requisite Majority (which shall have the right, but not the obligation, to direct the Indenture Trustee to accelerate the Notes and, subject to the provisions of this Indenture, cause the foreclosure and sale of the Collateral included in the Collateral Pool), the Indenture Trustee shall declare all of the Notes to be immediately due and payable. If an Event of Default specified in clause (f), clause (g) or clause (i) of the definition thereof occurs, the unpaid Outstanding Principal Balance of such Notes, together with all accrued interest thereon through the date of acceleration, shall automatically become due and payable in full without any declaration or other act on the part of the Indenture Trustee or any Noteholder.

At any time after such declaration of acceleration has been made and before a judgment or decree for payment of the money due in respect of the Notes has been obtained by the Indenture Trustee as hereinafter provided in this ARTICLE IV, the Requisite Majority may rescind and annul such declaration and its consequences if:

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(a)          the Issuer has paid to or deposited with the Indenture Trustee a sum sufficient to pay:

(i)          all payments of principal of and interest on the Notes and all other amounts that would, in each case, then be due hereunder or upon the Notes if the Event of Default giving rise to such acceleration had not occurred; and

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

(b)          all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by virtue of such acceleration, have been cured or waived as provided in Section 4.12.

No such rescission and annulment shall affect any subsequent default or impair any right consequent thereto.

Section 4.03         Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.

(a)          If the Issuer fails to pay all amounts due upon an acceleration of the Notes under Section 4.02 forthwith upon demand and such declaration and its consequences shall not have been rescinded and annulled, the Indenture Trustee, in its capacity as Indenture Trustee and as trustee of an express trust, shall, if directed by the Requisite Majority (which will have the right, but not the obligation, to direct the Indenture Trustee to cause the foreclosure and sale of the Collateral in the Collateral Pool), institute a judicial proceeding for the collection of the sums so due and unpaid, prosecute such proceeding to judgment or final decree and enforce the same against the Issuer or any other obligor upon such Notes and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the Collateral, wherever situated, or may institute and prosecute such non-judicial proceedings in lieu of judicial proceedings as are then permitted by applicable law.

(b)          If an Event of Default occurs and is continuing, the Indenture Trustee may, in its discretion and in any order, proceed to protect and enforce its rights and the rights of the Noteholders by such appropriate proceedings as the Indenture Trustee shall deem most effective 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 or legal or equitable right vested in the Indenture Trustee by this Indenture or any Mortgage or by law.

(c)          In case (i) there shall be pending, relative to the Issuer, MBC or any Person having or claiming an interest in the Collateral Pool, proceedings under Title 11 of the United States Code or any other applicable federal or state bankruptcy, insolvency or other similar law, (ii) a receiver, assignee, debtor-in-possession or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or shall have taken possession of the Issuer or MBC or their respective property or (iii) there shall be pending a comparable judicial proceeding brought by creditors of the Issuer or MBC or affecting the property of the Issuer or MBC, the Indenture Trustee, irrespective of whether the principal of or interest on any Notes shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise:

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(iv)        to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective attorneys, and for reimbursement of all reasonable expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of willful misconduct, negligence or bad faith of the Indenture Trustee or any predecessor Indenture Trustee, as applicable) and of the Noteholders allowed in such proceedings;

(v)         unless prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any election of a trustee, a standby trustee or Person performing similar functions in any such proceedings;

(vi)        to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their and its behalf; and

(vii)       to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Noteholders allowed in any judicial proceedings relative to the Issuer or MBC, their respective creditors and their respective property;

and any trustee, receiver, liquidator, custodian or other similar official in any such proceeding is hereby authorized by each of Noteholders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders to pay to the Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective attorneys, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of willful misconduct, negligence or bad faith of the Indenture Trustee or predecessor Indenture Trustee.

(d)          Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of the Noteholder or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person.

(e)          In any proceedings brought by the Indenture Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any Noteholder a party to any such proceedings.

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(f)          All rights of action and claims under this Indenture or the Notes may be prosecuted and enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its counsel, be for the ratable benefit of the Noteholders in respect of which such judgment has been recovered, subject to the payment priorities of Section 2.15(b).

Section 4.04         Remedies.

If an Event of Default has occurred and is continuing, and the Notes have been declared due and payable pursuant to Section 4.02 and such declaration and its consequences shall not have been rescinded and annulled, the Indenture Trustee shall, at the written direction of the Requisite Majority, in addition to performing any tasks as provided in Section 4.03, do one or more of the following:

(a)          institute, or cause to be instituted, Proceedings for the collection of all amounts then payable on or under the Collateral or this Indenture with respect to the Notes, whether by declaration of acceleration or otherwise, of the sums due and unpaid, prosecute such Proceedings, enforce any judgment obtained and collect from the Collateral included in the Collateral Pool the moneys adjudged to be payable;

(b)          liquidate, or cause to be liquidated, all or any portion of the Collateral Pool at one or more public or private sales called and conducted in any manner permitted by applicable laws; provided, however, that the Indenture Trustee shall give the Issuer written notice of any private sale called by or on behalf of the Indenture Trustee pursuant to this Section 4.04(b) at least 10 days prior to the date fixed for such private sale;

(c)          institute, or cause to be instituted, Foreclosure Proceedings with respect to all or part of the Collateral included in the Collateral Pool;

(d)          exercise, or cause to be exercised, any remedies of a secured party under the UCC;

(e)          maintain the lien of this Indenture over the Collateral included in the Collateral Pool and, in its own name or in the name of the Issuer or otherwise, collect and otherwise receive in accordance with is Indenture any money or property at any time payable or receivable on account of or in exchange for the Mortgaged Properties and Mortgage Loans in the Collateral Pool;

(f)          take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee hereunder; and

(g)          exercise, or cause to be exercised, any remedies contained in any Mortgage;

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provided, however, that the Indenture Trustee shall not, unless required by law, sell or otherwise liquidate all or any portion of the Collateral Pool following any Event of Default except in accordance with Section 4.15; provided, further, that, with respect to instituting any remedies pursuant to this Section 4.04 in any state wherein the law prohibits more than one “judicial action” or “one form of action” to enforce a mortgage obligation, the Indenture Trustee shall enforce any of the Indenture Trustee’s rights hereunder with respect to any Mortgaged Properties in accordance with the directions of the Requisite Majority.

In the event that the Indenture Trustee, following an Event of Default hereunder, institutes Foreclosure Proceedings, the Indenture Trustee shall promptly give a notice to that effect to the Issuer.

Section 4.05         Application of Money Collected.

Any money collected by the Indenture Trustee pursuant to this Article shall be deposited in the Payment Account and, on each Payment Date, shall be applied in accordance with Section 2.15 and, in case of the distribution of such money on account of the principal of or interest on the Notes, upon presentation and surrender of the Notes if fully paid.

Section 4.06         Limitation on Suits,

Except as provided in Section 4.07, no Noteholder shall have any right to institute any proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(1)         such Noteholder has previously given written notice to the Indenture Trustee of a continuing Event of Default;

(2)         the Requisite Majority shall have made written request to the Indenture Trustee to institute proceedings in respect of such Event of Default in its own name as Indenture Trustee hereunder;

(3)         such Noteholder has offered to the Indenture Trustee adequate indemnity or security satisfactory to the Indenture Trustee against the costs, expenses and liabilities to be incurred in compliance with such request;

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

(5)         an Event of Default shall have occurred and be continuing;

it being understood and intended that no one or more of such Noteholders shall have any right in any manner whatever by virtue of, or by availing itself or themselves of, any provision of this Indenture to affect, disturb or prejudice the rights of any other of such Noteholders, or to obtain or to seek to obtain priority or preference over any other of such Noteholders or to enforce any right under this Indenture, except in the manner herein provided and for the equal and ratable benefit of all of such Noteholders. Subject to the foregoing restrictions, the Noteholders may exercise their rights under this Section 4.06 independently.

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Section 4.07         Unconditional Right of Noteholders to Receive Principal and Interest.

Notwithstanding any other provision in this Indenture, the Holder of any Note at Maturity shall have the right, which is absolute and unconditional, to receive payments of interest, principal and other amounts then due on such Note (subject to Section 2.15) and to institute suit for the enforcement of any such payment (subject to Section 4.06), and such rights shall not be impaired without the consent of such Noteholder, unless a non-payment has been cured pursuant to the second paragraph of Section 4.02. The Issuer shall, however, be subject to only one consolidated lawsuit by the Noteholders, or by the Indenture Trustee on behalf of the Noteholders, for any one cause of action arising under this Indenture or otherwise.

Section 4.08         Restoration of Rights and Remedies.

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

Section 4.09         Rights and Remedies Cumulative.

Except as otherwise provided with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes in Section 2.11, no right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.

Section 4.10         Delay or Omission Not Waiver.

No delay or omission of the Indenture Trustee or any Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Indenture or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, to the extent permitted by applicable law, by the Indenture Trustee or the Noteholders, as the case may be.

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Section 4.11         Control by Requisite Majority.

The Requisite Majority shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee under Section 4.04, or exercising any trust or power conferred on the Indenture Trustee (including, without limitation, the exercise of its rights under any Account Control Agreement); provided, that such direction shall not be in conflict with any rule of law or with this Indenture or involve the Indenture Trustee in personal liability; provided, further, that the Indenture Trustee may take any other action deemed proper by the Indenture Trustee which is not inconsistent with such direction.

Section 4.12         Waiver of Past Defaults.

Prior to the acceleration of the Maturity of the Notes, the Requisite Majority may waive any past default hereunder and its consequences, except a default:

(1)         in the distribution of principal or interest on any Note, for which a waiver shall require the consent of Noteholders holding 100% of the Outstanding Principal Balance of all Notes affected thereby;

(2)         in respect of a covenant or provision hereof which under ARTICLE VIII cannot be modified or amended without the consent of the Holder of each Note affected thereby, for which a waiver shall require the consent by each such Holder;

(3)         depriving the Indenture Trustee of a lien on any part the Collateral, for which a waiver shall require the consent of the Indenture Trustee; or

(4)         depriving the Indenture Trustee of any fees, reimbursement, or indemnification, to which the Indenture Trustee is entitled, for which a waiver shall require the written consent of the Indenture Trustee.

Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom (and any Early Amortization Period resulting therefrom) shall be deemed to have been cured, for every purpose of this Indenture, but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Any costs or expenses incurred by the Indenture Trustee in connection with such waiver shall be reimbursable to the Indenture Trustee from amounts on deposit in the Payment Account.

Section 4.13         Undertaking for Costs.

All parties to this Indenture agree, and each Noteholder and Note Owner by its acceptance of such Note or an Ownership Interest therein shall be deemed to have agreed, that in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, a court in its discretion may require, 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. The provisions of this Section 4.13 shall not apply to any suit instituted by the Indenture Trustee, to any suit instituted by any Noteholder or group of Noteholders holding in the aggregate at least 25% of the Outstanding Principal Balance, or to any suit instituted by any Noteholder pursuant to Section 4.07.

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Section 4.14         Waiver of Stay or Extension Laws.

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

Section 4.15         Sale of Collateral.

(a)          The power to effect any public or private sale of any portion of the Collateral Pool pursuant to Section 4.03 or Section 4.04 shall not be exhausted by any one or more sales as to any portion of the Collateral remaining unsold, but shall continue unimpaired until either the entirety of the Collateral Pool shall have been sold or all amounts payable on the Notes and under this Indenture with respect thereto shall have been paid. The Indenture Trustee may from time to time postpone any sale by public announcement made at the time and place of such sale. The Indenture Trustee hereby expressly waives its right to any amount fixed by law as compensation for any such sale but such waiver does not apply to any amounts to which the Indenture Trustee is otherwise entitled under Section 5.04.

(b)          Subject to Section 4.15(c), the Indenture Trustee shall not sell the Collateral included in the Collateral Pool pursuant to Section 4.03 or Section 4.04, unless:

(i)          the Requisite Majority consents to or directs the Indenture Trustee to make the related sales; or

(ii)         the proceeds of such liquidation would be greater than or equal to the Outstanding Principal Balance.

The foregoing provisions of this Section 4.15 shall not preclude or limit the ability of the Indenture Trustee or its designee to purchase all or any portion of the Collateral at any sale, public or private, and the purchase by the Indenture Trustee or its designee of all or any portion of the Collateral at any sale shall not be deemed a sale or disposition thereof for purposes of this Section 4.15(b).

(c)          In the event that the Notes is not fully paid on the Final Payment Date, the Noteholders holding more than 25% of the Outstanding Principal Balance shall have the right to require the sale of the Collateral, subject to Section 4.15(b) and Section 4.15(d).

(d)          In connection with a sale of all or any portion of the Collateral Pool:

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(i)          any Holder or Holders of Notes may bid for and purchase the property offered for sale, and upon compliance with the terms of sale may hold, retain and possess and dispose of such property, without further accountability, and may, in paying the purchase money therefor, deliver any Outstanding Notes or claims for interest thereon in lieu of cash up to the amount which shall, upon distribution of the net proceeds of such sale, be payable thereon, and such Notes, in case the amounts so payable thereon shall be less than the amount due thereon, shall be returned to the Holders thereof after being appropriately stamped to show such partial payment;

(ii)         the Indenture Trustee shall execute and deliver, without recourse, an appropriate instrument of conveyance transferring its interest in any portion of the Collateral Pool in connection with a sale thereof;

(iii)        the Indenture Trustee is hereby irrevocably appointed the agent and attorney-in-fact of the Issuer to transfer and convey any the Issuer’s interest in any portion of the Collateral Pool in connection with a sale thereof, and to take all action necessary to effect such sale;

(iv)        no purchaser or transferee at such a sale shall be bound to ascertain the Indenture Trustee’s authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys; and

(v)         no purchaser or transferee at such a sale shall have been a prior owner of such Collateral if such prior owner was MBC or an Affiliate thereof.

Section 4.16         Action on Notes.

The Indenture Trustee’s right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Collateral Pool.

ARTICLE V
THE INDENTURE TRUSTEE

Section 5.01         Certain Duties and Responsibilities.

(a)          The Issuer hereby irrevocably constitutes and appoints the Indenture Trustee, with full power of substitution, as its true and lawful attorney-in-fact with full irrevocable power and authority in place and stead of the Issuer and in the name of the Issuer or in its own name or in the name of a nominee, from time to time in the Indenture Trustee’s discretion, to take any and all appropriate action and to execute any and all documents and instruments which may be necessary or desirable to accomplish the purposes of this Indenture, all as set forth in this Section 5.01.

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(b)          The rights, duties and liabilities of the Indenture Trustee in respect of this Indenture shall be as follows:

(i)          The Indenture Trustee shall have the full power and authority to do all things not inconsistent with the provisions of this Indenture that it may deem advisable in order to enforce the provisions hereof or to take any action with respect to a default or an Event of Default hereunder, or to institute, appear in or defend any suit or other proceeding with respect hereto, or to protect the interests of the Noteholders. The Issuer shall prepare and file or cause to be filed, at the Issuer’s expense, a UCC Financing Statement and any continuation statements, describing the Issuer as debtor, the Indenture Trustee as secured party and the Collateral included in the Collateral Pool as the collateral, in all appropriate locations in the State of New York promptly following the issuance of the Notes, and within six months prior to each fifth anniversary of the original filing. The Indenture Trustee is hereby authorized and obligated to make, at the expense of the Issuer, all required filings and refilings with respect to which the Indenture Trustee receives written direction from the Issuer, necessary to preserve the liens created by this Indenture as provided herein. The Indenture Trustee shall not be required to take any action to exercise or enforce the trusts hereby created which, in the opinion of the Indenture Trustee, shall be likely to involve expense or liability to the Indenture Trustee, unless the Indenture Trustee shall have received an agreement satisfactory to it in its reasonable discretion to indemnify it against such liability and expense. Except as otherwise expressly provided herein, the Indenture Trustee shall not be required to ascertain or inquire as to the performance or observance of any of the covenants or agreements contained herein, or in any other instruments to be performed or observed by the Issuer.

(ii)         Subject to the other provisions of this ARTICLE V, the Indenture Trustee, upon receipt of all resolutions, certificates, statements, opinions, reports, documents, orders or other instruments furnished to the Indenture Trustee that are specifically required to be furnished pursuant to any provisions of this Indenture, shall examine them to determine whether they are on their face in the form required by this Indenture to the extent expressly set forth herein. If any such instrument is found on its face not to conform to the requirements of this Indenture in a material manner, the Indenture Trustee shall take such action as it deems appropriate to have the instrument corrected. The Indenture Trustee shall not incur any liability in acting upon any signature, notice, request, consent, certificate, opinion, or other instrument reasonably believed by it to be genuine. In administering the trusts hereunder, the Indenture Trustee may execute any of the trusts or powers hereunder directly or through its agents or attorneys; provided, that it shall remain liable for the acts of all such agents and attorneys. The Indenture Trustee may, at its own expense (except as otherwise provided in Section 5.04), consult with counsel, accountants and other professionals to be selected and employed by it, and the Indenture Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice of any such Person nor for any error of judgment made in good faith by a Responsible Officer, unless it shall be proved that the Indenture Trustee was negligent in ascertaining the pertinent facts.

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(iii)        The Indenture Trustee shall not, except as otherwise provided in Section 5.01(b)(i), have any duty to make, arrange or ensure the completion of any recording, filing or registration of any instrument or other document (including any UCC Financing Statements), or any amendments or supplements to any of said instruments or to determine if any such instrument or other document is in a form suitable for recording, filing or registration, and the Indenture Trustee shall not have any duty to make, arrange or ensure the completion of the payment of any fees, charges or taxes in connection therewith.

(iv)        Whenever in performing its duties hereunder, the Indenture Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee may, in the absence of bad faith on the part of the Indenture Trustee, rely upon (unless other evidence in respect thereof be specifically prescribed herein) an Officer’s Certificate of the Issuer and such Officer’s Certificate shall be full warrant to the Indenture Trustee for any action taken, suffered or omitted by it on the faith thereof.

(v)         The Indenture Trustee shall not have any obligation to see to the payment or discharge of any liens (other than the liens of this Indenture and the Mortgages) upon the Collateral included in the Collateral Pool, or to see to the application of any payment of the principal of or interest on any Note secured thereby or to the delivery or transfer to any Person of any property released and from any such lien, or to give notice to or make demand upon any mortgagor, mortgagee, trustor, beneficiary or other Person for the delivery or transfer of any such property. The Indenture Trustee (and any successor trustee or co-trustee in its individual capacity) nevertheless agrees that it will, at its own cost and expense, promptly take all action as may be necessary to discharge any liens or encumbrances on the Collateral included in the Collateral Pool, arising as a result of the Indenture Trustee (or such successor trustee or co-trustee, as the case may be) acting negligently, in bad faith or with willful misconduct in its capacity as Indenture Trustee (or such successor trustee or co-trustee, as the case may be).

(vi)        The Indenture Trustee shall not be concerned with or accountable to any Person for the use or application of any deposited moneys or of any property or securities or the proceeds thereof that shall be released or withdrawn in accordance with the provisions hereof or of any property or securities or the proceeds thereof that shall be released from the lien hereof or thereof in accordance with the provisions hereof or thereof and the Indenture Trustee shall not have any liability for the acts of other parties that are not in accordance with the provisions hereof.

(c)          The rights, duties and liabilities of the Indenture Trustee in respect of the Collateral Pool and this Indenture, in addition to those set forth in Section 5.01(a), shall be as follows:

(i)          except during the continuance of an Event of Default with respect to the Notes, the Indenture 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 Indenture Trustee; and

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

(d)          Subject to Section 4.12, in case an Event of Default known to the Indenture Trustee with respect to the Notes has occurred and is continuing, the Indenture Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his own affairs.

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

(i)          this subsection shall not be construed to limit the effect of subsections (b), (c) or (d) of this Section 5.01;

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

(iii)        the Indenture 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 directions of any applicable party pursuant to a Transaction Document, the Requisite Majority (unless a lower or higher percentage of Noteholders is expressly permitted or required to authorize such action hereunder, in which case such lower or higher percentage) of the Outstanding Principal Balance, as the case may be, relating to the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee, or exercising or omitting exercise any trust or power conferred upon the Indenture Trustee, under this Indenture with respect to the Notes; and

(iv)        the Indenture Trustee shall not be required to take notice or be deemed to have notice or knowledge of a default in the observance of any covenant contained in Section 9.06 or ARTICLE X unless either (1) a Responsible Officer of the Indenture Trustee shall have actual knowledge of such default or (2) written notice of such default shall have been given by the Issuer or by any Noteholder to and received by a Responsible Officer of the Indenture Trustee. In the absence of receipt of such notice or actual knowledge the Indenture Trustee may conclusively assume that there is no default or Event of Default.

