exv10w39




EXHIBIT 10.39





EXECUTION VERSION




THIRD AMENDMENT AND WAIVER TO

FIRST AMENDED AND RESTATED CREDIT AGREEMENT

(Wachovia/Arbor)




     THIS THIRD AMENDMENT AND WAIVER TO FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
January 20, 2010 (this “Amendment No. 3”), is entered into by and among ARBOR REALTY
FUNDING LLC, a Delaware limited liability company (together with its successors and permitted
assigns, “Arbor Realty Funding”), as a borrower, ARSR TAHOE, LLC, a Delaware limited
liability company (together with its successors and permitted assigns, “ARSR Tahoe”), as a
borrower, ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited partnership (together with its
successors and permitted assigns, “Arbor Realty”), as a borrower, ART 450 LLC, a Delaware
limited liability company (together with its successors and permitted assigns, “ART 450”),
as a borrower, ARBOR REALTY SR, INC., a Maryland corporation (together with its successors and
permitted assigns, “ARSR”), as a borrower, ARBOR ESH II LLC (together with its successors
and permitted assigns, “Arbor ESH” and, together with Arbor Realty Funding, ARSR Tahoe,
Arbor Realty and ARSR, each individually referred to herein as a “Borrower” and
collectively referred to herein as the “Borrowers”), as a borrower, ARBOR REALTY TRUST,
INC., a Maryland corporation (together with its successors and permitted assigns, “ART”),
as a guarantor, Arbor Realty, as a guarantor, ARSR, as a guarantor (ARSR, together with ART and
Arbor Realty, the “Guarantors”), the several banks and other financial institutions party
to the Credit Agreement (each, together with its successors and assigns, a “Lender” and,
collectively, the “Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as administrative agent for the Lenders (together with its successors and assigns in
such capacity, the “Administrative Agent”), and consented to by ARSR, as the pledgor
(together with its successors and permitted assigns, the “Pledgor”). Capitalized terms
used and not otherwise defined herein shall have the meanings given to such terms in the Credit
Agreement (as defined below and as amended hereby).



R E C I T A L S




     WHEREAS, the Borrowers, the Guarantors, the Lenders and the Administrative Agent are parties
to that certain First Amended and Restated Credit Agreement, dated as of July 23, 2009 (as amended,
modified, restated, replaced, waived, substituted, supplemented or extended from time to time,
including pursuant to that First Amendment to First Amended and Restated Credit Agreement and Other
Credit Documents, dated as of December 16, 2009, that Second Amendment to First Amended and
Restated Credit Agreement, dated as of December 24, 2009 and by this Amendment No. 3, the
"Credit Agreement”);



     WHEREAS, the Borrowers and the Guarantors desire to make certain modifications to the Credit
Agreement;



     WHEREAS, the Borrowers and the Guarantors have requested that the Administrative Agent and the
Lenders waive certain provisions in the Credit Agreement;



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     WHEREAS, the Administrative Agent and the Lenders are willing to waive certain provisions of
and modify the Credit Agreement as requested by the Borrowers and the Guarantors on the terms and
conditions specified herein;



     WHEREAS, each Guarantor desires to evidence its agreement to the amendments and modifications
set forth herein and to reaffirm its obligations under the Guaranty; and



     WHEREAS, the Pledgor is a party to other Credit Documents and related agreements that may be
affected, directly or indirectly, by this Amendment No. 3 and desires to evidence its agreement to
the amendments and modifications set forth herein.



     NOW THEREFORE, in consideration of the foregoing recitals, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:



     Section 1. Waiver.



     The Borrowers and the Guarantors acknowledge and agree that ART has not complied with the
Financial Covenant related to Tangible Net Worth contained in Subsection 5.9(b) of the
Credit Agreement for the Test Period ending December 31, 2009 and may not comply with such
Financial Covenant in 2010 (the “Acknowledged Non-Compliance”). Notwithstanding such
Acknowledged Non-Compliance, the Administrative Agent and the Lenders hereby agree to waive, solely
through the Payoff Date, the Acknowledged Non-Compliance. All parties acknowledge and agree that
the Administrative Agent’s and the Lenders’ one-time waiver of the Acknowledged Non-Compliance as
set forth herein shall not be deemed to be a waiver of any other term, provision, duty, obligation,
liability, right, power, remedy or covenant of any party to the Credit Documents or a waiver of any
other non-compliance with Subsection 5.9(b) of the Credit Agreement or any other Financial
Covenant for any other period of time. The waiver set forth herein shall be effective only to the
extent specifically set forth herein and shall not (a) be construed as a waiver of any breach or
default other than as specifically waived herein nor as a waiver of any breach or default of which
the Administrative Agent or the Lenders have not been informed by the Borrowers, the Guarantors or
the Pledgor, (b) affect the right of the Administrative Agent and/or the Lenders to demand
compliance by the Borrowers, the Guarantors and the Pledgor with all terms and conditions of the
Credit Documents, except as specifically modified or waived by this Amendment No. 3, (c) be deemed
a waiver of any transaction or future action on the part of the Borrowers, the Guarantors or the
Pledgor requiring the Administrative Agent’s, the Lenders’ or the Required Lenders’ consent or
approval under the Credit Documents, or (d) except as waived hereby, be deemed or construed to be a
waiver or release of, or a limitation upon, the Administrative Agent’s or the Lenders’ exercise of
any rights or remedies under the Credit Agreement or any other Credit Document, whether arising as
a consequence of any Event of Default which may now exist or otherwise, all such rights and
remedies hereby being expressly reserved.