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The Indenture Trustee shall perform the duties and obligations specified to be performed by the Indenture Trustee in this Indenture and in the other Transaction Documents.

Section 5.02         Notice of Defaults.

The Indenture Trustee, promptly but not later than two (2) Business Days after a Responsible Officer of the Indenture Trustee acquires actual knowledge of the occurrence of any default under this Indenture, shall notify the Issuer and the Noteholders of any such default (a “Notice of Default”), unless all such defaults known to the Indenture Trustee shall have been cured before the giving of such notice or unless the same is rescinded and annulled, or waived by the Requisite Majority pursuant to Section 4.02 or Section 4.12. For the purpose of this Section 5.02, the term “default” means any event which is, or after notice, or direction of the Requisite Majority or lapse of time would become, an Event of Default with respect to the Notes.

Section 5.03         Certain Rights of Indenture Trustee.

Subject to the provisions of Section 5.01, in connection with this Indenture:

(a)          the Indenture Trustee may request and rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties as may be required by such party or parties pursuant to the terms of this Indenture or any other Transaction Document, as applicable;

(b)          any request or direction of the Issuer mentioned herein shall be sufficiently evidenced by the Issuer Request or Issuer Order and any resolution of the board of directors of the Issuer may be sufficiently evidenced by a Resolution;

(c)          whenever in the administration of this Indenture the Indenture Trustee shall deem it desirable that a matter be proved or established prior to taking, suffering or omitting any action hereunder, the Indenture Trustee (unless other evidence be herein specifically prescribed) may, in the absence of bad faith on its part, rely upon an Officer’s Certificate;

(d)          the Indenture Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel rendered thereby 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 Indenture 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, debenture, note, coupon, other evidence of indebtedness or other paper or document, but the Indenture Trustee in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Indenture Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Issuer, personally or by agent or attorney;

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(f)           the Indenture Trustee may, at its own expense (except as otherwise provided in Section 5.04), execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys of the Indenture Trustee; provided, that it shall remain liable for the acts of all such attorneys and agents;

(g)          the Indenture Trustee shall not be required to provide any surety or bond of any kind in connection with the execution or performance of its duties hereunder;

(h)          except with respect to the representations made by it in Section 5.06, the Indenture Trustee shall not make any representations as to the validity or sufficiency of this Indenture;

(i)           the Indenture Trustee shall not at any time have any responsibility or liability with respect to the legality, validity or enforceability of the Collateral included in the Collateral Pool other than its failure to act in accordance with the terms of this Indenture;

(j)           The Indenture Trustee shall be under no obligation to exercise any of the powers vested in it by this Indenture or any other Transaction Document, as applicable, or to institute, conduct or defend any litigation hereunder or in relation hereto at the request, order or direction of any of the Noteholders, pursuant to the provisions of this Indenture, unless such Noteholders shall have offered to the Indenture Trustee security or indemnity satisfactory to the Indenture Trustee against the costs, expenses and liabilities which may be incurred therein or thereby (which in the case of the Requisite Majority will be deemed to be satisfied by a letter agreement with respect to such costs from such Noteholders); nothing contained herein shall, however, relieve the Indenture Trustee of the obligation, upon the occurrence of an Event of Default of which a Responsible Officer of the Indenture Trustee shall have actual knowledge, and such Event of Default having not been cured, to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs;

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

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

(m)          The Indenture Trustee shall not be required to expend or risk its own funds or otherwise incur financial liability for the performance of any of its duties hereunder or the exercise of any of its rights or powers if there is reasonable ground for believing that the repayment of such funds or adequate indemnity against such risk or liability is not assured to it;

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

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(o)          To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. When an account is opened, the Indenture Trustee will ask for information that will allow the Indenture Trustee to identify relevant parties. The parties hereto hereby acknowledge such information disclosure requirements and agree to comply with all such information disclosure requests from time to time from the Indenture Trustee;

(p)          Notwithstanding anything to the contrary herein, any and all email communications (both text and attachments) by or from the Indenture Trustee that the Indenture Trustee deems to contain confidential, proprietary, and/or sensitive information may be encrypted. The recipient (the “Email Recipient”) of the encrypted email communication will be required to complete a registration process. Instructions on how to register and/or retrieve an encrypted message will be included in the first secure email sent by the Indenture Trustee to the Email Recipient. Additional information and assistance on using the encryption technology can be found at [name of website] website at [website address] or by calling [telephone number] (in the U.S.) or [telephone number; and

(q)          The Indenture Trustee shall have the right to require that any directions, instructions or notices provided to it by any Noteholder be signed by an Authorized Person (as hereinafter defined), be provided on corporate letterhead, be notarized or contain a medallion signature guarantee, or contain such other evidence as may be reasonably requested by the Indenture Trustee to establish the identity and/or signatures thereon. The identity of such Authorized Persons, as well as their specimen signatures, title, telephone number and e-mail address, shall be delivered to the Indenture Trustee in the list of authorized signers form as set forth on Exhibit F and shall remain in effect until the applicable party, or an entity acting on its behalf, notifies the Indenture Trustee of any change thereto (the person(s) so designated from time to time, the “Authorized Persons”).

Section 5.04         Compensation; Reimbursement; Indemnification.

(a)          The Issuer hereby agrees:

(1)         to pay or cause to be paid to the Indenture Trustee, in accordance with the terms of this Indenture, monthly, the related Indenture Trustee Fee as compensation for all services rendered by it hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

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(2)         to reimburse, indemnify or cause to be indemnified and hold harmless the Indenture Trustee and its directors, officers, employees, agents, Affiliates and Control Persons for any loss, liability, claim, expense or disbursements (including without limitation costs and expenses of litigation, and of investigation, reasonable counsel fees, damages, judgments and amounts paid in settlement): (A) incurred in connection with any act (including any actions taken by the Indenture Trustee or its agents pursuant to ARTICLE IV) or omission on the part of the Indenture Trustee with respect to this Indenture (and the transactions contemplated in connection herewith), any other Transaction Documents, the Collateral Pool (including but not limited to protecting its interest in such Collateral or collecting any amount payable thereunder or in enforcing its rights with respect to such Collateral, whether or not any legal proceeding is commenced hereunder or under the Mortgages) or the Notes, in each case, other than any loss, liability or expense incurred by reason of willful misfeasance, bad faith or negligence in the performance of the Indenture Trustee’s obligations or duties under this Indenture; (B) arising out of or in any way relating to any one or more of the following: (I) any accident, injury to or death of persons or loss of or damage to property occurring in, on or about any Mortgaged Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (II) any use, non-use or condition in, on or about any Mortgaged Property or any part thereof or on the adjoining sidewalks, curbs, adjacent property or adjacent parking areas, streets or ways; (III) performance of any labor or services or the furnishing of any materials or other property in respect of any Mortgaged Property or any part thereof; and (IV) any failure of any Mortgaged Property to be in compliance with any Applicable Laws; or (C) arising out of or in any way relating to any tax on the making and/or recording of any Mortgage.

With respect to any third party claim:

(ii)         the Indenture Trustee shall give the Issuer written notice thereof promptly after the Indenture Trustee shall have knowledge thereof;

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

(iv)        notwithstanding the foregoing provisions of this Section 5.04(a), the Indenture Trustee shall not be entitled to reimbursement out of the Payment Account for settlement of any such claim by the Indenture Trustee entered into without the prior written consent of the Issuer, which consent shall not be unreasonably withheld.

The provisions of this Section 5.04(a) shall survive the termination of this Indenture and the resignation or termination of the Indenture Trustee.

The Indenture Trustee agrees to fully perform its duties under this Indenture notwithstanding any failure on the part of any of the Issuer to make any payments, reimbursements or indemnifications to the Indenture Trustee pursuant to this Section 5.04(a); provided, however, that (subject to Section 5.04(b)) nothing in this Section 5.04 shall be construed to limit the exercise by the Indenture Trustee of any right or remedy permitted under this Indenture in the event of any the Issuer’s failure to pay any sums due the Indenture Trustee pursuant to this Section 5.04.

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(b)          The Indenture Trustee shall not institute any proceeding seeking the enforcement of any lien against the Collateral Pool unless (i) such proceeding is in connection with a proceeding in accordance with ARTICLE IV for enforcement of the lien of this Indenture for the benefit of the Noteholders after the occurrence of an Event of Default (other than an Event of Default due solely to a breach of this Section 5.04) and a resulting declaration of acceleration of such Notes that has not been rescinded and annulled, or (ii) such proceeding does not and will not result in or cause a sale or other disposition of the Collateral included in the Collateral Pool.

Section 5.05         Corporate Indenture Trustee Required; Eligibility.

The Issuer hereby agrees that there shall at all times be an Indenture Trustee hereunder which shall be a bank (within the meaning of Section 2(a)(5) of the 1940 Act) organized and doing business under the laws of the United States or any State thereof, authorized under such laws to exercise corporate trust powers, having aggregate capital, surplus and undivided profits of at least $100,000,000, and subject to supervision or examination by Federal or State authority, the long-term unsecured debt of which is rated not lower than “A+” by S&P and the short-term debt of which is rated not lower than “A-1” by S&P. If such bank publishes reports of condition at least annually, pursuant to law or to the requirements of the applicable supervising or examining authority, then for the purposes of this Section 5.05, the combined capital, surplus and undivided profits of such bank shall be deemed to be its combined capital, surplus and undivided profits as set forth in its most recent report of condition so published. The Indenture Trustee shall at all times meet the requirements of Section 26(a)(1) of the 1940 Act and shall in no event be an Affiliate of the Issuer or an Affiliate of any Person involved in the organization or operation of the Issuer or be directly or indirectly controlled by the Issuer. If at any time a Responsible Officer of the Indenture Trustee becomes aware that the Indenture Trustee has ceased to be eligible in accordance with the provisions of this Section 5.05, the Indenture Trustee shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 5.06         Authorization of Indenture Trustee.

The Indenture Trustee represents and warrants as to itself: that it is duly authorized under applicable [federal] law, its charter and its by-laws to execute and deliver this Indenture, and to perform its obligations hereunder, including, without limitation, that (assuming it is enforceable against the other parties hereto) this Indenture constitutes its valid and binding obligation enforceable against it in accordance with the Indenture’s terms (subject to applicable bankruptcy and insolvency laws and general principles of equity), that it is duly authorized to accept the Grant to it of the Collateral included in the Collateral Pool and is authorized to authenticate the Notes issued pursuant hereto, and that all corporate action necessary or required therefor has been duly and effectively taken or obtained and all federal and state governmental consents and approvals required with respect thereto have been obtained.

Section 5.07         Merger, Conversion, Consolidation or Succession to Business.

Any corporation, bank, trust company or association into which the Indenture Trustee may be merged or converted or with which it may be consolidated, or any corporation, bank, trust company or association resulting from any merger, conversion or consolidation to which the Indenture Trustee shall be a party, or any corporation, bank, trust company or association succeeding to all or substantially all the corporate trust business of the Indenture Trustee, shall be the successor of the Indenture Trustee hereunder; provided, that such corporation, bank, trust company or association shall be otherwise qualified and eligible under this ARTICLE V, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

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Section 5.08         Resignation and Removal; Appointment of Successor.

(a)          No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee pursuant to this ARTICLE V shall become effective until (i) the acceptance of appointment by the successor Indenture Trustee in accordance with the applicable requirements of Section 5.09 and (ii) payment to the predecessor Indenture Trustee of all unpaid fees and expenses.

(b)          Subject to Section 5.08(a), the Indenture Trustee may be removed at any time with respect to the Notes by the Requisite Majority and notice of such action by the Noteholders shall be delivered to the Indenture Trustee and the Issuer.

(c)          If at any time:

(i)          the Indenture Trustee shall cease to be eligible under Section 5.05, or the representations of the Indenture Trustee in Section 5.06 shall prove to be untrue in any material respect, and the Indenture Trustee shall fail to resign after written request therefor by the Issuer or the Noteholders of 10% of the Outstanding Principal Balance; or

(ii)         the Indenture Trustee shall become incapable of acting or shall be adjudged a bankrupt or insolvent or a receiver of the Indenture Trustee or of its property shall be appointed or any public officer shall take charge or control of the Indenture Trustee or its property or affairs for the purpose of rehabilitation, conservation or liquidation;

then, in either such case, (1) the Issuer, may, by written notice, remove the Indenture Trustee, or (2) subject to Section 4.13, any Noteholder may, on its own behalf and on behalf of all others similarly situated, petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee.

(d)          If the Indenture Trustee shall resign, be removed or become incapable of acting, or if a vacancy shall occur in the office of Indenture Trustee for any reason (including removal), the Issuer, with the consent of the Requisite Majority, shall promptly appoint a successor Indenture Trustee, who shall comply with the applicable requirements of Section 5.09. If, within 60 days after such resignation, or incapacity, or the occurrence of such vacancy, a successor Indenture Trustee shall not have been appointed by the Issuer, and shall not have accepted such appointment in accordance with the applicable requirements of Section 5.09, then a successor Indenture Trustee shall be appointed by act of the Requisite Majority delivered to the Issuer and the retiring Indenture Trustee, and the successor Indenture Trustee so appointed shall, forthwith upon its acceptance of such appointment in accordance with the applicable requirements of Section 5.09, become the successor Indenture Trustee with respect to the Notes. If the Indenture Trustee shall resign pursuant to this Section 5.08, then such resigning Indenture Trustee must pay all costs and expenses associated with the transfer of its duties. If the Indenture Trustee shall be removed pursuant to this Section 5.08, then the party requesting such removal of the Indenture Trustee shall pay all costs and expenses associated with the transfer of its duties.

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If, within 120 days after such resignation, removal or incapacity, or the occurrence of such vacancy, no successor Indenture Trustee shall have been so appointed and accepted appointment in the manner required by Section 5.09, the resigning Indenture Trustee may, on its own behalf, petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee.

(e)          The Issuer shall give notice of any resignation or removal of the Indenture Trustee and the appointment of a successor Indenture Trustee by giving notice of such event to the Noteholders. Each notice shall include the name of the successor Indenture Trustee and the address of its corporate trust office.

Section 5.09         Acceptance of Appointment by Successor.

In case of the appointment hereunder of a successor Indenture Trustee, the successor Indenture Trustee so appointed shall execute, acknowledge and deliver to the Issuer and to the retiring Indenture Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Indenture Trustee shall become effective and such successor Indenture Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Indenture Trustee; but, on the request of the Issuer or the successor Indenture Trustee, such retiring Indenture Trustee shall, upon payment of its fees, execute and deliver an instrument transferring to such successor Indenture Trustee all the rights, powers and trusts of the retiring Indenture Trustee, shall duly assign, transfer and deliver to such successor Indenture Trustee all property and money held by such retiring Indenture Trustee hereunder, and shall take such action as may be requested by the Issuer to provide for the appropriate interest in the Collateral Pool (including, without limitation, the Mortgages) to be vested in such successor Indenture Trustee, but shall not be responsible for the recording of such documents and instruments as may be necessary to give effect to the foregoing.

Upon request of any such successor Indenture Trustee, the Issuer shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Indenture Trustee all such rights, powers and trusts referred to in this Section.

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

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Section 5.10         Unclaimed Funds.

The Indenture Trustee is required to hold any payments received by it with respect to the Notes that are not paid to the Noteholders in trust for the Noteholders. Notwithstanding the foregoing, at the expiration of three years following the Final Payment Date for the Notes any moneys set aside in accordance with Section 2.15(b) for payment of principal, interest and other amounts on such Notes remaining unclaimed by any lawful owner thereof, and, to the extent required by applicable law, any accrued interest thereon shall be remitted to the Issuer, as their interest may appear, to be held in trust by the Issuer for the benefit of the applicable Noteholder until distributed in accordance with applicable law, and all liability of the Indenture Trustee with respect to such money shall thereupon cease; provided, that the Indenture Trustee, before being required to make any such remittance, may, at the expense of the applicable Noteholder, payable out of such unclaimed funds, to the extent permitted by applicable law, and otherwise at the expense of the Issuer payable out of the Collateral Pool, cause to be published at least once but not more than three times in two newspapers in the English language customarily published on each Business Day and of general circulation in New York, New York, a notice to the effect that such moneys remain unclaimed and have not been applied for the purpose for which they were deposited, and that after a date specified therein, which shall be not less than 30 days after the date of first publication of said notice, any unclaimed balance of such moneys then remaining in the hands of the Indenture Trustee will be paid to the Issuer upon their written directions to be held in trust for the benefit of the applicable Noteholder until distributed in accordance with applicable law. Any successor to the Issuer through merger, consolidation or otherwise or any recipient of substantially all the assets of the Issuer in a liquidation of the Issuer shall remain liable for the amount of any unclaimed balance paid to the Issuer pursuant to this Section 5.10.

Section 5.11         Illegal Acts.

No provision of this Indenture or any amendment or supplement hereto shall be deemed to impose any duty or obligation on the Indenture Trustee to do any act in the performance of its duties hereunder or to exercise any right, power, duty or obligation conferred or imposed on it, which under any present or future law shall be unlawful, or which shall be beyond the corporate powers, authorization or qualification of the Indenture Trustee.

Section 5.12         Communications by the Indenture Trustee.

The Indenture Trustee, if any principal of or interest on any Notes due and payable hereunder is not paid, shall send to the Issuer, within one (1) Business Day after such payment was due, a written demand for payment thereon.

Section 5.13         Separate Indenture Trustees and Co-Trustees.

(a)          Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting legal requirements applicable to it in the performance of its duties hereunder, the Indenture Trustee shall have the power to, and shall execute and deliver all instruments to, appoint one or more Persons to act as separate trustees or co-trustees hereunder, jointly with the Indenture Trustee, of any portion of the Collateral Pool subject to this Indenture, and any such Persons shall be such separate trustee or co-trustee, with such powers and duties consistent with this Indenture as shall be specified in the instrument appointing such Person but without thereby releasing the Indenture Trustee from any of its duties hereunder. If the Indenture Trustee shall request the Issuer to do so, the Issuer shall join with the Indenture Trustee in the execution of such instrument, but the Indenture Trustee shall have the power to make such appointment without making such request. A separate trustee or co-trustee appointed pursuant to this Section 5.13 need not meet the eligibility requirements of Section 5.05.

(b)          Every separate trustee and co-trustee shall, to the extent not prohibited by law, be subject to the following terms and conditions:

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(i)          the rights, powers, duties and obligations conferred or imposed upon such separate or co-trustee shall be conferred or imposed upon and exercised or performed by the Indenture Trustee and such separate or co-trustee jointly, as shall be provided in the appointing instrument, except to the extent that under any law of any jurisdiction in which any particular act is to be performed any nonresident trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such separate trustee or co-trustee at the direction of the Indenture Trustee;

(ii)         all powers, duties, obligations and rights conferred upon the Indenture Trustee, in respect of the custody of all cash deposited hereunder shall be exercised solely by the Indenture Trustee; and

(iii)        the Indenture Trustee may at any time by written instrument accept the resignation of or remove any such separate trustee or co-trustee, and, upon the request of the Indenture Trustee, the Issuer shall join with the Indenture Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to make effective such resignation or removal, but the Indenture Trustee shall have the power to accept such resignation or to make such removal without making such request. A successor to a separate trustee or co-trustee so resigning or removed may be appointed in the manner otherwise provided herein.

(c)          Such separate trustee or co-trustee, upon acceptance of such trust, shall be vested with the estates or property specified in such instruments, jointly with the Indenture Trustee, and the Indenture Trustee shall take such action as may be necessary to provide for (i) the appropriate interest in the Collateral Pool to be vested in such separate trustee or co-trustee, and (ii) the execution and delivery of any transfer documentation or bond powers that may be necessary to give effect to the transfer of the lien of this Indenture and the Mortgages to the co-trustee. Any separate trustee or co-trustee may, at any time, by written instrument constitute the Indenture Trustee, its agent or attorney-in-fact with full power and authority, to the extent permitted by law, do all acts and things and exercise all discretion authorized or permitted by it, for and on behalf of it and in its name. If any separate trustee or co-trustee shall be dissolved, become incapable of acting, resign, be removed or die, all the estates, property, rights, powers, trusts, duties and obligations of said separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Indenture Trustee, without the appointment of a successor to said separate trustee or co-trustee, until the appointment of a successor to said separate trustee or co-trustee is necessary as provided in this Indenture.

(d)          Any notice, request or other writing, by or on behalf of any Noteholder, delivered to the Indenture Trustee shall be deemed to have been delivered to all separate trustees and co-trustees.

(e)          Although co-trustees may be jointly liable, no co-trustee or separate trustee shall be severally liable by reason of any act or omission of the Indenture Trustee or any other such trustee hereunder.

(f)          No appointment of a separate trustee or co-trustee pursuant to this Section 5.13 shall relieve the Indenture Trustee of any of its obligations, duties or responsibilities hereunder in any way or to any degree.

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ARTICLE VI
REPORTS TO NOTEHOLDERS

Section 6.01         Reports to Noteholders and Others.

(a)          Based on information with respect to the Mortgaged Properties and Mortgage Loans provided to the Indenture Trustee by MBC and the Issuer pursuant to this Indenture (and the Indenture Trustee’s calculations based on such information and the Indenture Trustee’s records with respect to the Notes), the Indenture Trustee shall prepare, or cause to be prepared, and make available either in electronic format or by first class mail on each Payment Date, or as soon thereafter as is practicable, to the Issuer, the Underwriter, each Noteholder and any other Person upon the direction of the Issuer a statement in respect of the payments made on such Payment Date setting forth the information set forth in Exhibit G hereto (the “Trustee Report”). The Indenture Trustee’s internet website will be located at [website address] or at such other address as the Indenture Trustee shall notify the parties hereto from time to time. For assistance with the Indenture Trustee’s internet website, Noteholders may call [telephone number].

The Indenture Trustee shall not be liable for having disseminated information in accordance with this Indenture.

The Indenture Trustee shall be entitled to rely on and shall not be responsible for the content or accuracy of any information provided by third parties for purposes of preparing the Trustee Report and may affix thereto any disclaimer it deems appropriate in its reasonable discretion (without suggesting liability on the part of any other party hereto).

(b)          Within a reasonable period of time after the end of each calendar year (but in no event more than 60 days following the end of such calendar year), the Indenture Trustee shall prepare, or cause to be prepared, and make available either in electronic format or by first class mail to each Person who at any time during the calendar year was a Noteholder (i) a statement containing the aggregate amount of principal and interest payments on the Notes for such calendar year or applicable portion thereof during which such person was a Noteholder and (ii) such other customary information as the Indenture Trustee deems necessary or desirable for Noteholders to prepare their federal, state and local income tax returns including, without limitation (and to the extent provided to it by the Issuer which shall so cause such information to be provided), the amount of original issue discount accrued on the Notes, if applicable. The obligations of the Indenture Trustee in the immediately preceding sentence shall be deemed to have been satisfied to the extent that substantially comparable information has been provided by the Indenture Trustee.

Section 6.02         Access to Certain Information.

(a)          The Indenture Trustee shall afford to the Noteholders, the Issuer, and any regulatory authority that may exercise authority over any Noteholder, access to any documentation regarding the Collateral Pool within its control. Such access shall be afforded without charge but only upon reasonable prior written request and during normal business hours at the offices of the Indenture Trustee designated by it.

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(b)          The Indenture Trustee shall maintain at its office primarily responsible for administration of the Collateral Pool and shall deliver to the Issuer and, subject to the succeeding paragraph, any Noteholder or Note Owner or Person identified to the Indenture Trustee as a prospective transferee of a Note or an Ownership Interest therein (at the reasonable request and expense of the requesting party), copies of the following items (to the extent that such items have been delivered to the Indenture Trustee or the Indenture Trustee can cause such items to be delivered to it without unreasonable burden or expense): (i) the Prospectus, in the form most recently provided to the Indenture Trustee by the Issuer or by any Person designated by the Issuer; (ii) this Indenture, any Asset Transfer Agreement and any amendments hereto or thereto; (iii) all reports prepared by, and all reports delivered to, the Indenture Trustee since the Closing Date; (iv) all Officer’s Certificates delivered by the Issuer since the Closing Date pursuant to Section 9.09 and all Officer’s Certificates delivered by the Issuer since the Closing Date pursuant to Section 9.09; (v) all accountants’ reports caused to be delivered by the Issuer since the Closing Date pursuant to Section 9.10; (vi) all Determination Date Reports since the Closing Date prepared pursuant to Section 9.11(a); and (vii) the Mortgage Loan Files, including any and all modifications, waivers and amendments of the terms of each Mortgage Loan entered into or consented to by the Issuer and delivered to the Indenture Trustee pursuant to Section 10.08(c) or otherwise. The Indenture Trustee shall make available copies of any and all of the foregoing items upon written request of any party set forth in the previous sentence. However, the Indenture Trustee shall be permitted to require of such party the payment of a sum sufficient to cover the reasonable costs and expenses of providing such copies as are requested by such party.

The Indenture Trustee will make available, upon reasonable advance notice and at the expense of the requesting party, copies of the above items to any Noteholder or Note Owner and to prospective purchasers of Notes.

(c)          The Indenture Trustee shall not be liable for any dissemination of information made in accordance with Section 6.02(a) or Section 6.02(b).

(d)          The Issuer shall permit agents, representatives and employees of the Indenture Trustee to inspect the Mortgaged Properties or any part thereof at reasonable hours upon reasonable advance notice, subject to the applicable Mortgage Loans.

ARTICLE VII
REDEMPTION

Section 7.01         Optional Redemption.

(a)          The Issuer, at its option, may redeem the Notes, in whole or in part, on any Payment Date on or after ____________ __, 2019 (any such Payment Date, the “Redemption Date”) at the redemption prices (expressed as percentages of principal amount), set forth below, plus accrued and unpaid interest thereon up to, but not including, the Redemption Date (subject to the right of Noteholders of record on the relevant Record Date to receive interest due on the relevant Payment Date), if redeemed during the periods set forth below:

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Redemption Date occurs:	Redemption Price:
On or after ___________ __, 2019 but prior to _____________ __, 2020	103.0%
On or after ___________ __, 2020 but prior to _____________ __, 2021	101.5%
After _____________ __, 2021	100.0%

(b)          In the event that less than all of the Notes are to be redeemed at any time pursuant to an optional redemption, selection of such Notes for redemption will be made by the Indenture Trustee in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not then listed on a national securities exchange, on a pro rata basis, unless prohibited by stock exchange or other applicable rule or regulation, and if pro rata redemption is so prohibited, by lot or by such method as the Indenture Trustee shall deem fair and appropriate; provided, however, that no Notes of a principal amount of $1,000 or less shall be redeemed in part.

(c)          At least 10 days, and no more than 20 days, before a Redemption Date, the Issuer shall mail, or cause to be mailed, a notice of redemption by first-class mail to each Holder of Notes to be redeemed at his or her last address as the same appears on the registry books maintained by the Registrar pursuant to Section 2.06(a) or otherwise delivered within such period in accordance with the applicable procedures of the Depository.

The notice shall identify the Notes to be redeemed (including the CUSIP numbers thereof) and shall state:

(i)          the Redemption Date;

(ii)         the redemption price and the amount of premium and accrued interest to be paid;

(iii)        if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the Redemption Date and upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued;

(iv)        the name and address of the Paying Agent;

(v)         that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(vi)        that unless the Issuer defaults in making the redemption payment, interest on Notes called for redemption ceases to accrue on and after the Redemption Date;

(vii)       the provision of the Notes pursuant to which such Notes called for redemption are being redeemed; and

(viii)      the aggregate principal amount of Notes that are being redeemed.

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(d)          At the Issuer’s written request made at least five (5) Business Days prior to the date on which notice is to be given, the Indenture Trustee shall give the notice of redemption in the Issuer’s name and at the Issuer’s sole expense. Notices of redemption may not be conditional.

(e)          Once the notice of redemption described in Section 7.01(c) is mailed, Notes called for redemption shall become due and payable on the Redemption Date and at the redemption price, including any premium, plus interest accrued to, but not including, the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be paid at the redemption price, including any premium, plus interest accrued up to, but not including, the Redemption Date; provided that if the Redemption Date is after a regular Record Date and on or prior to the Payment Date, the accrued interest shall be payable to the Holder of the redeemed Notes registered on the relevant Record Date, and provided, further, that if a Redemption Date is not a Business Day, payment shall be made on the next succeeding Business Day and no interest shall accrue for the period from such Redemption Date to such succeeding Business Day.

(f)          On or prior to 10:00 a.m., New York City time, on each Redemption Date, the Issuer shall deposit with the Paying Agent in immediately available funds money sufficient to pay the redemption price of, including premium, if any, and accrued interest on all Notes to be redeemed on that date other than Notes or portions thereof called for redemption on that date which have been delivered by the Issuer to the Indenture Trustee for cancellation.

On and after any Redemption Date, if money sufficient to pay the redemption price of, including premium, if any, and accrued interest on Notes called for redemption shall have been made available in accordance with the preceding paragraph, the Notes called for redemption will cease to accrue interest and the only right of the Holders of such Notes will be to receive payment of the redemption price of and, subject to the first proviso in Section 7.01(e), accrued and unpaid interest on such Notes up to, but not including, the Redemption Date. If any Note surrendered for redemption shall not be so paid, interest will be paid, from the Redemption Date until such redemption payment is made, on the unpaid principal of the Note and any interest not paid on such unpaid principal, in each case at the rate and in the manner provided in the Notes.

(g)          Upon surrender of a Note that is redeemed in part, the Indenture Trustee shall authenticate for the Holder thereof a new Note equal in principal amount to the unredeemed portion of the Note surrendered.

Section 7.02         Purchase of Notes at Holders’ Option.

(a)          Notes shall be purchased in cash in whole or in part (provided that no Notes of a principal amount of $1,000 or less shall be redeemed in part) by the Issuer, at the option of Holders, in accordance with the provisions of this Section 7.02, on ___________ __, 2021 the “Put Right Purchase Date”), for cash at a purchase price equal to 100% of the principal amount of the Notes surrendered plus accrued and unpaid interest thereon up to, but not including, the Put Right Purchase Date (the “Put Right Purchase Price”); provided that if the Put Right Purchase Date falls after a Record Date and on or before the related Payment Date, then interest on the Notes payable on such Payment Date will instead be payable to the Holders in whose names the Notes are registered at the close of business on such Record Date.

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(b)          To exercise its rights pursuant to this Section 7.02, the Holder shall deliver to the Paying Agent a properly completed put right purchase notice (each, a “Put Right Purchase Notice”) at any time from the opening of business on the date that is six (6) months prior to the Put Right Purchase Date until the close of business on the date that is four (4) months prior to the Put Right Purchase Date stating:

(i)          if Definitive Notes have been issued, the certificate number of the Note that the Holder will deliver for repurchase (or if the Notes are not Definitive Notes, the Put Right Purchase Notice must comply with the rules and procedures of the Depositary to the extent applicable),

(ii)         the portion of the Note which the Holder will deliver to be purchased, provided that that no Notes of a principal amount of $1,000 or less shall be redeemed in part, and

(iii)        that such Note shall be purchased as of the Put Right Purchase Date pursuant to the terms and conditions in this Section 7.02 and the Notes.

(c)          The Issuer shall pay the Put Right Purchase Price for all Notes with respect to which a Put Right Purchase Notice is given and not validly withdrawn, on the Put Right Purchase Date. Surrender by a Holder of its Notes to be purchased shall be a condition to receipt by such Holder of the Put Right Purchase Price therefor. The Put Right Purchase Price shall be paid pursuant to this Section 7.02 only if the Note delivered to the Paying Agent conforms in all respects to the description thereof in the related Put Right Purchase Notice, as determined by the Issuer.

(d)          Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Put Right Purchase Notice contemplated by this Section 7.02 shall have the right to withdraw such Put Right Purchase Notice in whole or in part at any time prior to the close of business on the Business Day immediately preceding the Put Right Purchase Date by delivery of a written notice of withdrawal to the Paying Agent specifying:

(i)          the aggregate principal amount the Notes with respect to which such notice of withdrawal is being submitted,

(ii)         the certificate number, if any, of the Notes in respect of which such notice of withdrawal is being submitted (or, if the Notes are not Definitive Notes, the withdrawal notice must comply with the rules and procedures of the Depositary to the extent applicable), and

(iii)        the aggregate principal amount, if any, of such Notes which remains subject to the original Put Right Purchase Notice and which has been or will be delivered for purchase by the Issuer.

(e)          The Paying Agent shall promptly notify the Issuer of the receipt by it of any Put Right Purchase Notice or written notice of withdrawal thereof.

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(f)          On or before 10:00 a.m. New York City time on the Put Right Purchase Date, the Issuer shall deposit with the Indenture Trustee or with the Paying Agent an amount of immediately available funds sufficient to pay the aggregate Put Right Purchase Price of all the Notes or portions thereof which are to be purchased as of the Put Right Purchase Date.

(g)          If the Indenture Trustee or the Paying Agent holds, in accordance with the terms hereof, immediately available funds sufficient to pay the Put Right Purchase Price of any Note for which a Put Right Notice has been tendered and not withdrawn, then, from and after the Put Right Purchase Date, such Note will cease to be Outstanding, and interest shall cease to accrue, whether or not such Note is delivered to the Paying Agent, and the rights of the Holder in of such Notes shall terminate (other than the right to receive the Put Right Purchase Price as aforesaid).

(h)          The Put Right Purchase Price shall be paid to such Holder with respect to Notes for which a Put Right Purchase Notice has been tendered and not validly withdrawn, subject to receipt of funds by the Indenture Trustee or the Paying Agent, promptly after the later of (i) the Put Right Purchase Date (provided that the conditions in Section 7.02(b) have been satisfied) and (ii) the time of delivery of such Note to the Paying Agent by the Holder thereof in the manner required by Section 7.02(b).

(i)          No Notes may be purchased by the Issuer at the option of Holders on a Put Right Purchase Date if there has occurred and is continuing a Default or an Event of Default with respect to the Notes, other than a Default in the payment of the Put Right Purchase Price with respect to such Notes.

ARTICLE VIII
SUPPLEMENTAL INDENTURES; AMENDMENTS

Section 8.01         Supplemental Indentures or Amendments Without Consent of Noteholders.

Without the consent of any Noteholder, the parties to each agreement listed below, at any time and from time to time, may enter into one or more indentures supplemental hereto, or one or more amendments hereto or to the Notes, any Guaranty or any other Transaction Documents, as applicable, for any of the following purposes:

(1)         to correct any typographical error or cure any ambiguity, or to cure, correct, amend or supplement any provision herein or in the Notes, any Guaranty or any other Transaction Document; provided, that such action shall not adversely affect the interests of the Noteholders in any material respect;

(2)         to convey, transfer, assign, mortgage or pledge any property to the Indenture Trustee so long as the interests of the Noteholders would not be adversely affected in any material respect;

(3)         to correct any manifestly incorrect description, or amplify the description, of any property subject to the lien of this Indenture;

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(4)         to modify the Indenture, any Guaranty or any other Transaction Documents as required or made necessary by any change in applicable law, so long as the interests of the Noteholders would not be adversely affected in any material respect;

(5)         to add to the covenants of the Issuer, or any other party for the benefit of the Noteholders, or to surrender any right or power conferred upon the Issuer under this Indenture, any Asset Transfer Agreement or any Guaranty;

(6)         to add any additional Events of Default hereunder; provided, that such action shall not adversely affect the interests of the Noteholders in any material respect; or

(7)         to evidence and provide for the acceptance of appointment by a successor Indenture Trustee.

Without the consent of any Noteholder, the Issuer and the Indenture Trustee, at any time and from time to time, may enter into one or more amendments to any Account Control Agreement.

Section 8.02         Supplemental Indentures With Consent.

With the consent of Requisite Majority, the parties to the agreements listed below may enter into one or more indentures supplemental hereto, or one or more amendments hereto or to the Notes, any Guaranty or any other Transaction Document for the purpose of adding any provisions hereto or thereto, changing in any manner or eliminating any of the provisions hereof or thereof or modifying in any manner the rights of the Noteholders hereunder or thereunder; provided, that no such supplemental indenture or amendment may, without the consent of the Noteholders of 100% of the Outstanding Principal Balance of the Outstanding Notes affected thereby:

(1)         change the Final Payment Date or the Payment Date of any principal, interest or other amount on any Note;

(2)         reduce the Outstanding Principal Balance of a Note or the applicable Note Rate;

(3)         authorize the Indenture Trustee to agree to delay the timing of, or reduce the payments to be made on or in respect of, the Mortgaged Properties or the Mortgage Loans, except as provided in this Indenture or in any Asset Transfer Agreement;

(4)         change the coin or currency in which the principal of any Note or interest thereon is payable;

(5)         impair the right to institute suit for the enforcement of any such payment on or after the Final Payment Date;

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(6)         reduce the percentage of the then Outstanding Principal Balance, the consent of whose Holders is required for any supplemental indenture or amendment, or the consent of whose Holders is required for any waiver of defaults under this Indenture and their consequences provided for in this Indenture, or for any other reason under this Indenture;

(7)         change any obligation of the Issuer to maintain an office or agency in the places and for the purposes set forth in this Indenture;

(8)         except as otherwise expressly provided in this Indenture or in any Asset Transfer Agreement, deprive the Indenture Trustee of the benefit of a first priority security interest in the Collateral included in the Collateral Pool;

(9)         modify Section 2.15; or

(10)        release from the lien of any Asset Transfer Agreement and this Indenture (except as specifically permitted under this Indenture or such Asset Transfer Agreement) all or any portion of the Collateral Pool.

It shall not be necessary for the consent of the Noteholders under this Section 8.02 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

Section 8.03         Delivery of Supplements and Amendments.

Promptly after the execution by the Issuer and the Indenture Trustee (and any other party, if required) of any supplemental indenture or amendment pursuant to the provisions hereof, the Indenture Trustee, at the expense of the Issuer, payable out of the Collateral Pool pursuant to Section 5.04, shall furnish a notice setting forth in general terms the substance of such supplemental indenture or amendment to each Noteholder at the address for such Noteholder set forth in the Note Register.

Section 8.04         Execution of Supplemental Indentures, Etc.

In executing, or accepting the additional trusts created by, any supplemental indenture or amendment permitted by this Article or in accepting the modifications thereby of the trusts created by this Indenture or in giving any consent to any modification of any Mortgage Loan pursuant to this Indenture, the Indenture Trustee shall be entitled to receive, at the Issuer’s expense payable out of the Collateral Pool pursuant to Section 5.04, and shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture, amendment or modification is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture or amendment or consent to any such modification which affects the Indenture Trustee’s own rights, duties or immunities under this Indenture or otherwise.

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ARTICLE IX
COVENANTS; WARRANTIES

Section 9.01         Maintenance of Office or Agency.

The Issuer shall maintain or cause to be maintained an office or agency in the continental United States where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer shall give prompt written notice to the Indenture Trustee and the Noteholders of the location, and any change in the location, of such office or agency.

Section 9.02         Existence and Good Standing.

Subject to Section 9.11, the Issuer shall do or cause to be done all things necessary to preserve, renew and keep in full force and effect its existence, rights, licenses, permits and corporate franchises and comply in all material respects with all Legal Requirements applicable to it and the Collateral. There shall never be committed by the Issuer or MBC any act or omission affording any Governmental Authority the right of forfeiture as against any Collateral or any part thereof or any moneys paid in performance of the Issuer’s obligations under any of the Transaction Documents. The Issuer hereby covenants and agrees not to commit, permit or suffer to exist any act or omission affording such right of forfeiture. The Issuer shall at all times maintain, preserve and protect, or cause to be maintained, preserved and protected, all franchises and trade names and preserve all the remainder of its property required for the conduct of its business and shall keep (or cause the Mortgagor Customers under each applicable Mortgage Loan to keep) the Mortgaged Properties in good working order and repair, and from time to time make, or cause to be made, all reasonably necessary repairs, renewals, replacements, betterments and improvements thereto. The Issuer shall keep (or cause the Mortgagor Customers under each applicable Mortgage Loan to keep) the Mortgaged Properties insured at all times by financially sound and reputable insurers, to such extent and against such risks, and maintain liability and such other insurance, as is more fully provided in this Indenture.

Section 9.03         Payment of Taxes and Other Claims.

(a)          The Issuer shall pay or discharge or cause to be paid or discharged, before the same shall become delinquent, all applicable taxes, assessments and governmental charges (the “Taxes”) levied or imposed upon the Issuer or upon the income, profits or property of the Issuer, or shown to be due on the tax returns filed by the Issuer, except as set forth in Section 9.03(b); provided, that the Issuer’s failure to pay or discharge Taxes will not cause a forfeiture of, or a lien (other than a Permitted Encumbrance) to encumber, any property included in the Collateral. Upon the written direction of the Issuer, the Indenture Trustee is authorized to pay out of the Payment Account, prior to making payments on the Notes, any such taxes, assessments, governmental charges or claims which, if not paid, would cause a forfeiture or sale of, or a lien (other than a Permitted Encumbrance) to encumber, any property included in the Collateral.