     Section 2. Amendments to Credit Agreement.



     (a) The definition of “Excess Principal Amount” contained in Section 1.1 of the Credit
Agreement is hereby amended and restated in its entirety as follows:



     ““Excess Principal Amount” means the excess, if any, of (a) the amount of any
repayment or prepayment (in whole or in part) received by the Borrower from or on behalf of the
related Obligor in connection with, or purchase price paid by a third party (which may be an
Affiliate of the Borrower) for



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all or a portion of, a Pledged Mortgage Asset over (b) the amount the Borrowers are required
to pay to the Lender in connection with such repayment, prepayment or release in accordance with
Section 2.5(b)(vi).”




     (b) Clauses (FOURTH), (FIFTH) and (SIXTH) of Subsection 2.9(a)(ii) of the Credit
Agreement are hereby amended and restated in its entirety as:



     “FOURTH, without limiting the Borrowers’ obligations to make mandatory prepayments or other
principal payments under Section 2.2(b), Section 2.5(b) or any other provision of the Credit
Documents in a timely manner as provided in this Article II, pari passu and pro rata (based on the
amounts owed to such Persons under this clause) for the payment of the amounts and Loans provided
for in Section 2.2(b), Section 2.5(b) or any other provision of the Credit Documents;



     FIFTH, [reserved];



     “SIXTH, [reserved];”



     Section 3. Credit Documents in Full Force and Effect as Modified.



     Except as specifically modified hereby, the Credit Documents shall remain in full force and
effect in accordance with their terms. All references to any Credit Document shall be deemed to
mean each Credit Document as modified by this Amendment No. 3. This Amendment No. 3 shall not
constitute a novation of the Credit Documents, but shall constitute modifications thereof. The
parties hereto agree to be bound by the terms and conditions of the Credit Documents, as modified
by this Amendment No. 3, as though such terms and conditions were set forth herein. Each of the
Borrowers, the Guarantors and the Pledgor hereby ratifies the Credit Agreement and the other Credit
Documents and acknowledges and reaffirms (a) that it is bound by all terms of the Credit Agreement
and the other Credit Documents applicable to it and (b) that it is responsible for the observance
and full performance of its respective Obligations. This Amendment No. 3 is a Credit Document
executed pursuant to the Credit Agreement and shall be construed, administered and applied in
accordance with the terms and provisions of the Credit Agreement.



     Section 4. Representations.



     Each of the Borrowers, the Guarantors and the Pledgor represents and warrants, as of the date
of this Amendment No. 3, as follows:



     (a) it is duly incorporated or organized, validly existing and in good standing under the laws
of its jurisdiction of organization and each jurisdiction where it conducts business;



     (b) the execution, delivery and performance by it of this Amendment No. 3 is within its
corporate, company or partnership powers, has been duly authorized and does not contravene (1) its
Authority Documents or its applicable resolutions, (2) any Requirements of Law or (3) any
Contractual Obligation, Indebtedness or Guarantee Obligation;



     (c) no consent, license, permit, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority or other Person is required in connection with the
execution, delivery, performance, validity or enforceability by or against it of this Amendment No.
3;



     (d) this Amendment No. 3 have been duly executed and delivered by it;



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     (e) this Amendment No. 3 and each of the Credit Documents as modified thereby constitute its
legal, valid and binding obligation, enforceable against it in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors’ rights generally or by general principles of
equity;



     (f) the Security Documents continue to create a valid security interest in, and Lien upon, the
Collateral, in favor of the Administrative Agent, for the benefit of the Secured Parties, which
security interests and Liens are perfected in accordance with the terms of the Security Documents
and prior to all Liens subject to Permitted Liens;



     (g) no Default or Event of Default exists or will exist after giving effect to this Amendment
No. 3;



     (h) each of the Credit Documents is in full force and effect and neither the Borrowers, the
Guarantors nor the Pledgor has any defense, offset, counterclaim, abatement, right of rescission or
other claims, actions, causes of action, demands, damages or liabilities of any kind or nature, in
all cases whether legal or equitable, available to the Borrowers, the Guarantors, the Pledgor or
any other Person with respect to (i) this Amendment No. 3, the Credit Agreement, the Credit
Documents or any other instrument, document and/or agreement described herein or therein, as
modified and amended hereby, (ii) the obligation of the Borrowers and the Guarantors to repay the
Obligations and other amounts due under the Credit Documents or (iii) the Administrative Agent, the
Lenders or the Administrative Agent’s or the Lenders’ respective officers, employees,
representatives, agents, counsel or directors arising out of or from or in any way related to or in
connection with the Credit Agreement or the Credit Documents, including, without limitation, any
action by such Persons, or failure of such Persons to act, under the Credit Agreement or the other
Credit Documents on or prior to the date hereof; and



     (i) except as specifically provided in this Amendment No. 3, the Obligations are not reduced
or modified by this Amendment No. 3.