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(b)          After prior written notice to the Indenture Trustee, the Issuer, at its own expense, may in good faith contest by appropriate Proceeding, promptly initiated and conducted in good faith and with due diligence, the amount or validity or application in whole or in part of any applicable Taxes; provided, that: (i) such Proceeding shall not be precluded by, and be conducted in accordance with the provisions of, any other instrument to which the Issuer is subject and shall not constitute a default thereunder and such Proceeding shall be conducted in accordance with all applicable statutes, laws and ordinances; (ii) no Collateral nor any part thereof or interest therein will be in danger of being sold, forfeited, terminated, canceled or lost; (iii) the Issuer shall promptly upon final determination thereof pay, or cause to be paid, the amount of any such Taxes, together with all costs, interest and penalties which may be payable in connection therewith; (iv) such Proceeding shall suspend the collection of such contested Taxes from the Collateral; and (v) the Issuer shall furnish such security and/or reserves as may be required in the Proceeding as required in accordance with GAAP, to insure the payment of any such Taxes, together with all interest and penalties thereon.

Section 9.04         Title to the Collateral; Lien.

(a)          The Issuer shall ensure that all cash at any time owned by the Issuer and held as part of the Collateral Pool is deposited and maintained in the Collection Account, Payment Account or any other account subject to an Account Control Agreement. The Issuer shall not consent to the bank or securities intermediary maintaining any such account to comply with instructions or entitlement orders of any person other than the Indenture Trustee. The Issuer will ensure that the bank or securities intermediary maintaining the Collection Account, the Payment Account or any other account held as part of the Collateral Pool, on or promptly after the establishment of such account, executes and delivers to the Indenture Trustee an Account Control Agreement with respect to such account.

Section 9.05         Protection of Collateral Pool.

The Issuer, and, to the extent directed by the Issuer or the Requisite Majority, the Indenture Trustee, will, at the Issuer’s expense, and without expense to the Indenture Trustee, from time to time execute and deliver all such amendments and supplements hereto (subject to Section 8.01 and Section 8.02) and all such financing statements, continuation statements, instruments of further assurance and other instruments (provided, however, that the Indenture Trustee will not be obligated to prepare or file any such supplements, statements or other instruments), and will take such other action necessary or advisable to:

(a)          Grant more effectively all or any portion of the Collateral Pool;

(b)          maintain or preserve the lien (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof;

(c)          perfect, publish notice of, or protect the validity of any Grant made or to be made by or in this Indenture;

(d)          enforce any of the Mortgage Loans included in the Collateral Pool;

(e)          preserve and defend title to the Collateral included in the Collateral Pool and the rights of the Indenture Trustee in such Collateral against the claims of all Persons and parties; or

(f)          for carrying out the intention or facilitating the performance of the terms of this Indenture.

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The Issuer will promptly execute and deliver and hereby authorizes the Indenture Trustee to execute in the name of the Issuer or without the signature of the Issuer to the extent the Indenture Trustee may lawfully do so, one or more financing statements or other instruments, to evidence more effectively the security interest of the Indenture Trustee in the Collateral.

The Issuer grants to the Indenture Trustee an irrevocable power of attorney coupled with an interest for the purpose of exercising and perfecting any and all rights and remedies available to the Indenture Trustee at law and in equity, including, without limitation, such rights and remedies available to the Indenture Trustee pursuant to this Section 9.05, including for the purpose of executing and delivering any financing statement, continuation statement or other instrument required pursuant to this Section 9.05; provided, that, subject to and consistent with Section 5.01, the Indenture Trustee will not be obligated to prepare or file any such statements or instruments.

Section 9.06         Limitation on Sales of Assets.

(a)          Neither the Issuer nor MBC shall, directly or indirectly, make any Asset Sale, unless:

(i)          the Issuer or MBC, as the case may be, receives consideration at the time of such Asset Sale at least equal to the Fair Market Value of the assets sold or otherwise disposed of, and

(ii)         at least 75% of such consideration received by the Issuer or MBC consists of (1) cash or Permitted Investments, (2) assets (other than securities) to be used in a Related Business, (3) with respect to an Asset Sale by MBC, the Capital Stock of any Person engaged in a Related Business that is, or as a result of or in connection with the acquisition of such Capital Stock by MBC becomes a subsidiary of MBC or (4) a combination of cash, Permitted Investments, such assets and such Capital Stock.

(b)          The amount of any notes or other obligations received by the Issuer or MBC from such transferee that are converted, sold or exchanged within one (1) year of the related Asset Sale by the Issuer or MBC into cash or Permitted Investments shall be deemed to be cash, in an amount equal to the net cash proceeds or the Fair Market Value of the Permitted Investments realized upon such conversion, sale or exchange for purposes of determining the percentage of the consideration received by the Issuer or MBC in cash or Permitted Investments.

(c)          Except as provided in Section 9.06(b), if at any time any non-cash consideration received by the Issuer or MBC, as the case may be, in connection with any Asset Sale is converted into or sold or otherwise disposed of for cash (other than interest received with respect to any such non-cash consideration), then such conversion or disposition shall be deemed to constitute an Asset Sale hereunder and the Net Cash Proceeds thereof shall be applied in accordance with the provisions of this Section 9.06.

(d)          The Issuer or MBC, as the case may be, may apply an amount equal to the Net Cash Proceeds of any Asset Sale within 120 days of receipt thereof to:

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(i)          with respect to an Asset Sale by MBC, repay secured indebtedness outstanding under any credit facility or any other secured indebtedness of MBC (and to cause a corresponding reduction in commitments if such repaid indebtedness was outstanding under the revolving portion of a credit facility), other than Indebtedness owed to the Issuer or an Affiliate of MBC; or

(ii)         make an investment in or expenditures for Mortgage Loans or, with respect to an Asset Sale by MBC, acquire the Capital Stock of any Person engaged in a Related Business.

Pending the final application of any such Net Cash Proceeds, MBC may temporarily reduce revolving credit borrowings to the extent not prohibited by the terms of this Indenture.

(e)          To the extent all or part of the Net Cash Proceeds of any Asset Sale are not applied or committed within 120 days of such Asset Sale as described in Section 9.06(d)(i) or Section 9.06(d)(ii) (the “Net Proceeds Trigger Date” and such Net Cash Proceeds, the “Unutilized Net Cash Proceeds”), the Issuer shall, within 20 days after such 120^th day, make an offer to purchase (a “Net Proceeds Offer”) all outstanding Notes up to an aggregate maximum principal amount of Notes equal to such Unutilized Net Cash Proceeds, at a purchase price in cash equal to 100% of the principal amount thereof, plus accrued and unpaid interest thereon, if any, up to, but not including, the purchase date thereof).

The Issuer shall mail a notice of a Net Proceeds Offer by first-class mail, postage prepaid, to the record Holders as shown on the register of Holders within 20 days following the Net Proceeds Offer Trigger Date, with a copy to the Indenture Trustee, containing all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the following terms:

(1)         that the Net Proceeds Offer is being made pursuant to this Section 9.06, that all Notes tendered will be accepted for payment and that the Net Proceeds Offer shall remain open for a period of 20 Business Days or such longer periods as may be required by law;

(2)         the offer price (including the amount of accrued interest) and the Net Proceeds Offer date of payment (the “Net Proceeds Offer Payment Date”) (which shall be not less than 30 nor more than 45 days following the commencement of the Net Proceeds Offer and which shall be at least five (5) Business Days after the Indenture Trustee receives notice thereof from the Issuer);

(3)         that any Note not tendered will continue to accrue interest;

(4)         that, unless the Issuer defaults in making payment therefor, any Note accepted for payment pursuant to the Net Proceeds Offer shall cease to accrue interest from and after the Net Proceeds Offer Payment Date;

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(5)         that Holders electing to have a Note purchased pursuant to a Net Proceeds Offer will be required to surrender such Note, with the form entitled “Option of Holder to Elect Purchase” on the reverse of the Note completed, to the Paying Agent at the address specified in the notice prior to the close of business on the Business Day prior to the Net Proceeds Offer Payment Date;

(6)         that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the second Business Day prior to the Net Proceeds Offer Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of such Holder, the principal amount of the Notes such Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased; and

(7)         that Holders whose Notes are purchased only in part will be issued new Notes in a principal amount equal to the unpurchased portion of the Note surrendered; provided, however, that no Notes of a principal amount of $1,000 or less shall be purchased in part.

On or before the Net Proceeds Offer Payment Date, the Issuer shall (i) accept for payment Notes or portions thereof (provided that no Notes of a principal amount of $1,000 or less shall be purchased in part) validly tendered pursuant to the Net Proceeds Offer, (ii) deposit with the Paying Agent, in accordance with Section 2.09, immediately available funds in an amount sufficient to pay the purchase price plus accrued and unpaid interest, if any, of all Notes to be purchased and (iii) deliver to the Indenture Trustee an Officers’ Certificate describing the Notes or portions thereof being purchased by the Issuer. Upon receipt by the Paying Agent of the monies specified in clause (ii) of the preceding sentence and a copy of the Officers’ Certificate specified in clause (iii) of the preceding sentence, the Paying Agent shall promptly mail to the Holders of Notes so accepted payment in an amount equal to the purchase price plus accrued and unpaid interest, if any, out of the funds deposited with the Paying Agent in accordance with the preceding sentence. The Indenture Trustee shall promptly authenticate and mail to such Holders new Notes equal in principal amount to any unpurchased portion of the Notes surrendered. Upon the payment of the purchase price for the Notes accepted for purchase, the Indenture Trustee shall return the Notes purchased to the Issuer for cancellation. Any monies remaining after the purchase of Notes pursuant to a Net Proceeds Offer shall be returned within three (3) Business Days by the Indenture Trustee to the Issuer except with respect to monies owed as obligations to the Indenture Trustee pursuant to this Indenture. For purposes of this Section 9.06, the Indenture Trustee shall act as the Paying Agent.

(f)          With respect to any Net Proceeds Offer effected pursuant to this Section 9.06, to the extent the aggregate principal amount of Notes exceeds the Unutilized Net Cash Proceeds to be applied to the repurchase thereof, such Notes shall be purchased pro rata based on the aggregate principal amount of such Notes tendered by each Holder thereof (provided that no Notes of a principal amount of $1,000 or less shall be purchased in part). To the extent the Unutilized Net Cash Proceeds exceed the aggregate amount of Notes tendered by the holders thereof pursuant to such Net Proceeds Offer (such excess constituting an “Excess”), the Issuer may retain and utilize such Excess for any general corporate purposes. Upon the completion of a Net Proceeds Offer, the amount of Unutilized Net Cash Proceeds shall be reset to zero.

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(g)          If the Issuer makes a Net Proceeds Offer, the Issuer will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act and any other applicable federal or state securities laws and regulations and any applicable requirements of any securities exchange on which the Notes are listed, and any violation of the provisions of this Section 9.06 relating to such Net Proceeds Offer occurring as a result of such compliance shall not be deemed a Default or an Event of Default.

Section 9.07         Repurchase at the Option of Holders upon Change of Control.

(a)          In the event of the occurrence of a Change of Control (the date of such occurrence being the “Change of Control Date”), the Issuer shall, within 30 days after the occurrence of such Change of Control, make an offer (the “Change of Control Offer”) to all Holders to purchase all outstanding Notes properly tendered pursuant to such offer, and within 60 days after the occurrence of the Change of Control, all Notes properly tendered pursuant to such offer shall be accepted for purchase (the date of such purchase, the “Change of Control Purchase Date”) for a cash price equal to 101% of the principal amount thereof as of the Change of Control Purchase Date, plus accrued and unpaid interest up to, but not including, the date of purchase.

(b)          In order to effect the Change of Control Offer, the Issuer shall mail a notice to each Holder with a copy to the Indenture Trustee stating:

(i)          that a Change of Control has occurred and that each Holder has the right to require the Issuer to purchase such Holder’s Notes at a purchase price (the “Change of Control Purchase Price”) in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest up to, but not including, the date of purchase;

(ii)         the purchase date, which shall be a Business Day no earlier than 30 days nor later than 60 days from the date such notice is mailed or otherwise delivered in accordance with the applicable procedures of the Depository;

(iii)        that, unless the Issuer defaults in the payment of the purchase price, any Notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest from and after the Change of Control Purchase Date; and

(iv)        the procedures determined by the Issuer, consistent with this Indenture, that a Holder must follow in order to have its Notes purchased.

Alternatively, the Issuer will not be required to make a Change of Control Offer as provided above, if, in connection with or in contemplation of any Change of Control, the Issuer has made an offer to purchase (an “Alternate Offer”) any and all Notes validly tendered at a cash price equal to or higher than the Change of Control Purchase Price and has purchased all Notes properly tendered in accordance with the terms of such Alternate Offer so long as the terms and conditions of such contemplated Change of Control are described in reasonable detail to the Holders in the notice delivered in connection with such Alternate Offer.

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The Issuer will not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in a manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Issuer or makes an Alternate Offer and purchases all Notes validly tendered and not withdrawn under such Change of Control Offer or Alternate Offer.

(c)          If the Issuer makes a Change of Control Offer or Alternate Offer, the Issuer will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Exchange Act, and any other applicable federal or state securities laws and regulations and any applicable requirements of any securities exchange on which the Notes are listed, and any violation of the provisions of this Indenture relating to such Change of Control Offer occurring as a result of such compliance shall not be deemed a Default or an Event of Default.

Section 9.08         Covenants.

For so long as the Notes are outstanding, the Issuer shall not:

(a)          cause or permit any Collateral Transfer of a legal or beneficial interest in any Mortgage Loan or any part thereof or any legal or beneficial interest therein or any other part of the Collateral Pool, except as expressly permitted by this Indenture;

(b)          dissolve or liquidate in whole or in part;

(c)          engage, directly or indirectly, in any business other than that the business of making and holdings Mortgage Loans, ;

(d)          incur, create or assume any indebtedness for borrowed money other than the Notes or otherwise pursuant to this Indenture and the Webster Guaranty;

(e)          voluntarily file a petition for bankruptcy or reorganization, make an assignment for the benefit of creditors or commence any similar proceeding;

(f)          change its state of organization, name, identity or organizational status, or otherwise amend the organizational documents of the Issuer, without notifying the Indenture Trustee of such change in writing at least thirty (30) days prior to the effective date of such change and, in the case of a change in the Issuer’s organizational status or any such amendment, without first obtaining the prior written consent of the Indenture Trustee;

(g)          withdraw or direct any party to withdraw any funds from the Collection Account, other than in accordance with the terms of this Indenture;

(h)          engage in any business or activity other than as permitted under the organizational documents of the Issuer and this Indenture;

(i)          except as contemplated by the Transaction Documents, commingle its funds or assets with those of any other Person and shall not participate in any cash management system with any other Person, provided that the Issuer may participate in MBC’s cash management system;

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(j)          pledge its assets to or for the benefit of any other Person except to the Indenture Trustee, for the benefit of the Noteholders to secure the Notes;

(k)          enter into or be a party to, any transaction with any of its partners, members, shareholders or Affiliates except in the ordinary course of its business and on terms which are commercially reasonable terms comparable to those of an arm’s-length transaction with an unrelated third party; or

(l)          indemnify its partners, officers, directors or members, as the case may be, in each case unless such an obligation or indemnification is fully subordinated to the Notes and shall not constitute a claim against it in the event that its cash flow is insufficient to pay the Notes.

(m)          engage in any business other than for the purpose of acquiring, owning, holding, selling, transferring, exchanging, managing and operating the Mortgage Loans, entering into and performing its obligations under the Transaction Documents and transacting lawful business that is incident, necessary and appropriate to accomplish the foregoing;

(n)          have any assets other than the Mortgage Loans, the related Mortgage Notes and personal property necessary or incidental to its ownership and operation of such Mortgage Loans; and

(o)          directly or indirectly, (i) declare or pay any dividend or any other distribution on any Capital Stock of the Issuer or make any payment or distribution to the direct or indirect holders (in their capacities as such) of Capital Stock of the Issuer, (ii) purchase, redeem or otherwise acquire or retire for value any Capital Stock of the Issuer or (iii) make any Investment in any Person (other than Permitted Investments), provided that the Issuer may make such payments described in clause (i) if (1) no Default or Event of Default shall have occurred and be continuing at the time or immediately after giving effect to such payment, and (2) immediately after giving effect to such payment, (A) the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (B) Available Amounts on deposit in the Collection Account are not less than the amount required to be paid pursuant to Section 2.15(b) on the immediately succeeding Payment Date.

Section 9.09         Statement as to Compliance.

(a)          The Issuer shall deliver to the Indenture Trustee, within 120 days after the end of each fiscal year commencing with 2016, an Officer’s Certificate of the Issuer stating that, in the course of the performance by the officer executing such Officer’s Certificate of such officer’s present duties as an officer of the Issuer, such officer would normally obtain knowledge or have made due inquiry of employees of the Issuer and the Issuer’s Affiliates as to the existence of any condition or event which would constitute an Event of Default after notice or lapse of time or both and that to the best of the officer’s knowledge, (i) the Issuer has fulfilled all of its obligations under this Indenture in all material respects throughout such year, or, if there has been an Event of Default in the fulfillment of any such obligation in any material respect, specifying each such default known to such officer and the nature and status thereof, and (ii) no Event of Default has occurred and is continuing and no condition or event that would constitute an Event of Default after notice or lapse of time or both has occurred, or, if such an event has occurred and is continuing, specifying each such event known to such officer and the nature and status thereof.

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(b)          The Issuer shall deliver to the Indenture Trustee, within 60 days after the end of each calendar quarter, an Officer’s Certificate stating that (i) a review of the activities of the Issuer throughout the preceding calendar quarter, and of its performance under this Indenture has been made under such officer’s supervision, (ii) to such officer’s knowledge, based on such review, the Issuer has fulfilled in all material respects throughout such period its obligations under this Indenture or, if there was a default in the fulfillment of any such obligation in any material respect, such Officer’s Certificate shall specify each such default known to such officer and the nature and status thereof.

Section 9.10         Reports by Independent Public Accountants.

If this Indenture is required to be qualified under the 1939 Act, on or before September 30 of each year, beginning the September 30 following the first year in which this Indenture is required to be so qualified, the Issuer, at its expense, shall cause a firm of independent public accountants (which may also render other services to MBC or the Issuer) to furnish to the Indenture Trustee a report containing such firm’s opinion that, on the basis of an examination conducted by such firm substantially in accordance with standards established by the American Institute of Certified Public Accountants, the assertion made pursuant to Section 9.09 regarding compliance by the Issuer with the minimum Servicing Standards identified in the Uniform Single Attestation for Mortgage Bankers (to the extent applicable to residential or commercial properties) during the preceding fiscal year is fairly stated in all material respects, subject to such exceptions and other qualifications that, in the opinion of such firm, such institute’s standards require it to report.

Section 9.11         Reports to the Indenture Trustee.

(a)          Not later than 4:00 p.m., New York City time, three (3) Business Days prior to each Payment Date, the Issuer shall deliver to the Indenture Trustee a report (the “Determination Date Report”) in a mutually agreeable electronic format, reflecting as of the close of business on the last day of the related Collection Period, the information required for purposes of making the payments required by Section 2.15(b) and the calculations and reports referred to in Section 6.01. The Issuer shall also provide to the Indenture Trustee the wire instructions for the relevant parties to which payments under Section 2.15(b) will be made. The Determination Date Report shall also contain a certification by the Issuer that (1) on the date of such report and immediately after giving effect to such payments, the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (2) no Default or Event of Default has occurred and is continuing on such date or would result from such payments. Such information shall be delivered by the Issuer in such form as may be reasonably acceptable to Indenture Trustee.

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(b)          The Issuer shall deliver to the Indenture Trustee:

(i)          within forty-five (45) days after the end of each calendar quarter the following items, each executed by a the Issuer as being true and correct: (1) a certificate dated as of the last day of each such calendar quarter identifying for each of the Mortgage Loans the respective termination or maturity dates, Mortgage Loan Payments required to be paid, and identifying any defaults under a Mortgage Loan with respect to which it has knowledge, and (2) statements of the financial affairs and condition of MBC and its subsidiaries on a consolidated basis, including a balance sheet, a cash flow summary report, a statement of profit and loss for MBC and its subsidiaries on a consolidated basis and an operating statement including detailed income and expense statement, in each case in such detail as the Indenture Trustee may request for MBC for the immediately preceding calendar quarter, which statements shall be prepared by MBC;

(ii)         within one hundred twenty (120) days after the end of each calendar year, statements of the financial affairs and condition of MBC and its subsidiaries on a consolidated basis, including a balance sheet, a cash flow summary report, a statement of profit and loss for MBC and its subsidiaries on a consolidated basis and an operating statement including detailed income and expense statement, audited in conjunction with the audit of MBC by a or another independent certified public accountant reasonably acceptable to the Indenture Trustee, for the immediately preceding calendar year; and

(iii)        copies of notices of defaults under, or any material modifications to, any of the Mortgage Loans; and

(iv)        at any time and from time to time such other financial data as the Indenture Trustee or its agents shall reasonably request with respect to MBC or the Issuer or any of their respective Affiliates.

(c)          The Indenture Trustee shall have the right, at any time and from time to time when an Event of Default exists, upon reasonable notice to the Issuer and MBC and during normal business hours at the Issuer’s or MBC’s principal place of business, to conduct an inspection or review, at the Issuer’s expense, of the Issuer’s or MBC’s, as applicable, books and records. The Issuer and MBC shall cooperate, and shall cause their respective agents and employees to cooperate in the conduct of any such inspection or review.

(d)          On or before 1:00 p.m. on the Business Day following each Determination Date, the Issuer shall determine whether the Available Amount distributable on such Payment Date pursuant to (and subject to the priorities set forth in) Section 2.15(b) will be sufficient to pay the obligations under this Indenture on such Payment Date. In the event the Issuer determines that the Available Amount distributable on such Payment Date pursuant to (and subject to the priorities set forth in) Section 2.15(b) will not be sufficient to pay the obligations under this Indenture on such Payment Date (a “Deficiency”) the Issuer shall notify the Indenture Trustee in writing of such Deficiency, which written notice shall be delivered on or before 1:00 p.m. New York City time on the third Business Day before such Payment Date.

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Section 9.12         Mergers and Consolidations.

The Issuer may not consolidate with or merge with or into (whether or not the Issuer is the surviving entity) any other entity, unless:

(a)          either (i) the Issuer shall be the surviving entity or (ii) the surviving entity (if other than the Issuer) shall be a Person organized and validly existing under the laws of the United States of America or any State thereof or the District of Columbia, and shall, in any such case, expressly assume by a supplemental indenture, the due and punctual payment of the principal of, premium, if any, and interest on all the Notes and the performance and observance of every covenant of this Indenture and the other Transaction Documents to be performed or observed on the part of the Issuer; provided, that in the case where the surviving entity is not a corporation, there is a co-obligor of the Notes that is a corporation; and

(b)          immediately thereafter, after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing.

Section 9.13         Litigation.

The Issuer shall give prompt written notice to the Indenture Trustee of any Proceedings pending against the Issuer which could reasonably be expected to materially and adversely affect the Issuer’s condition (financial or otherwise) or business or any Mortgaged Property.

Section 9.14         Notice of Default.

The Issuer shall promptly advise the Indenture Trustee of any material adverse change in the Issuer’s condition, financial or otherwise not otherwise reported, or of the occurrence of any material Event of Default of which the Issuer has knowledge.

Section 9.15         Cooperate in Legal Proceedings.

The Issuer shall cooperate fully with the Indenture Trustee with respect to any Proceedings before any court, board or other Governmental Authority which may in any way affect the rights of the Indenture Trustee hereunder or any rights obtained by the Indenture Trustee under any of the other Transaction Documents and, in connection therewith, permit the Indenture Trustee, at its election, to participate in any such Proceedings.

Section 9.16         Insurance Benefits.

The Issuer shall cooperate with the Indenture Trustee in obtaining for the Indenture Trustee the benefits of any proceeds of the insurance policies lawfully or equitably payable in connection with any applicable Mortgaged Property, subject to the rights of Mortgagor Customers under the applicable Mortgage Loans, and the Indenture Trustee shall be reimbursed for any expenses incurred in connection therewith (including reasonable attorneys’ fees and disbursements) out of such insurance proceeds.

Section 9.17         Costs of Enforcement.

In the event (a) that any Mortgage encumbering any Mortgaged Property is foreclosed in whole or in part or that any such Mortgage is put into the hands of an attorney for collection, suit, action or foreclosure, (b) of the foreclosure of any Mortgage in which Proceeding the Indenture Trustee is made a party, or (c) of the bankruptcy, insolvency, rehabilitation or other similar Proceeding in respect of the Issuer or MBC or an assignment by the Issuer or MBC for the benefit of its creditors, the Issuer, its successors or assigns, shall be chargeable with and agrees to pay all reasonable costs of collection and defense, including reasonable attorneys’ fees and costs, incurred by the Indenture Trustee or the Issuer in connection therewith and in connection with any appellate Proceeding or post-judgment action involved therein, together with all required service or use taxes.

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Section 9.18         Performance of Issuer’s Duties by MBC.

The duties of the Issuer will be performed on behalf of the Issuer by MBC pursuant to the Management Services Agreement dated as of the Closing Date between the Issuer and MBC.

Section 9.19         Payment of Debts.

The Issuer will use commercially reasonable efforts to remain solvent and the Issuer will pay its debts and liabilities (including, as applicable, shared personnel and overhead expenses) from its assets as the same shall become due.

Section 9.20         Capitalization of the Issuer.

The Issuer use commercially reasonable efforts to maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations.

Section 9.21         Employees.

The Issuer shall pay its own liabilities and expenses, including, without limitation, the salaries of its own employees, if any, out of its own funds and assets and maintain a sufficient number of employees if any are required in light of its contemplated business operations.

Section 9.22         Performance by the Issuer.

(a)          The Issuer shall observe, perform and satisfy all the terms, provisions, covenants and conditions of, and shall pay when due all applicable costs, fees and expenses to the extent required under, the Transaction Documents executed and delivered by, or applicable to, the Issuer.

(b)          The Issuer shall in a timely manner observe, perform, enforce and fulfill each and every covenant, term and provision of each Transaction Document executed and delivered by, or applicable to, the Issuer, or recorded instrument affecting or pertaining to the applicable Mortgaged Properties, to the extent the failure to observe or perform the same would materially and adversely affect the Issuer’s interest in such Mortgaged Properties, and shall not enter into or otherwise suffer or permit any amendment, waiver, supplement, termination or other modification of any Transaction Document executed and delivered by, or applicable to, the Issuer except in accordance with the terms and provisions thereof.

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Section 9.23         Use of Proceeds.

The Issuer shall use the proceeds of the Notes to purchase from MBC, pursuant to the Asset Transfer Agreement dated as of the Closing Date, the Mortgage Loans and related assets set forth therein.

Section 9.24         Other Rights, Etc.

It is agreed that the risk of loss or damage to any Collateral is on the Issuer, and the Indenture Trustee shall have no liability whatsoever for decline in value of the Collateral.

Section 9.25         Books and Records.

The Issuer will maintain all of its books, records, financial statements and bank accounts separate from those of its Affiliates and any constituent party and file its own tax returns (provided that the Issuer’s financial statements and tax returns may be prepared on a consolidated basis with other entities provided that such consolidated financial statements and tax returns indicate the separate existence of the Issuer and its assets and liabilities). The Issuer shall maintain its books, records, resolutions and agreements as official records.

Section 9.26         Overhead Expenses.

The Issuer shall allocate fairly and reasonably overhead expenses, if any, that are shared with an Affiliate, including paying for office space and services performed by any employee of an Affiliate.

ARTICLE X
COVENANTS REGARDING MORTGAGE LOANS

Section 10.01         Collection of Mortgage Loan Payments; Collection Account; Release Account.

(a)          The Issuer shall undertake reasonable efforts to collect all payments called for under the terms and provisions of the Mortgage Loans and shall follow such collection procedures as are consistent with the Servicing Standard.

(b)          The Issuer shall establish and maintain one segregated account in the name of the Issuer for the benefit of the Indenture Trustee on behalf of the Noteholders (the “Collection Account”), which shall be established in such manner and with the type of depository institution (the “Collection Account Bank”) specified in this Indenture. The Collection Account shall be an Eligible Account. The Collection Account will be subject to an Account Control Agreement among the Issuer, the Indenture Trustee and the Collection Account Bank in form and substance reasonably satisfactory to the Indenture Trustee pursuant to which the Collection Account Bank agrees to follow the instructions of the Indenture Trustee with respect to the Collection Account and the amounts on deposit therein, provided that the Indenture Trustee shall deliver such instructions only after the occurrence of an Event of Default. Subject to Section 10.02, neither MBC nor the Issuer will have any right of withdrawal from the Collection Account and the Issuer hereby covenants and agrees that it shall not withdraw, or direct any Person to withdraw, any funds from the Collection Account. The Collection Account shall be maintained by the Indenture Trustee as a segregated account, separate and apart from trust funds created for trust certificates or bonds of other series serviced and the other accounts of the Issuer.

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(c)          The Issuer shall, not later than ten (10) days after the Closing Date (or, if later, the date the related Mortgage Loan is first included in the Collateral Pool) instruct the Mortgagor Customers to make all Mortgage Loan Payments to the Collection Account. The Issuer shall deposit or cause to be deposited in the Collection Account, within two (2) Business Days after receipt, the following payments and collections received or made by or on behalf of the Issuer subsequent to the Closing Date (other than payments due on or before the Closing Date):

(i)          all payments on account of Mortgage Loan Payments;

(ii)         all payments of other amounts payable by the Mortgagor Customer on the Mortgage Loans;

(iii)        all Insurance Proceeds, Condemnation Proceeds and Liquidation Proceeds received in respect of any Mortgaged Property;

(iv)        the Release Price from the release of any Mortgage Loan to the extent not deposited into the Release Account; and the Release Price from the release of any Mortgage Loan transferred from the Release Account to the Collection Account pursuant to this Indenture and all proceeds representing earnings on investments in the Release Account (including interest on any Permitted Investments) made with such proceeds;

(v)         any amounts paid by any party to indemnify the Issuer or the Indenture Trustee pursuant to any provision of this Indenture;

(vi)        any amounts received on account of payments under the guaranties provided by related Mortgage Loan Guarantors; and

(vii)       any other amounts required to be so deposited under this Indenture.

(d)          The Issuer shall establish and maintain at a bank designated by the Indenture Trustee a Release Account. The Release Account shall be an Eligible Account. The funds held in the Release Account may be held as cash or invested in Permitted Investments in accordance with the provisions of Section 10.03(a). The Issuer will deposit or cause to be deposited in the Release Account, on the date of receipt, any cash proceeds from the sale of any Mortgage Loan.

Section 10.02         Withdrawals From the Collection Account.

The Account Control Agreement with respect to the Collection Account shall provide that (a) on each Remittance Date the Collection Account Bank shall deliver the Available Amount by wire transfer of immediately available funds for deposit into the Payment Account for application by the Indenture Trustee to make payments in accordance with the priorities set forth pursuant to Section 2.15(b) and (b) on any Business Day other than a Remittance Date the Collection Account Bank shall remit to the Issuer or to the Issuer’s designee the amount requested by the Issuer, provided that (i) the Issuer shall not request an amount which, after giving effect to such remittance, would cause the remaining Available Amount on deposit in the Collection Account to be less than the amount required to be paid pursuant to Section 2.15(b) (excluding any remaining Available Amounts to be paid to the Issuer) on the immediately succeeding Payment Date and (ii) the Issuer shall have executed and delivered to the Collection Account Bank and the Indenture Trustee a certificate stating that (1) a copy of such certificate has simultaneously been delivered to the Indenture Trustee, (2) no Default or Event of Default shall have occurred and be continuing at the time of or immediately after giving effect to such payment, and (3) immediately after giving effect to such payment (A) the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (B) the remaining Available Amount on deposit in the Collection Account is not less than the amount required to be paid pursuant to Section 2.15(b) (excluding any remaining Available Amounts to be paid to the Issuer) on the immediately succeeding Payment Date.

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Section 10.03         Investment of Funds in the Collection Account.

(a)          At the Issuer’s direction, the Collection Account Bank shall invest the funds held in the Collection Account in one or more Permitted Investments selected by the Issuer bearing interest or sold at a discount, and maturing, unless payable on demand, not later than the Business Day immediately preceding the next succeeding Remittance Date. All such Permitted Investments shall be held to maturity, unless payable on demand. Any investment of funds in the Collection Account shall be made in the name of the Issuer for the benefit of the Indenture Trustee (in its capacity as such). The Issuer shall promptly deliver to the Indenture Trustee, and the Indenture Trustee shall maintain continuous possession of, any Permitted Investment that is either (i) a “certificated security,” as such term is defined in the Uniform Commercial Code, or (ii) other property in which a secured party may perfect its security interest by possession under the Uniform Commercial Code or any other applicable law. If amounts on deposit in the Collection Account are at any time invested in a Permitted Investment payable on demand, the Issuer shall:

(1)         consistent with any notice required to be given thereunder, demand that payment thereon be made on the last day such Permitted Investment may otherwise mature hereunder in an amount equal to the lesser of (A) all amounts then payable thereunder and (B) the amount required to be withdrawn on such date; and

(2)         demand payment of all amounts due thereunder promptly upon determination by the Issuer that such Permitted Investment would not constitute a Permitted Investment in respect of funds thereafter on deposit in the Collection Account.

(b)          In the event that the Issuer elects to remove a Mortgage Loan from the Collateral Pool under Section 2.04 or Section 11.02, amounts deposited in the Release Account shall be applied by the Issuer (or the Indenture Trustee based solely on the instructions of the Issuer), first, to pay the expenses related to such release and, second, either to acquire a Qualified Substitute Loan or Qualified Substitute Loans within twelve (12) months following the removal of such Released Loan. Any amounts remaining in the Release Account following the twelve (12) month period from the related Release shall be transferred as Unscheduled Proceeds into the Collection Account and applied as Unscheduled Principal Payments on the following Payment Date. During an Early Amortization Period, all amounts in the Release Account shall be deposited as Unscheduled Proceeds into the Collection Account and will be included in the Available Amount on the following Payment Date to be applied as Unscheduled Principal Payments.

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(a)          Whether or not the Issuer directs the investment of funds in the Collection Account, interest and investment income realized on funds deposited therein, to the extent of the Net Investment Earnings, if any, for the Collection Account for each Collection Period, shall be added to the Available Amount for such Collection Period.

(b)          Except as otherwise expressly provided in this Indenture, if any default occurs in the making of a payment due under any Permitted Investment, or if a default occurs in any other performance required under any Permitted Investment, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate proceedings.

(c)          Notwithstanding the investment of funds held in the Collection Account, for purposes of the calculations hereunder, including the calculation of the Available Amount, the amounts so invested shall be deemed to remain on deposit in the Collection Account.

(d)          Any actual losses sustained on the liquidation of a Permitted Investment in the Collection Account shall be deposited by the Issuer immediately, but in no event later than one Business Day following such liquidation, into the Collection Account.

Section 10.04         Mortgage Loans.

With respect to each Mortgaged Property, the Issuer (a) shall observe and perform all the obligations imposed upon it under the related Mortgage Loan and shall not do or permit to be done anything to impair materially the value of such Mortgaged Property or related Mortgage Loan as security, (b) shall promptly send copies to the Indenture Trustee of all notices of event of default which the Issuer shall send or receive under the related Mortgage Loan, (c) shall notify the Indenture Trustee in writing of any material change in the status of any Mortgagor Customer with respect to such Mortgaged Property, including, without limitation, the vacating or surrender of any Mortgagor Customer, even if such action is expressly permitted by the terms of such Mortgagor Customer’s Mortgage Loan, (d) shall enforce all of the material terms, covenants and conditions contained in a related Mortgage Loan upon the part of the Mortgagor Customer thereunder to be observed or performed (including, without limitation, collecting financial information from each Mortgagor Customer) consistent with past practice of the Issuer or MBC, (e) shall not execute any assignment of the Issuer’s interest in a related Mortgage Loan or the Mortgage Loan Payments, and (f) shall not consent to any assignment of a related Mortgage Loan not in accordance with its terms or as permitted thereunder. The Issuer shall not agree to any material modification of a related Mortgage Loan, other than in the ordinary course of business of the Issuer.

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Section 10.05         Compliance With Laws.

With respect to each Mortgaged Property:

(a)          The Issuer shall promptly comply, or cause the Mortgagor Customers to comply, in all material respects with all federal, state and local laws, orders, ordinances, governmental rules and regulations or court orders affecting such Mortgaged Property, or the use thereof (“Applicable Laws”), currently existing or enacted in the future.

(b)          The Issuer shall give prompt notice to the Indenture Trustee of the receipt by the Issuer of any written governmental agency notice related to a violation of any Applicable Laws and of the commencement of any governmental agency proceedings or investigations which relate to compliance with Applicable Laws.

(c)          After prior written notice to the Indenture Trustee, the Issuer, at its own expense, may contest by appropriate Proceeding, promptly initiated and conducted in good faith and with due diligence, the Applicable Laws affecting any Mortgaged Property; provided, that (i) no Event of Default has occurred and is continuing under this Indenture, (ii) the Issuer is not prohibited from doing so under the provisions of any Mortgage Loan, (iii) none of such Mortgaged Property, any part thereof or interest therein, any of the related Mortgagor Customers or occupants thereof, or the Issuer shall be affected in any materially adverse way as a result of such Proceeding, (iv) non-compliance with the Applicable Laws shall not impose criminal liability on the Issuer or civil or criminal liability on the Indenture Trustee, and (v) the Issuer shall have furnished to the Indenture Trustee all other items reasonably requested by the Indenture Trustee.

Section 10.06         Other Rights, Etc.

It is agreed that the risk of loss or damage to a Mortgaged Property is on the Issuer, and the Indenture Trustee shall have no liability whatsoever for decline in value of such Mortgaged Property, for failure to maintain insurance policies, or for failure to determine whether insurance in force is adequate as to the amount of risks insured. Possession by the Indenture Trustee shall not be deemed an election of judicial relief, if any such possession is requested or obtained, with respect to any Mortgaged Property or any other Collateral included in the Collateral Pool and not in the Indenture Trustee’s possession.

Section 10.07         Right to Release Any Portion of the Collateral Pool.

The Indenture Trustee shall not release any portion of the Collateral Pool except as expressly set forth in the terms and provisions of this Indenture and the other Transaction Documents and shall release such portion without, as to the remainder of such Collateral, in any way impairing or affecting the lien or priority of this Indenture, or improving the position of any subordinate lienholder with respect thereto, except to the extent that the obligations hereunder shall have been reduced by the actual monetary consideration, if any, received by the Indenture Trustee for such release, and may accept by assignment, pledge or otherwise any other property in place thereof, all in accordance with the terms hereof. This Indenture shall continue as a lien and security interest in the remaining portion of the Collateral Pool to which it applies.

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Section 10.08         Mortgage Loan Matters.

(a)          The Issuer may enter into renewals of Mortgage Loans and new Mortgage Loans that are on commercially reasonable terms, provided any such renewal and new Mortgage Loans are entered into in the ordinary course of business consistent with past practices of the Issuer and MBC. The Issuer shall execute and deliver, or cause to be executed and delivered, at the request of any party hereto all such further assurances, confirmations and assignments in connection with the Mortgage Loans as may be required by the Issuer.

(b)          Except as specifically set forth herein, the Issuer shall not (i) amend or modify in any material respect, or terminate (other than in connection with a bona fide default by the Mortgagor Customer thereunder beyond any applicable notice or grace period), any Mortgage Loan other than in accordance with the Servicing Standard, (ii) shall not collect any of the Mortgage Loan Payments more than one (1) month in advance, and (iii) shall not execute any other assignment of the Issuer’s interest in the Mortgage Loans or any other Collateral (except as contemplated by the Transaction Documents). For the purpose of this Section 10.08, without limiting the generality of the foregoing, any extension of the term of a Mortgage Loan that does not reduce the Mortgage Loan Payment payable thereunder shall be deemed not to be material and any amendment or modification of a Mortgage Loan that reduces the term of such Mortgage Loan or the Mortgage Loan Payment payable thereunder shall be deemed to be material.

(c)          Notwithstanding the foregoing:

(i)          The Issuer may, consistent with the Servicing Standard, agree to any modification, waiver or amendment of any term of, forgive any Mortgage Loan Payment on, and permit the release of the related Mortgagor Customer or any Mortgage Loan Guarantor (each, a “Mortgage Loan Amendment”) without the consent of the Indenture Trustee, any Noteholder or any other Person, provided that the Issuer certifies to the Indenture Trustee that:

(1)         such Mortgage Loan Amendment is entered into for a commercially reasonable purpose in an arm’s-length transaction on market terms; and

(2)         in the reasonable judgment of the Issuer, such Mortgage Loan Amendment is in the best interest of the Noteholders and will not have an adverse effect on such Mortgage Loan or the Appraised Value of the related Mortgaged Property.

(ii)         Any Mortgage Loan Amendment in connection with a bona fide default by a Mortgagor Customer shall not be subject to the foregoing terms of this Section 10.08. Regardless of whether any Mortgage Loan Amendment is material or not, the Issuer will give the Indenture Trustee prompt written notice thereof and shall indicate whether such action is being taken pursuant to the preceding sentence and upon request will deliver a copy of any documents executed in connection therewith to the Indenture Trustee.