     Section 5. Conditions Precedent.



     The effectiveness of this Amendment No. 3 is subject to the following conditions precedent:
(i) delivery to the Administrative Agent of this Amendment No. 3 duly executed by each of the
parties hereto; (ii) the payment of all legal fees and expenses of Moore & Van Allen PLLC, as
counsel to the Administrative Agent, in the amount to be set forth on a separate invoice; and (iii)
delivery to the Administrative Agent of such other documents, agreements or certifications as the
Administrative Agent may reasonably require.



     Section 6. Miscellaneous.



     (a) This Amendment No. 3 may be executed in any number of counterparts (including by
facsimile), and by the different parties hereto on the same or separate counterparts, each of which
shall be deemed to be an original instrument but all of which together shall constitute one and the
same agreement.



     (b) The descriptive headings of the various sections of this Amendment No. 3 are inserted for
convenience of reference only and shall not be deemed to affect the meaning or construction of any
of the provisions hereof.




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     (c) This Amendment No. 3 may not be amended or otherwise modified, waived or supplemented
except as provided in the Credit Agreement.



     (d) The interpretive provisions of Sections 1.2 through 1.8 of the Credit
Agreement are incorporated herein mutatis mutandis.



     (e) This Amendment No. 3 represents the final agreement among the parties and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral agreements between the
parties. There are no unwritten oral agreements between the parties.



     (f) THIS AMENDMENT NO. 3 AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT
NO. 3 SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.



     (g) Each provision of this Amendment No. 3 shall be valid, binding and enforceable to the
fullest extent permitted by Requirements of Law. In case any provision in or obligation under this
Amendment No. 3 shall be invalid, illegal or unenforceable in any jurisdiction (either in its
entirety or as applied to any Person, fact, circumstance, action or inaction), the validity,
legality and enforceability of the remaining provisions or obligations, or of such provision or
obligation in any other jurisdiction or as applied to any Person, fact, circumstance, action or
inaction, shall not in any way be affected or impaired thereby.



     (h) In consideration of the Lenders and the Administrative Agent entering into this Amendment
No. 3, each of the Borrowers, each of the Guarantors and the Pledgor hereby waives, releases and
discharges the Administrative Agent, the Lenders and the Administrative Agent’s and the Lenders’
respective officers, employees, representatives, agents, counsel and directors from any and all
actions, causes of action, claims, demands, damages and liabilities of whatever kind or nature, in
law or in equity, now known or unknown, suspected or unsuspected to the extent that any of the
foregoing arises out of or from or in any way relating to or in connection with the Credit
Agreement or the Credit Documents, including but not limited to, any action or failure to act under
the Credit Agreement or the other Credit Documents on or prior to the date hereof, except, with
respect to any such Person being released hereby, any actions, causes of action, claims, demands,
damage and liabilities arising out of such Person’s gross negligence or willful misconduct in
connection with the Credit Agreement or the other Credit Documents.



     (i) Each Guarantor (i) agrees to and consents to the terms and provisions of this Amendment
No. 3, (ii) acknowledges and confirms that the Guaranty remains in full force and effect
notwithstanding this Amendment No. 3, and (iii) reaffirms its obligations under the Guaranty.



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     IN WITNESS WHEREOF, the parties have caused this Amendment No. 3 to be executed by their
respective officers thereunto duly authorized, as of the date first above written.



	 	 	 	 	 
	BORROWERS:	 ARBOR REALTY FUNDING, LLC, a Delaware 

limited liability company

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARSR TAHOE, LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR REALTY LIMITED PARTNERSHIP,
a Delaware limited
partnership

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ART 450 LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR REALTY SR, INC., a Maryland corporation

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR ESH II LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 



[Signatures Continued on the Following Page]




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	GUARANTORS:	 ARBOR REALTY TRUST, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR REALTY LIMITED PARTNERSHIP,

a Delaware limited partnership

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR REALTY SR, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 



[Signatures Continued on the Following Page]





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	ADMINISTRATIVE AGENT:	 WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent on behalf of the Lenders

 	 
	 	By:  	/s/ John Nelson
 	 
	 	 	Name:  	John Nelson 	 
	 	 	Title:  	Managing Director 	 
	 



	 	 	 	 	 
	LENDER:	 WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender

 

	 
	 	By:  	/s/ John Nelson
 	 
	 	 	Name:  	John Nelson 	 
	 	 	Title:  	Managing Director 	 
	 



[Signatures Continued on the Following Page]




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CONSENTED TO BY:




	 	 	 	 	 
	PLEDGOR:	 ARBOR REALTY SR, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ John Natalone
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 



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