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(iii)        The limitations, conditions and restrictions set forth in Section 10.08(c)(i) shall not apply to the Issuer’s ability to terminate a Mortgage Loan in accordance with the terms thereof.

(d)          The Issuer shall have no liability to the Indenture Trustee, the Noteholders or to any other Person if its analysis and determination that the Mortgage Loan Amendment or other action contemplated by Section 10.08(c) would not materially reduce the likelihood of timely payment of amounts due thereon, or that such Mortgage Loan Amendment or other action is reasonably likely to produce a greater recovery to the Issuer on a present value basis than would liquidation, should prove to be wrong or incorrect, so long as the analysis and determination were made on a reasonable basis in accordance with the Servicing Standard in good faith by the Issuer.

(e)          All modifications, waivers, amendments and other actions entered into or taken in respect of a Mortgage Loan pursuant to this Section 10.08 shall be in writing. The Issuer shall notify the Indenture Trustee, in writing, of any modification, waiver, amendment or other action entered into or taken in respect of any Mortgage Loan pursuant to this Section 10.08 and the date thereof, and shall deliver to the Indenture Trustee for deposit in the related Mortgage Loan File an original counterpart of the agreements relating to such modification, waiver, amendment or other action, promptly (and in any event within 10 Business Days) following the execution thereof. In addition, following any Mortgage Loan Amendment, the issuer shall deliver to the Indenture Trustee an Officer’s Certificate setting forth in reasonable detail the basis of the determinations made by it pursuant to Section 10.08(c).

Section 10.09         Perfection of Security Interest.

The Issuer shall take all action that may be necessary or desirable, or that the Indenture Trustee may request, so as at all times to maintain the validity, perfection, enforceability and priority of the Indenture Trustee’s security interest in the Collateral or to enable the Indenture Trustee to protect, exercise or enforce its rights hereunder and in the Collateral, including, but not limited to:

(a)          immediately discharging all liens other than Permitted Encumbrances;

(b)          subject to any Permitted Encumbrances, warranting, defending and preserving the validity and priority of the lien of any Collateral against the claims of all Persons whomsoever.

(c)          obtaining landlords’ waivers and related agreements;

(d)          delivering to the Indenture Trustee, endorsed or accompanied by such instruments of assignment as the Indenture Trustee may specify, and stamping or marking, in such manner as the Indenture Trustee may specify, any and all chattel paper, instruments, letters of credit and advices thereof and documents evidencing or forming a part of the Collateral;

(e)          entering into warehousing, lockbox and other custodial arrangements satisfactory to the Indenture Trustee;

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(f)          executing (as appropriate) and delivering authorizations for the recording of financing statements, instruments of pledge, notices and assignments, in each case in form and substance satisfactory to the Indenture Trustee, relating to the creation, validity, perfection, maintenance or continuation of the Indenture Trustee’s security interest under the Uniform Commercial Code or other applicable law;

(g)          obtaining “control” of any investment property, deposit account, letter-of-credit right or electronic chattel paper (the term “control” as used in respect of the foregoing types of Collateral having the meaning set forth in Articles 8 and 9 of the UCC), with any agreements establishing such “control” to be in form and substance satisfactory to the Indenture Trustee; and

(h)          if the Issuer at any time has or acquires a commercial tort claim, promptly notifying the Indenture Trustee thereof, in writing, and granting a specific collateral assignment of such claim to the Indenture Trustee as additional Collateral.

ARTICLE XI
TRANSFERS AND EXCHANGES OF MORTGAGE LOANS; RELEASE OF MORTGAGE LOANS

Section 11.01         Exchange of Mortgage Loans.

(a)          The Issuer may remove an Exchanged Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool. In addition, no exchange of a Mortgaged Loan to a third party or to MBC or any Affiliate of MBC or of the Issuer may occur if an Early Amortization Period exists or would occur as a result of such exchange.

(b)          In the event that the Issuer elects to substitute one or more Qualified Substitute Loans pursuant to this Section 11.01, the Issuer shall deliver to the Indenture Trustee all documents as specified in the definition of “Mortgage Loan File” with respect to each Qualified Substitute Loan in accordance with this Indenture. Mortgage Loan Payments due with respect to Qualified Substitute Loans in the month of substitution shall not be part of the Collateral and will be retained by the Issuer. For the month of substitution, the Available Amount shall include the Mortgage Loan Payment due on the Mortgage Loan for the Removed Mortgage Loan for such month and thereafter the Issuer shall be entitled to retain all amounts received in respect of such Removed Mortgage Loan. On or prior to the effective date of any such substitution, the Issuer shall deliver to the Indenture Trustee an amended Mortgage Loan Schedule reflecting the addition to the Collateral of each new Qualified Substitute Loan and the removal from the Collateral of each Removed Mortgage Loan. Upon such substitution, each Qualified Substitute Loan shall be subject to the terms of this Indenture in all respects, and the Issuer shall be deemed to have made the representations and warranties contained in Section 2.21 with respect to each Qualified Substitute Loan.

(c)          The Issuer shall effect such substitution by having each Qualified Substitute Loan assigned to the Issuer and distributing or otherwise transferring the Removed Mortgage Loan to MBC or the entity purchasing the Removed Mortgage Loan and delivering to and depositing with the Indenture Trustee (i) any transfer documents transferring such Qualified Substitute Loan to the Issuer, (ii) any transfer documents transferring such Removed Mortgage Loan to MBC or the entity purchasing the Removed Mortgage Loan and (iii) the Mortgage Loan File for such Qualified Substitute Loan.

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(d)          Upon receipt of an Officer’s Certificate from the Issuer to the effect that all requirements with respect to any substitution pursuant to the foregoing terms of this Section 11.01 have been satisfied, upon which the Indenture Trustee shall be permitted to fully rely and shall have no liability for so relying without any obligation to confirm or verify, (i) the Indenture Trustee shall release or cause to be released to the Issuer’s designee the related Mortgage Loan, the related Mortgage Note and the related Mortgage Loan File for the Removed Mortgage Loan and (ii) each of the Indenture Trustee and the Issuer shall execute and deliver such instruments of release, transfer or assignment, in each case without recourse, as shall be provided to it and are reasonably necessary to vest in the Issuer’s designee the ownership of the Removed Mortgage Loan and to release other lien or security interest in such Removed Mortgage Loan.

Section 11.02         Release of Mortgaged Property by the Issuer.

(a)          The Issuer shall have the right to have released from the lien of this Indenture any Mortgage Loan (following such release, a “Released Loan”) by depositing in the Release Account an amount equal to the Release Price in immediately available funds for the Released Loan and satisfying the Required Conditions. Upon the Indenture Trustee’s receipt of an Officer’s Certificate from the Issuer certifying that all Required Conditions have been satisfied, the Indenture Trustee shall release to the Issuer or its designee the related Mortgage Loan File and execute and deliver such instruments of release, transfer or assignment, in each case without recourse, that shall be provided to it by the Issuer and are reasonably necessary to release any lien or security interest in such Released Loan.

(b)          No sale of a Mortgage Loan to a third party or to MBC or any Affiliate thereof may occur if an Early Amortization Period would occur as a result of such purchase.

Section 11.03         Mortgage Loan Substitution.

(a)          The Issuer may remove a Mortgage Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.01 provided that the Issuer determines, in its reasonable discretion, that there is a reasonable risk of monetary default by the Mortgagor Customer under such Mortgage Loan (“Credit Risk”).

(b)          The Issuer may remove a Mortgage Loan from the Collateral Pool in exchange for the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.01 provided that the Issuer determines, in its reasonable discretion, that such Mortgage Loan is no longer an Eligible Mortgage Loan.

(c)          The Issuer shall, in connection with the removal of a Mortgage Loan from the Collateral Pool and the addition of one or more Qualified Substitute Loans to the Collateral Pool pursuant to the provisions of Section 11.03, deliver to the Indenture Trustee and Officer’s Certificate from the Issuer certifying (i) the reason for such removal, including an explanation of the related Credit Risk (and a copy of any written communication from the Mortgagor Customer related to such Credit Risk) or why such Mortgage Loan is no longer an Eligible Mortgage Loan, as the case may be, or (ii) a summary description of the anticipated Qualified Substitute Loans, (iii) that (1) immediately after giving effect to such removal and substitution, the aggregate outstanding principal amount of Eligible Mortgage Loans plus the aggregate amount on deposit in the Collection Account and any other deposit account of the Issuer subject to an Account Control Agreement is equal to not less than 120% of the Outstanding Principal Balance and (2) no Default or Event of Default has occurred and is continuing on the date of such removal and substitution or would result therefrom.

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Section 11.04         Release, Sale and Exchange of Defaulted Mortgage Loans.

(a)          The Issuer shall exercise reasonable efforts, to the extent consistent with the Servicing Standard, to enforce a Defaulted Mortgage Loan as to which no satisfactory arrangements can be made for collection of delinquent payments.

(b)          The Issuer may offer to sell a Defaulted Mortgage Loan pursuant to this Section 11.04, for a fair price, free and clear of the lien of this Indenture, if and when the Issuer determines that, consistent with the Servicing Standard, such a sale would be in the best interests of the Noteholders. The Issuer shall give the Indenture Trustee not less than twenty (20) Business Days’ prior written notice of its intention to sell any Defaulted Mortgage Loan pursuant to this Section 11.04. No Interested Person shall be obligated to submit a bid to purchase any such Defaulted Mortgage Loan. The Liquidation Proceeds shall be deposited into the Collection Account and applied as set forth herein.

(c)          If and when the Issuer deems it necessary and prudent for purposes of establishing a fair price for any Defaulted Mortgage Loan for purposes of conducting a sale of such Defaulted Mortgage Loan pursuant to Section 11.04(b), the Issuer is authorized, at the Issuer’s cost, to have an appraisal conducted by an Independent MAI-designated appraiser or other expert.

(d)          Whether any cash bid constitutes a fair price for any Defaulted Mortgage Loan for purposes of Section 11.04(b) shall be determined by the Issuer in its reasonable discretion or, if such cash bid is from an Interested Person, by the Indenture Trustee. In determining whether any bid received from an Interested Person represents a fair price for any Defaulted Mortgage Loan, the Indenture Trustee shall be supplied with and may conclusively rely on the most recent appraisal conducted in accordance with Section 11.04(c) within the preceding 12-month period or, in the absence of any such appraisal, on a narrative appraisal prepared by an Independent MAI-designated appraiser or other expert retained by the Issuer, at the Issuer’s cost. Such appraiser shall be selected by the Issuer. In determining whether any bid constitutes a fair price for any such Defaulted Mortgage Loan, the Issuer shall take into account, among other factors, the period and amount of any delinquency on the affected Mortgage Loan, the occupancy status and physical condition of the related Mortgaged Property and the state of the local economy.

(e)          The Issuer shall act on behalf of itself and the Indenture Trustee in negotiating and taking any other action necessary or appropriate in connection with the sale of any Defaulted Mortgage Loan, and the collection of all amounts payable in connection therewith. In connection therewith, the Issuer may charge prospective bidders fees that approximate the Issuer’s actual costs in the preparation and delivery of information pertaining to such sales or evaluating bids without obligation to deposit such amounts into the Collection Account. Any sale of a Defaulted Mortgage Loan shall be free and clear of the lien of this Indenture and shall be final and without recourse to the Issuer or the Indenture Trustee. If such sale is consummated in accordance with the terms of this Indenture, the Indenture Trustee shall not have any liability to the Issuer or any Noteholder with respect to the purchase price therefor accepted by the Issuer or the Indenture Trustee, as the case may be.

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(f)          The Issuer shall accept the first (and, if multiple bids are received contemporaneously, highest) cash bid received from any Person that constitutes a fair price for such Defaulted Mortgage Loan. Notwithstanding the foregoing, the Issuer shall not be obligated to accept the highest cash bid if the Issuer determines, in accordance with the Servicing Standard, that rejection of such bid would be in the best interests of the Noteholders, and the Issuer may accept a lower cash bid if it determines, in accordance with the Servicing Standard, that acceptance of such bid would be in the best interests of the Noteholders (for example, if the prospective buyer making the lower bid is more likely to perform its obligations or the terms offered by the prospective buyer making the lower bid are more favorable).

(e)          At any time that a Defaulted Mortgage Loan has not already been sold pursuant to the terms hereof, the Issuer may at its option (i) release such Defaulted Mortgage Loan from the lien of this Indenture pursuant to Section 11.02 or (ii) exchange one or more Qualified Substitute Loans for the subject Defaulted Mortgage Loan pursuant to Section 11.01.

(f)          The Issuer shall, and is hereby authorized and empowered by the Indenture Trustee to, prepare, execute and deliver in its own name, on behalf of the Issuer and the Indenture Trustee or any of them, the endorsements, assignments and other documents necessary to effectuate a sale of a Defaulted Mortgage Loan pursuant to this Section 11.04, and the Indenture Trustee shall execute and deliver any limited powers of attorney necessary to permit the Issuer to do so; provided, however, that the Indenture Trustee shall not be held liable for any misuse of any such power of attorney by the Issuer and the Issuer hereby agrees to indemnify the Indenture Trustee against, and hold the Indenture Trustee harmless from, any loss or liability arising from any misuse or negligence in the exercise of such power of attorney.

Section 11.05         Servicing Agent.

The Issuer shall, subject to the terms and conditions herein set forth, act as servicing agent in connection with the Mortgage Loans, including performance of the following services:

(a)          collect on a monthly basis all principal and interest due from each Mortgagor Customer under the Mortgage Notes and any other Mortgage Loan Document;

(b)          collect any other revenue due in connection with the Mortgage Notes, and any other Mortgage Loan Document, and any other revenue due in connection with matters relating to any Mortgaged Property, including, without limitation, any rents, security deposits, additional rent, direct and indirect operating costs, tenant improvement charges, and any amounts due in connection with or as a result of any casualty or exercise of eminent domain;

(c)          except as otherwise provided herein, instruct all Mortgagor Customers to remit all payments in respect of the Mortgage Notes to the Collection Account;

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(d)          cause each Mortgagor Customer to keep the Mortgaged Property owned by such Mortgagor Customer insured in accordance with this Indenture;

(e)          immediately upon the filing of a notice of lien against any Mortgaged Property, cause the applicable Mortgagor Customer to pay any and all general and special city and county taxes of every kind and nature, any and all real estate and ad valorem taxes, personal property taxes, assessments, water rates, sewer rents, fines, impositions, levies, permits, inspection and license fees, all special assessments for public improvements (without permitting any improvement bond to be issued for special assessments) and all other charges now or hereafter levied or imposed upon or assessed against such Mortgaged Property or any part thereof by any municipality or other governmental authority or upon the revenues, rents, issues, income and profits of such Mortgaged Property or arising in respect of the occupancy, use or possession thereof or the use of walks, chutes, areas and other space beyond the lot line of such Mortgaged Property and on or abutting the public sidewalks and/or highways in front or adjoining such Mortgaged Property or pursuant to any environmental protection act for the use of any furnace, compactors, incinerators, parking areas or for other matters covered by any such act, together with any penalties and interest on any of the foregoing;

(f)          notify the Indenture Trustee of any monetary default or other material default by any Mortgagor Customer under the terms, covenants and conditions of any Mortgage Loan Collateral within five (5) days after the date the Issuer discovers such default;

(g)          notify the appropriate Mortgagor Customer of any monetary default or other material default under the terms of any Mortgage Loan Collateral in accordance with the terms of the applicable Mortgage Loan Documents, and otherwise communicate with such Mortgagor Customer on the Indenture Trustee’s behalf as and when required pursuant to the terms of such Mortgage Loan Documents;

(h)          notify the Indenture Trustee of (i) any abandonment by a Mortgagor Customer of such Mortgaged Property; (ii) the Issuer’s receipt of a notice from a Mortgagor Customer alleging that the Issuer is in default in the performance of its obligations under the Mortgage Loan Collateral or that any other right, entitlement, protection or condition for the benefit of a Mortgagor Customer is not being observed, performed or satisfied; (iii) the Issuer’s receipt of any notice of a proposed or threatened exercise of the right of eminent domain with respect to the Mortgaged Property or any portion thereof; and (iv) any casualty, damage or injury to the Mortgaged Property or a portion thereof which could create a risk of a material, immediate diminution in the revenue earned by or generated from the Mortgaged Property;

(i)          cooperate and assist in any legal proceedings by or against the Indenture Trustee or any the Indenture Trustee with regard to the Mortgage Loan Collateral or the Mortgaged Property and involving third parties;

(j)          following an event of a default by any Mortgagor Customer which is not timely cured within any applicable notice and cure period, take such action as may be necessary or appropriate with respect to such default, including, without limitation, retaining counsel, at the Issuer’s sole cost and expense, to foreclose the defaulting Mortgage Loan Collateral;

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(k)          maintain and keep in good order separate, accurate and complete accounts and records for the Indenture Trustee, and maintain orderly files containing records of interest and principal paid, insurance policies, leases and subleases, correspondence and all other documents and papers pertaining to the Mortgage Loan Collateral and the Mortgaged Property or the operation thereof;

(l)          at the Indenture Trustee’s option, either audit and verify the accuracy of any statements and information required to be submitted by any Mortgagor Customer with respect to its Mortgage Loan Collateral or refer said matter to the Indenture Trustee’s accountants and cooperate with said accountants in the conduct of any such audit;

(m)          take service, if requested, for the Indenture Trustee of legal notices; advise the Indenture Trustee’s attorneys as promptly as possible of such service; advise the Indenture Trustee of the receipt of information concerning any claim of injury, damage or other liability against the Indenture Trustee or any the Indenture Trustee and, to the extent available, other relevant information concerning such claim; and provide copies of all relevant legal papers to the Indenture Trustee’s attorneys. The Issuer will give notice of claims and forward documents to the Indenture Trustee’s insurance carrier whenever appropriate, and furnish the Indenture Trustee with copies of insurance claims made against or on behalf of the Indenture Trustee; and

(n)          generally, do all things reasonably deemed necessary or desirable for the proper servicing of Mortgage Loan Collateral.

Section 11.06         Servicing.

(a)          The Issuer covenants to maintain or cause the servicing of the Mortgage Loans to be maintained in conformity with the Servicing Standard. In the event that the preceding language is interpreted as constituting one or more servicing contracts, each such servicing contract shall terminate automatically upon the earliest of (i) an Event of Default, (ii) the date on which all the Notes have been paid in full or (iii) the transfer of servicing.

(b)          If the Mortgage Loans are serviced by the Issuer, (i) the Issuer agrees agree that the Indenture Trustee is the collateral assignee of all servicing records, including but not limited to any and all servicing agreements, files, documents, records, data bases, computer tapes, copies of computer tapes, proof of insurance coverage, insurance policies, appraisals, other closing documentation, payment history records, and any other records relating to or evidencing the servicing of Mortgage Loans (the “Servicing Records”), and (ii) the Issuer grants the Indenture Trustee a security interest in all servicing fees and rights relating to the Mortgage Loans and all Servicing Records to secure the obligation of the Issuer or its designee to service in conformity with this Section 11.06 and any other obligation of the Issuer to the Indenture Trustee and the Noteholders. The Issuer covenants to safeguard such Servicing Records and to deliver them promptly to the Indenture Trustee or its designee at the Indenture Trustee’s request.

(c)          If the Mortgage Loans are serviced by a third party servicer (such third party servicer, the “Servicer”), the Issuer (i) shall provide a copy of the servicing agreement to the Indenture Trustee, which shall be in form and substance acceptable to the Indenture Trustee (the “Servicing Agreement”), and (ii) shall provide a Servicer Notice to the Servicer substantially in the form of Exhibit I hereto (a “Servicer Notice”) and shall cause the Servicer to acknowledge and agree to the same. Any successor or assignee of a Servicer shall be approved in writing by the Indenture Trustee and shall acknowledge and agree to a Servicer Notice prior to such successor’s assumption of servicing obligations with respect to the Mortgage Loans.

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(d)          If the servicer of the Mortgage Loans is the Issuer or the Servicer is an Affiliate of the Issuer, such Person shall provide to the Indenture Trustee a letter from to the effect that upon the occurrence of an Event of Default, the Indenture Trustee may terminate any Servicing Agreement and in any event transfer servicing to the Indenture Trustee’s designee, at no cost or expense to the Indenture Trustee, it being agreed that the Issuer will pay any and all fees required to terminate the Servicing Agreement and to effectuate the transfer of servicing to the designee of the Indenture Trustee.

(e)          In the event the Issuer or its Affiliate is servicing the Mortgage Loans, the Issuer shall, and shall cause such Affiliate to, permit the Indenture Trustee from time to time to inspect the Issuer’s or such Affiliate’s, as the case may be, servicing facilities for the purpose of satisfying the Indenture Trustee that the Issuer or such Affiliate, as the case may be, has the ability to service the Mortgage Loans as provided in this Indenture.

Section 11.07         Termination of Servicing Duties.

At any time following an Event of Default, the Indenture Trustee may elect to discontinue the Issuer’s duties pursuant to Section 11.06. Following any such election by the Indenture Trustee, the Indenture Trustee shall designate and retain a subsidiary, affiliate or agent of the Indenture Trustee (the “Indenture Trustee’s Designee”) to perform said duties. Promptly after being discharged of its duties in accordance with the terms of this Section 11.07, the Issuer shall forward to the Indenture Trustee or the Indenture Trustee’s Designee any amounts then being held by the Issuer in connection with the Mortgage Loan Collateral or the Mortgaged Property.

ARTICLE XII
COSTS

Section 12.01         Performance at the Issuer’s Expense.

The Issuer acknowledges and confirms that it shall be responsible for the payment of all costs of reappraisal of any Mortgaged Property or any part thereof, whether required by law, regulation or any governmental or quasi-governmental authority. The Issuer hereby acknowledges and agrees to pay, immediately, upon demand, all fees of a type or nature which may reasonably be imposed by the Indenture Trustee from time to time, in accordance with the priorities set forth herein. Wherever it is provided for herein that the Issuer pay any costs and expenses, such costs and expenses shall include, but not be limited to, all reasonable legal fees and disbursements of the Indenture Trustee in accordance with the priorities set forth herein.

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ARTICLE XIII
MISCELLANEOUS

Section 13.01         Execution Counterparts.

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

Section 13.02         Compliance Certificates and Opinions, Etc.

Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee an Officer’s Certificate stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished.

Section 13.03         Form of Documents Delivered to Indenture Trustee.

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

Any certificate or opinion of an Authorized Officer of the Issuer 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 in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer 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 Issuer stating that the information with respect to such factual matters is in the possession of the Issuer, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous.

Whenever this Indenture requires that a document or instrument (other than any Note) be delivered in substantially the form attached hereto as an exhibit, modifications and additions to and deletions from any such exhibit reflected in such document or instrument as delivered hereunder shall not impair the validity or acceptability of such document or instrument (nor shall any Person be entitled to reject such document or instrument as a result thereof) to the extent that such modifications, additions or deletions are approved by the Issuer and are made in a manner consistent with applicable law (including changes thereto).

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

Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that any Person shall deliver any document as a condition of the granting of such application, or as evidence of such Person’s compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of such Person to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee’s right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in ARTICLE V.

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Section 13.04         No Oral Change.

This Indenture, and any provisions hereof, may not be modified, amended, waived, extended, changed, discharged or terminated orally or by any act or failure to act on the part of the Issuer or the Indenture Trustee, but only by an agreement in writing signed by the party against whom enforcement of any modification, amendment, waiver, extension, change, discharge or termination is sought and otherwise in accordance herewith.

Section 13.05         Acts of Noteholders.

(a)          Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by the Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the “Act” or “Acts” of the Noteholders 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 (subject to Section 5.01) conclusive in favor of the Indenture Trustee and the Issuer if made in the manner provided in this Section 13.05. With respect to authorization to be given or taken by Noteholders, the Indenture Trustee shall be authorized to follow the written directions or the vote of the Requisite Majority, unless any greater or lesser percentage is required by the terms hereunder.

(b)          The fact and date of the execution by any Person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient.

(c)          The Outstanding Principal Balance and serial numbers of Notes held by any Person, and the date of holding the same, shall be proved by the Note Register.

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

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Section 13.06         Computation of Percentage of Noteholders.

Unless otherwise specified herein, whenever this Indenture states that any action may be taken by a specified percentage of the Noteholders, such statement shall mean that such action may be taken by the Noteholders of such specified percentage of the Outstanding Principal Balance.

Section 13.07         Notice to the Indenture Trustee, the Issuer and Certain Other Persons.

Any communication provided for or permitted hereunder shall be in writing and, unless otherwise expressly provided herein, shall be deemed to have been duly given if delivered by courier or mailed by first class mail, postage prepaid, or if transmitted by facsimile and confirmed in a writing delivered or mailed as aforesaid, to: (a) in the case of the Issuer to MBC Funding II Corp., c/o Manhattan Bridge Capital, Inc., 60 Cutter Mill Road, Suite 205, Great Neck, New York 11021, Attention: Assaf Ran, and (b) in the case of the Indenture Trustee, [Trustee TBD], [address], Attention: ________________, facsimile number: __________; or, as to each such Person, such other address or facsimile number as may hereafter be furnished by such Person to the parties hereto in writing.

Section 13.08         Notices to Noteholders; Notification Requirements and Waiver.

Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given if in writing and delivered by courier or mailed by first class mail, postage prepaid to each Noteholder affected by such event, at its address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is delivered or mailed in the manner herein provided shall conclusively be presumed to have been duly given.

Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver.

In case, by reason of the suspension of regular courier and mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice.

Section 13.09         Successors and Assigns.

All covenants and agreements in this Indenture by the Issuer shall bind their successors and permitted assigns, whether so expressed or not.

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Section 13.10         Interest Charges; Waivers.

This Indenture is subject to the express condition that at no time shall the Issuer be obligated or required to pay interest hereunder at a rate which could subject the Indenture Trustee to either civil or criminal liability as a result of being in excess of the maximum interest rate which the Issuer is permitted by applicable law to contract or agree to pay. If by the terms of this Indenture, the Issuer is at any time required or obligated to pay interest hereunder at a rate in excess of such maximum rate, such rate shall be deemed to be immediately reduced to such maximum rate and all previous payments in excess of the maximum rate shall be deemed to have been payments in reduction of principal and not on account of the interest due hereunder.

The Issuer expressly waives presentment, demand, diligence, protest and all notices of any kind whatsoever with respect to this Indenture, except for notices expressly provided for in this Indenture or the Notes.

Section 13.11         Severability Clause.

In case any provision of this Indenture or of the Notes shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall, to the extent permitted by law, not in any way be affected or impaired thereby.

Section 13.12         Governing Law.

(a)          THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES).

(b)          Any action or proceeding against any of the parties hereto relating in any way to this Indenture or any Note or the Collateral included in the Collateral Pool may be brought and enforced in the courts of the State of New York sitting in the borough of Manhattan or of the United States District Court for the Southern District of New York and each of the Issuer irrevocably submits to the jurisdiction of each such court in respect of any such action or proceeding. The Issuer hereby waives, to the fullest extent permitted by law, any right to remove any such action or proceeding by reason of improper venue or inconvenient forum. As long as any of the Notes remain Outstanding, service of process upon the Issuer shall, to the fullest extent permitted by law, be deemed in every respect effective service in any such legal action or proceeding.

Section 13.13         Effect of Headings and Table of Contents.

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

Section 13.14         Benefits of Indenture.

Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, the Noteholders and any other party secured hereunder or named as a beneficiary of any provision hereof, any benefit or any legal or equitable right, remedy or claim under this Indenture.

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Section 13.15         Trust Obligation.

No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (a) the Indenture Trustee in its individual capacity or (b) any partner, owner, beneficiary, agent, officer, director, employee, agent or Control Person of the Issuer, the Indenture Trustee, in its individual capacity, any holder of a beneficial interest in the Issuer or of any successor or assignee of the Issuer, the Indenture Trustee, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee does not any such obligations in its individual capacity).

Section 13.16         Inspection.

The Issuer agrees that, on reasonable prior notice, it will permit any representative of the Indenture Trustee, during the Issuer’s normal business hours, to examine all the books of account, records, reports, and other papers of the Issuer, to make copies and extracts therefrom and to discuss the Issuer’s affairs, finances and accounts relating to the Issuer with the officers of MBC on behalf of the Issuer and the Issuer’s employees and independent public accounting firm, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) or the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder.

Section 13.17         Method of Payment.

Except as otherwise provided in Section 2.15(b), all amounts payable or to be remitted pursuant to this Indenture shall be paid or remitted or caused to be paid or remitted in immediately available funds by wire transfer to an account specified in writing by the recipient thereof.

Section 13.18         Trust Indenture Act Controls.

If this Indenture is required to be qualified under the 1939 Act:

(a)          if any provision of this Indenture limits, qualifies or conflicts with another provision which is required to be included in this Indenture by the 1939 Act, the required provision shall control;

(b)          if any provision of this Indenture modifies any 1939 Act provision that may be so modified, such 1939 Act provision shall be deemed to apply to this Indenture as so modified;

(c)          if any provision of this Indenture excludes any 1939 Act provision that may be so excluded, such 1939 Act provision shall be excluded from this Indenture; and

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(d)          the provisions of Sections 310 through 317 of the 1939 Act that impose duties on any Person (including the provisions automatically deemed included unless expressly excluded by this Indenture) shall be a part of and shall govern this Indenture, whether or not physically contained herein.

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

MBC FUNDING II CORP., as the Issuer
By:
	Name:
	Title:
MANHATTAN BRIDGE CAPITAL, INC.
By:
	Name:
	Title:
[TRUSTEE TBD],
not in its individual capacity but solely as Indenture Trustee
By:
	Name:
	Title:

EXHIBIT A

MORTGAGE LOAN SCHEDULE

A-1-1

EXHIBIT B-1

FORM OF GLOBAL SENIOR SECURED NOTE

Note Rate: __%	Initial Principal Balance of this Note:  $[                 ]
Cut-off Date: [          ], 2016	CUSIP No.
Closing Date:  [          ], 2016	ISIN No.
First Payment Date: [          ], 2016	Final Payment Date:  [                         ]
Issuer:  MBC Funding II Corp.	Note No.
Indenture Trustee: [Trustee TBD]

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE INDENTURE TRUSTEE, THE NOTE REGISTRAR OR ANY AGENT THEREOF FOR REGISTRATION OF TRANSFER, EXCHANGE, OR DISTRIBUTION, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT 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.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR DEFINITIVE NOTES, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AND EACH BENEFICIAL OWNER BY PURCHASING OR OTHERWISE ACQUIRING A BENEFICIAL INTEREST IN THIS NOTE, EACH AGREES TO TREAT THIS NOTE AND SUCH BENEFICIAL INTEREST FOR PURPOSES OF UNITED STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND ANY OTHER TAXES IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER AND TO REPORT THIS NOTE AND SUCH BENEFICIAL INTEREST ON ALL APPLICABLE TAX RETURNS IN A MANNER CONSISTENT WITH SUCH TREATMENT.

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE QUARTERLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

The Issuer, a New York corporation, for value received, hereby promises to pay to Cede & Co. or its registered assigns, upon presentation and surrender of this Note (this “Note”), the principal sum of [                                            ] United States dollars ($[                    ]) on the Final Payment Date referred to above, together with interest hereon from time to time in the amounts and at the times specified in the Indenture referred to below.

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or about                                    , 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(as the Issuer “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”), and will be secured by the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”). To the extent not defined herein, capitalized terms used herein have the respective meanings assigned in the Indenture. This Note is issued under and is subject to the terms, provisions and conditions of the Indenture, to which Indenture the Holder of this Note by virtue of the acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Indenture, payments of any interest and other amounts payable on this Note (other than payments of principal) shall be made on the 15^th day of each calendar month, commencing on                     15, 2016, and, to the extent required by the terms of the Indenture, payments of principal on this Note shall be made on the 15^th day of each calendar quarter, commencing on                 15, 2016, or, if any such day is not a Business Day, then on the next succeeding Business Day (each, a “Payment Date”), to the Person in whose name this Note is registered at the close of business on the related Record Date. All payments made under the Indenture on this Note will be made by the Indenture Trustee by wire transfer of immediately available funds to the account of the Person entitled thereto at a bank or other entity having appropriate facilities therefor, if such Noteholder shall have provided the Indenture Trustee with wiring instructions prior to the related Record Date (which wiring instructions may be in the form of a standing order applicable to all subsequent payments), or otherwise by check mailed to the address of such Noteholder as it appears in the Note Register as of the related Record Date. Notwithstanding the foregoing, the final payment on this Note on the Final Payment Date will be made in like manner, but only upon presentation and surrender of this Note at the offices of the Indenture Trustee or such other location specified in the notice to the Holder hereof of such final payment. Notwithstanding anything herein to the contrary, no payments will be made with respect to a Note that has previously been surrendered as contemplated by the preceding sentence or, with limited exception, that should have been surrendered as contemplated by the preceding sentence.

Any payment to the Holder of this Note in reduction of the Outstanding Principal Balance hereof is binding on such Holder and all future Holders of this Note and any Note issued upon the transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such payment is made upon this Note.

The Notes are issuable in fully registered form only without coupons in minimum denominations specified in the Indenture.

Each transferee of a Note or an Ownership Interest therein will be deemed to have represented, warranted and agreed that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii)(A) such Note is rated investment grade or better as of the date of the purchase, (B) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (C) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register upon surrender of this Note for registration of transfer at the offices of the Note Registrar, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of the same authorized denominations evidencing the same Outstanding Principal Balance will be issued to the designated transferee or transferees.

No service charge will be imposed for any transfer or exchange of this Note, but the Indenture Trustee or the Note Registrar 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 this Note.

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note Registrar or any such agent shall be affected by notice to the contrary.

The Indenture, any Asset Transfer Agreement and the Notes are subject to amendment, including by supplemental indenture, from time to time in accordance with the terms thereof, including in circumstances which do not require the consent of any or all Noteholders.

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

The Indenture Trustee makes no representation as to the validity or sufficiency of this Note (other than as to its signature set forth hereon below).

This Note shall be governed by and construed in accordance with the laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without regard to conflict of laws principles).

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed by the Issuer.

Dated:  [__________], 2016

MBC FUNDING II CORP.
By:
	Authorized Signatory

CERTIFICATE OF AUTHENTICATION

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

[TRUSTEE TBD],
not in its individual capacity but solely as Indenture Trustee
By:
	Authorized Signatory

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(please print or typewrite name and address including postal zip code of assignee)

the within Senior Secured Note and hereby authorize(s) the registration of transfer of such Note to assignee on the Note Register.

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a like Outstanding Principal Balance to the above named assignee and deliver such Note to the following address:

Dated:

Signature by or on behalf of Assignor

Signature Guaranteed

PAYMENT INSTRUCTIONS

The Assignee should include the following for purposes of payment:

Payments shall, if permitted, be made by wire transfer or otherwise, in immediately available funds, to ______________________________________________________________________________ for the account of ________________________________________. ______________________________ Payments made by check (such check to be made payable to____________________________) and all applicable statements and notices should be mailed to___________________________________.

This information is provided by                                                                       , the Assignee named above, or                                                                                     , as its agent.

EXHIBIT B-2

FORM OF DEFINITIVE SENIOR SECURED NOTE

DEFINITIVE NOTE 

Note Rate: __%	Initial Principal Balance of this Note:  $[                  ]
Cut-off Date: [          ], 2016	CUSIP No.
Closing Date:  [            ], 2016	ISIN No.
First Payment Date: [                ], 2016	Final Payment Date:  [                             ]
Issuer:  MBC Funding II Corp.	Note No.
Indenture Trustee: [Trustee TBD]

A-2-1

THE HOLDER HEREOF, BY ACCEPTING THIS NOTE, AGREES TO TREAT THIS NOTE FOR PURPOSES OF UNITED STATES FEDERAL, STATE AND LOCAL INCOME OR FRANCHISE TAXES AND ANY OTHER TAXES IMPOSED ON OR MEASURED BY INCOME, AS INDEBTEDNESS OF THE ISSUER AND TO REPORT THIS NOTE ON ALL APPLICABLE TAX RETURNS IN A MANNER CONSISTENT WITH SUCH TREATMENT.

REDUCTIONS OF THE OUTSTANDING PRINCIPAL BALANCE OF THIS NOTE MAY BE MADE MONTHLY AS SET FORTH IN THE INDENTURE REFERRED TO HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ABOVE.

THE NOTES ARE SOLELY OBLIGATIONS OF THE ISSUER AND DO NOT REPRESENT OBLIGATIONS OF ANY OTHER PERSON, INCLUDING, WITHOUT LIMITATION, THE INDENTURE TRUSTEE, THE UNDERWRITER OR ANY OF THEIR RESPECTIVE AFFILIATES. THE NOTES ARE NOT INSURED OR GUARANTEED BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.

A-2-2

The Issuer, a New York corporation, for value received, hereby promises to pay to [____________________] or its registered assigns, upon presentation and surrender of this Note (this “Note”), the principal sum of [_______________________] United States dollars ($[____________]) on the Final Payment Date referred to above, together with interest hereon from time to time in the amounts and at the times specified in the Indenture referred to below.

This Note is issued by the Issuer pursuant to an Indenture, to be dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(as the Issuer “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”), and will be secured by the assets of the Issuer (individually, the “Collateral” and, collectively, the “Collateral Pool”). To the extent not defined herein, capitalized terms used herein have the respective meanings assigned in the Indenture. This Note is issued under and is subject to the terms, provisions and conditions of the Indenture, to which Indenture the Holder of this Note by virtue of the acceptance hereof assents and by which such Holder is bound.

Pursuant to the terms of the Indenture, payments of any interest and other amounts payable on this Note (other than payments of principal) shall be made on the 15^th day of each calendar month, commencing on __________ 15, 2016, and, to the extent required by the terms of the Indenture, payments of principal on this Note shall be made on the 15^th day of each calendar quarter, commencing on __________ 15, 2016, or, if any such day is not a Business Day, then on the next succeeding Business Day (each, a “Payment Date”), to the Person in whose name this Note is registered at the close of business on the related Record Date. All payments made under the Indenture on this Note will be made by the Indenture Trustee by wire transfer of immediately available funds to the account of the Person entitled thereto at a bank or other entity having appropriate facilities therefor, if such Noteholder shall have provided the Indenture Trustee with wiring instructions prior to the related Record Date (which wiring instructions may be in the form of a standing order applicable to all subsequent payments), or otherwise by check mailed to the address of such Noteholder as it appears in the Note Register as of the related Record Date. Notwithstanding the foregoing, the final payment on this Note on the Final Payment Date will be made in like manner, but only upon presentation and surrender of this Note at the offices of the Indenture Trustee or such other location specified in the notice to the Holder hereof of such final payment. Notwithstanding anything herein to the contrary, no payments will be made with respect to a Note that has previously been surrendered as contemplated by the preceding sentence or, with limited exception, that should have been surrendered as contemplated by the preceding sentence.

Any payment to the Holder of this Note in reduction of the Outstanding Principal Balance hereof is binding on such Holder and all future Holders of this Note and any Note issued upon the transfer hereof or in exchange therefor or in lieu hereof whether or not notation of such payment is made upon this Note.

The Notes are issuable in fully registered form only without coupons in minimum denominations specified in the Indenture.

A-2-3

No transfer of this Note or any interest herein may be made unless that transfer is made pursuant to an effective registration statement under the Securities Act, and effective registration or qualification under applicable state securities laws, or is made in a transaction that does not require such registration or qualification. No person is obligated to register or qualify any of the Notes under the Securities Act or any other securities law or to take any action not otherwise required under the Indenture to permit the transfer of any Note or interest therein without registration or qualification.

Each transferee of a Note or an Ownership Interest therein shall represent, warrant and agree that either (i) such transferee is not, and is not purchasing such Note on behalf of, as a fiduciary of, as trustee of, or with the assets of, a Plan or (ii)(A) such Note is rated investment grade or better as of the date of the purchase, (B) such transferee believes that such Note is properly treated as indebtedness without substantial equity features for purposes of Department of Labor Regulations, as modified by ERISA, and agrees to so treat such Note and (C) such transferee’s acquisition and continued holding of such Note or Ownership Interest therein will not give rise to a non-exempt prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code (or any law materially similar to Section 4975 of the Code or Section 406 of ERISA).

As provided in the Indenture and subject to certain limitations therein set forth, the transfer of this Note is registrable in the Note Register upon surrender of this Note for registration of transfer at the offices of the Note Registrar, duly endorsed by, or accompanied by a written instrument of transfer in the form satisfactory to the Note Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Notes of the same authorized denominations evidencing the same Outstanding Principal Balance will be issued to the designated transferee or transferees.

No service charge will be imposed for any transfer or exchange of this Note, but the Indenture Trustee or the Note Registrar 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 this Note.

The Issuer, the Indenture Trustee, the Note Registrar and any agent of any thereof may treat the Person in whose name this Note is registered as the owner hereof for all purposes, and none of the Issuer, the Indenture Trustee, the Note Registrar or any such agent shall be affected by notice to the contrary.

The Indenture, any Asset Transfer Agreement and the Notes are subject to amendment, including by supplemental indenture, from time to time in accordance with the terms thereof, including in circumstances which do not require the consent of any or all Noteholders.

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

The Indenture Trustee makes no representation as to the validity or sufficiency of this Note (other than as to its signature set forth hereon below).

A-2-4

This Note shall be governed by and construed in accordance with the laws of the State of New York (including Section 5-1401 of the General Obligations Law of the State of New York, but otherwise without regard to conflict of laws principles).

A-2-5

IN WITNESS WHEREOF, the Issuer have caused this instrument to be duly executed by the Issuer.

Dated: [__________], 2016

MBC FUNDING II CORP.
By:
	Authorized Signatory

CERTIFICATE OF AUTHENTICATION

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

[TRUSTEE TBD], not in its individual capacity, but solely in its capacity as Indenture Trustee
By:
	Authorized Signatory

A-2-6

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto

(please print or typewrite name and address including postal zip code of assignee)

the within Senior Secured Note and hereby authorize(s) the registration of transfer of such Note to assignee on the Note Register.

I (we) further direct the Note Registrar to issue a new Senior Secured Note of a like Outstanding Principal Balance to the above named assignee and deliver such Note to the following address:

Dated:

Signature by or on behalf of Assignor

Signature Guaranteed

PAYMENT INSTRUCTIONS

The Assignee should include the following for purposes of payment:

Payments shall, if permitted, be made by wire transfer or otherwise, in immediately available funds, to ______________________________________________________________________________ for the account of ________________________________________. ______________________________ Payments made by check (such check to be made payable to____________________________) and all applicable statements and notices should be mailed to___________________________________.

This information is provided by                                                                       , the Assignee named above, or                                                                                     , as its agent.

A-2-7

EXHIBIT C

FORM OF INTERIM RECEIPT

[DATE]

MBC Funding II Corp.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Aegis Capital Corp.
810 Seventh Avenue, 18^th Floor
New York, New York 10019

RE:       Interim Receipt pursuant to Section 2.03(b) of the Indenture, dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”)

Ladies and Gentlemen:

In accordance with Section 2.03(b) of the above-referenced Indenture, the Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File related to the Mortgaged Properties listed on Schedule __ hereto, subject to any exceptions set forth in Schedule __ hereto, and other than any Mortgage Loan or Mortgaged Property specifically identified in any exception report annexed thereto as not being covered by such certification, (i) the original or a physical or electronic copy (certified to be true, correct and complete by the Issuer) of each Mortgage Loan is in its possession and (ii) such Mortgage Loan has been reviewed by it, appears regular on its face and appears to relate to a Mortgaged Property included in the Collateral.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

[Trustee TBD]
By:
	Name:
	Title:

EXHIBIT D

FORM OF RECEIPT OF COLLATERAL

[DATE]

MBC Funding II Corp.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Manhattan Bridge Capital, Inc.
60 Cutter Mill Road, Suite 205
Great Neck, New York 11021

Aegis Capital Corp.
810 Seventh Avenue, 18^th Floor
New York, New York 10019

RE: Receipt of Collateral pursuant to Section 2.03(b) of the Indenture, dated on or about ________________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC FUNDING II CORP.(the “Issuer”), MANHATTAN BRIDGE CAPITAL, INC. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”)

Ladies and Gentlemen:

In accordance with Section 2.03(b) of the above-referenced Indenture, the Indenture Trustee hereby certifies that, with respect to each Mortgage Loan File related to the Mortgaged Properties listed on Schedule __ hereto, subject to any exceptions set forth in Schedule __ hereto, and other than with respect to any Mortgage Loan or Mortgaged Property specifically identified in any exception report annexed thereto as not being covered by such certification, (i) all documents specified in the definition of “Mortgage Loan File” are in its possession, (ii) all such documents received by it with respect to such Mortgage Loan and the related Mortgaged Property have been reviewed by it, appear to be regular on their face and appear to relate to such Mortgage Loan or the related Mortgaged Property, and (iii) based on the examinations referred to in Section 2.03 of the Indenture and only as to the foregoing documents, the information set forth in such Mortgage Loan Schedule with respect to the items specified in clause (i) of the definition of “Mortgage Loan Schedule” accurately reflects the information set forth in such Mortgage Loan File.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Indenture.

A-2-2

[Trustee TBD]
By:
	Name:
	Title:

A-2-3

EXHIBIT E

FORM OF TRANSFEROR CERTIFICATE

[Date]

[Trustee TBD]

[Address]

Attention:

Re: MBC FUNDING II CORP., Senior Secured Notes (the “Notes”)

Ladies and Gentlemen:

This letter is delivered to you in connection with the transfer by ___________ (the “Transferor”) to _____________ (the “Transferee”) of Notes having an initial Outstanding Principal Balance as of ___________ __, 2016 (the “Closing Date”) of $[_________] (the “Transferred Notes”). The Notes, including the Transferred Notes, were issued pursuant to an Indenture, to be dated on or about ___________ __, 2016 (as amended or supplemented thereafter, the “Indenture”), between MBC Funding II Corp.(the “Issuer”), Manhattan Bridge Capital, Inc. and [Trustee TBD], as indenture trustee (in such capacity, the “Indenture Trustee”). All capitalized terms used but not otherwise defined herein shall have the respective meanings set forth in the Indenture. The Transferor hereby certifies, represents and warrants to you, as Note Registrar, and for the benefit of the Issuer, the Indenture Trustee and the Transferee, that:

1.            The Transferor is the lawful owner of the Transferred Notes with the full right to transfer such Notes free from any and all claims and encumbrances whatsoever.

2.           The Transferor or a person acting on its behalf has furnished, or caused to be furnished, to the Transferee all information regarding (a) the Transferred Notes and payments thereon, (b) the nature and performance of the Mortgage Loans and the Mortgaged Properties, (c) the Indenture and the Collateral, and (d) any other information with respect to the Transferred Notes, that the Transferee has requested.

Very truly yours,

(Transferor)

By:

Name:

Title:

EXHIBIT F

LIST OF AUTHORIZED SIGNATORIES

PLEDGOR

	Specimen Signature
Name
Title
Phone
E-mail Address
Name
Title
Phone
E-mail Address
SECURED PARTY
	Specimen Signature
Name
Title
Phone
E-mail Address
Name
Title
Phone
E-mail Address

EXHIBIT G

FORM OF TRUSTEE REPORT

EXHIBIT H

FORM OF ISSUER EXCEPTION REPORT

EXHIBIT I

FORM OF SERVICER NOTICE

EX-5.1

Exhibit 5.1

Morse, Zelnick, Rose & Lander, LLP

825 Third Avenue

New York 10022

_________ __, 201_

Manhattan Bridge Capital, Inc.

MBC Funding II Corp.

60 Cutter Mill Road

Great Neck, New York 11021

RE:      Registration on Form S-11

Gentlemen:

We have acted as special counsel to Manhattan Bridge Capital, Inc., a New York corporation (“MBC”) and MBC Funding II Corp., a New York corporation (“Funding”), in connection with the registration statement on Form S-11 (together, with the exhibits, thereto, the “Registration Statement”) to be filed on the date hereof by MBC and Funding with the U.S. Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended (the “Securities Act”). The Registration Statement relates to, among other things, the issuance and sale by Funding of up to $10,000,000 aggregate principal amount of its senior secured notes maturing ten years from the date of issuance (the “Notes”), the repayment of which, together with all accrued but unpaid interest thereon, will be fully and unconditionally guaranteed by MBC (the “Guarantee”). The Notes and the Guarantee will be issued by Funding and MBC, respectively, pursuant to the terms of an Indenture Agreement (together with the exhibits thereto, the “Indenture”), a form of which is included in the Registration Statement as Exhibit ___.

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act.

In rendering the opinions stated herein, we have examined and relied upon the following:

(i)           the Registration Statement, including all of the exhibits thereto;

(ii)          the form of Indenture filed as an exhibit to the Registration Statement;

(iii)         copies of actions by the unanimous written consent of the board of directors of Funding (the “Funding Board”), _______ __, 201_, as certified by __________, the corporate secretary of Funding;

(iv)         copies of actions by unanimous written consent of the board of directors of MBC (the “MBC Board”), dated ________ __, 2016, as certified by Stephen A. Zelnick, the assistant corporate secretary of MBC;

(v)          a certificate, dated ____________ __, 2016, from the Secretary of State of the State of New York as to Funding’s existence and good standing in such jurisdiction; and

(vi)         a certificate, dated ________ __, 2016, from the Secretary of State of the State of New York as to MBC’s existence and good standing in such jurisdiction.

We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the MBC and Funding and such agreements, certificates and receipts of public officials, certificates of officers or other representatives of the MBC, Funding and others, and such other documents as we have deemed necessary or appropriate as a basis for the opinions stated below.

In our examination, we have assumed the genuineness of all signatures, including endorsements, the legal capacity and competency of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as facsimile, electronic, certified or photostatic copies, and the authenticity of the originals of such copies. In making our examination of executed documents, we have assumed that the parties thereto, other than MBC and Funding, had the power, corporate or other, to enter into, deliver and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and the execution and delivery by such parties of such documents and, except as to the Funding or MBC, as the case may be, the validity and binding effect thereof on such parties. We have also assumed that each of MBC and Funding has been duly organized and is validly existing in good standing under the laws of its jurisdiction of organization, that MBC has duly authorized the actions taken in its capacity as the sole shareholder of Funding and that each of MBC and Funding has complied with all aspects of applicable laws of jurisdictions other than the United States of America and the State of New York in connection with the transactions contemplated by the Registration Statement to the extent a party thereto.

As to any facts relevant to the opinions stated herein that we did not independently establish or verify, we have relied upon statements and representations of officers and other representatives of MBC or Funding, as applicable and of public officials.

We do not express any opinion with respect to the laws of any jurisdiction other than (i) the laws of the State of New York and (ii) to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as “Opined on Law”). We do not express any opinion as to the effect of any non-Opined on Law on the opinions stated herein. The Notes and the Guarantee may be issued from time to time on a delayed or continuous basis, and this opinion is limited to the laws, including the rules and regulations, as in effect on the date hereof, which laws are subject to change with possible retroactive effect.

Based upon the foregoing and subject to the qualifications and assumptions stated herein, we are of the opinion that:

1.    With respect to the Notes, when (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), has become effective under the Securities Act; (ii) a “final” prospectus with respect to the Notes has been prepared, delivered and filed in compliance with the Securities Act and the applicable Rules and Regulations; (iii) the underwriting agreement with respect to the Notes has been duly authorized, executed and delivered by MBC and Funding, as applicable, and the other parties thereto; (iv) all necessary action, corporate or other, including any required action by the board of directors, or any authorized committee thereof, of (A) Funding, on behalf of Funding, or (B) MBC on behalf of MBC and/or in its capacity as the sole shareholder of Funding, or (C) any other action has been taken by MBC or Funding, as applicable, to approve the issuance, sale and terms of the Notes and related matters; (v) the Indenture has been duly authorized, executed and delivered by each party thereto; (vi) the terms of the Notes and of their issuance and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or the organizational or governing documents of MBC or Funding, as applicable, or result in a default under or breach of any agreement or instrument binding upon MBC and/or Funding, as applicable, and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over MBC and/or Funding, as applicable; and (v) the Notes have been duly executed, delivered and countersigned in accordance with the provisions of the Indenture and duly issued in accordance with the Indenture, and the underwriting agreement, the Notes will constitute valid and binding obligations of the Funding, enforceable against Funding in accordance with their respective terms under the laws of the State of New York.

2.    With respect to the Guarantee, when (i) the Registration Statement, as finally amended (including all necessary post-effective amendments), has become effective under the Securities Act; (ii) a final prospectus with respect to the Notes and the Guarantee has been prepared, delivered and filed in compliance with the Securities Act and the applicable Rules and Regulations; (iii) all necessary action, corporate or other, including any required action by the Funding Board, or any authorized committee thereof, or other action has been taken by Funding, to approve the issuance, sale and terms of the Notes; (iv) all necessary action, corporate or other, including any required action by the MBC Board, or any authorized committee thereof, on behalf of MBC and/or in its capacity as the sole shareholder of Funding, or other action has been taken by MBC, to approve the issuance, sale and terms of the Notes and the Guarantee; (v) the Indenture has been duly authorized, executed and delivered by each party thereto; (vi) the terms of the Guarantee and of its issuance and sale have been duly established in conformity with the Indenture so as not to violate any applicable law or the organizational or governing documents of MBC, or result in a default under or breach of any agreement or instrument binding upon MBC, and so as to comply with any requirement or restriction imposed by any court or governmental body having jurisdiction over MBC; (vii) an agreement reflecting the terms of the Guarantee has been duly executed, delivered and countersigned in accordance with the provisions of the Indenture and duly issued in accordance with the Indenture and the underwriting agreement,; and (viii) the Notes have been duly executed, authenticated, issued and delivered in accordance with the provisions of the Indenture and the definitive underwriting or similar agreement approved by the MBC Board and the Funding Board, upon payment of the consideration therefor provided for therein, the Guarantee will constitute valid and binding obligations of MBC, enforceable against MBC, in accordance with its terms under the laws of the State of New York.

The opinions stated herein are subject to the following qualifications:

(a)   the opinions stated herein are limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer, preference and other similar laws affecting creditors’ rights generally, and by general principles of equity (regardless of whether enforcement is sought in equity or at law);

(b)   we do not express any opinion with respect to any law, rule or regulation that is applicable to any party to the applicable Indenture or the transactions contemplated thereby solely because such law, rule or regulation is part of a regulatory regime applicable to any such party or any of its affiliates as a result of the specific assets or business operations of such party of such affiliates;

(c)   except to the extent expressly stated in the opinions contained herein, we have assumed that the Indenture constitutes the valid and binding obligation of each party to such Indenture, enforceable against such party in accordance with its terms;

(d)   we do not express any opinion with respect to the enforceability of any provision contained in the Indenture relating to any indemnification, contribution, exculpation, release or waiver that may be contrary to public policy or violative of federal or state securities laws, rules or regulations;

(e)   we do not express any opinion with respect to the enforceability of any provision of the Indenture to the extent that such section purports to bind MBC and/or Funding, as applicable, to the exclusive jurisdiction of any particular federal, state or other court or courts;

(f)   we do not express any opinion as to the enforceability of the Guarantee to the extent that the terms of such Guarantee provide that the obligations of MBC are absolute and unconditional irrespective of the enforceability or genuineness of the Notes and the Indenture or the effect thereof on the opinions stated herein;

(g)   we do not express any opinion with respect to the enforceability of any provisions contained in the Indenture to the extent that such provisions limit the obligation of MBC and/or Funding under such Indenture or any right of contribution of any party with respect to the Guarantee;

(h)   we call to your attention that irrespective of the agreement of the parties to the Indenture, a court may decline to hear a case on grounds of forum non conveniens or other doctrine limiting the availability of such court as a forum for resolution of disputes; in addition, we call to your attention that we do not express any opinion with respect to the subject matter jurisdiction of the federal, state or other courts in any action arising out of or relating to the Indenture; and

(i)    to the extent that any opinion relates to the enforceability of the choice of New York law and choice of New York forum provisions contained in the Indenture, the opinions stated herein are subject to the qualification that such enforceability may be subject to, in each case, (i) the exceptions and limitations in New York General Obligations Law sections 5-1401 and 5-1402 and (ii) principles of comity or constitutionality.

In rendering the opinions set forth above, we have assumed that the execution and delivery by MBC and Funding, respectively, of the Indenture and the performance by each of MBC and Funding of their respective obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which MBC, Funding or their respective properties is subject, except for those agreements and instruments that are listed in Part II of the Registration Statement.

We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also hereby consent to the reference to our firm under the heading “Legal Matters” in the prospectus forming part of the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the Rules and Regulations promulgated thereunder. This opinion is expressed as of the date hereof unless otherwise expressly stated, and we disclaim any undertaking to advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws.

Very truly yours,

/s/ Morse, Zelnick, Rose & Lander, LLP

EX-8.1

Exhibit 8.1

Morse, Zelnick, Rose & Lander, LLP

825 Third Avenue

New York 10022

_________ __, 201_

Manhattan Bridge Capital, Inc.

MBC Funding II Corp.

60 Cutter Mill Road

Great Neck, New York 11021

RE:      Registration on Form S-11

Gentlemen:

You have requested our opinion concerning certain federal income tax matters with respect to MBC Funding II Corp. (“Funding”), a wholly-owned subsidiary of Manhattan Bridge Capital, Inc. (“MBC”) in connection with the Form S-11 registration statement of the MBC and Funding to be filed with the U.S. Securities and Exchange Commission (the “SEC”) on or about _______ __, 201_ (together with the exhibits thereto, the “Registration Statement”).

The opinions expressed below are based, in part, upon (i) various assumptions and factual representations set forth in the Registration Statement (including the prospectus relating thereto), in registration statements on Forms S-11 and S-3 previously filed by MBC with the SEC and in a letter delivered to us by the Company today (the “Representation Letter”), and (ii) our review of such other documents as we have considered necessary or appropriate as a basis for rendering this opinion. We have not made any independent investigation of the facts set forth in any of these documents. We are not, however, aware of any material facts or circumstances contrary to or inconsistent with the representations we have relied upon as described herein or other assumptions set forth herein. We have assumed that (i) all representations made in the Representation Letter to the best of the knowledge of any person are true, correct and complete as if made without such qualification and (ii) no action will be taken by the Company that is inconsistent with the Company’s status as a real estate investment trust (a “REIT”) under the Internal Revenue Code of 1986, as amended (the “Code”), for any period prior or subsequent to the date hereof. The opinions expressed below are also based upon the Code, the Treasury Regulations promulgated thereunder (including temporary and proposed regulations) and existing administrative and judicial interpretations thereof (including private letter rulings issued by the Internal Revenue Service (the “IRS”), which are not binding on the IRS except with respect to a taxpayer receiving such a ruling), all as they exist at the date of this letter. All of the foregoing statutes, regulations and interpretations are subject to change, in some circumstances with retroactive effect. Any changes to the foregoing authorities might result in modifications of our opinions contained herein.

Based on the foregoing, we are of the opinion that:

(i) Commencing with MBC’s taxable year ended December 31, 2014, MBC was organized and has been operated in conformity with the requirements for qualification and taxation as a REIT under the Code and the proposed method of operation of MBC will enable MBC to continue to meet the requirements for qualification and taxation as a REIT under the Code.

(ii) The statements contained in the Registration Statement under the captions “Material United States Federal Income Tax Consequences” and “Restrictions on Ownership of Capital Stock” that describe applicable U.S. federal income tax law and legal conclusions with respect thereto are correct in all material respects as of the date hereof.

We express no opinion with respect to the transactions described herein or in the Registration Statement other than those opinions expressly set forth herein. Furthermore, MBC’s qualification as a REIT will depend upon MBC meeting, in its actual operations, the applicable asset composition, source of income, shareholder diversification, distribution and other requirements of the Code and Treasury Regulations necessary for a corporation to qualify as a REIT. We will not review these operations and no assurance can be given that the actual operations of MBC and its affiliates will meet these requirements or the representations made to us with respect thereto for any taxable year.

This opinion letter is furnished to you for your use in connection with the Registration Statement. We hereby consent to the filing of this opinion as Exhibit 8.1 to the Registration Statement. We also consent to the references to our name in connection with the material discussed in the Registration Statement under the captions “Material United States Federal Income Tax Consequences” and “Legal Matters.” In giving this consent, we do not admit that we are in the category of persons whose consent is required by Section 7 of the Securities Act of 1933, as amended, or the rules and regulations promulgated thereunder by the SEC.

Very truly yours,

/s/ Morse, Zelnick, Rose & Lander, LLP

EX-23.1

Exhibit 23.1 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this registration statement on Amendment No. 1 to Form S-11 of our report dated March 18, 2015, relating to the consolidated financial statements of Manhattan Bridge Capital, Inc. as of December 31, 2014, and for the year then ended (which report expresses an unqualified opinion on the financial statements) appearing in the prospectus, which is part of this registration statement. We also consent to the reference to us under the heading “Experts” in such prospectus.

/s/ Hoberman & Lesser, CPAs, LLP

Hoberman & Lesser, CPAs, LLP

January 26, 2016

EX-23.2

Exhibit 23.2 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the use in this registration statement on Amendment No. 1 to Form S-11 of our report dated March 21, 2014, relating to the consolidated financial statements of Manhattan Bridge Capital, Inc. as of December 31, 2013, and for the year then ended (which report expresses an unqualified opinion on the financial statements) appearing in the prospectus, which is part of this registration statement. We also consent to the reference to us under the heading “Experts” in such prospectus.

/s/ Hoberman, Goldstein & Lesser, CPAs, P.C.

Hoberman, Goldstein & Lesser, CPAs, P.C.

January 26, 2016