exv10w34






Exhibit 10.34






 





U.S. $57,164,228.00




FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT




by and among




ARBOR REALTY TRUST, INC.,

as a Borrower




ARBOR REALTY GPOP, INC.,

as a Borrower




ARBOR REALTY LPOP, INC.,

as a Borrower




ARBOR REALTY LIMITED PARTNERSHIP,

as a Borrower




ARBOR REALTY SR, INC.,

as a Borrower




ARBOR REALTY COLLATERAL MANAGEMENT, LLC,

as a Borrower




EACH OTHER BORROWER THAT BECOMES A PARTY HERETO,

each as a Borrower




EACH OF THE GUARANTORS THAT BECOMES A PARTY HERETO,

each as a Guarantor




WACHOVIA BANK, NATIONAL ASSOCIATION,

in its capacity as Initial Lender and in its capacity as Administrative Agent




and




EACH OF THE OTHER LENDERS THAT BECOMES A PARTY HERETO,

each as a Lender




Dated as of July 23, 2009




 






 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page
	ARTICLE I DEFINITIONS
	 	 	2	 
	Section 1.1 Certain Defined Terms
	 	 	2	 
	Section 1.2 Other Terms
	 	 	28	 
	Section 1.3 Computation of Time Periods
	 	 	28	 
	Section 1.4 Interpretation
	 	 	29	 
	 
	 	 	 	 
	ARTICLE II THE LOANS
	 	 	30	 
	Section 2.1 Loans
	 	 	30	 
	Section 2.2 Mandatory Prepayments
	 	 	33	 
	Section 2.3 Optional Prepayments
	 	 	35	 
	Section 2.4 [Reserved]
	 	 	35	 
	Section 2.5 Payment of Interest
	 	 	35	 
	Section 2.6 Pro Rata Treatment and Payments
	 	 	36	 
	Section 2.7 Accounts; Payments
	 	 	36	 
	Section 2.8 Non-Receipt of Funds by the Administrative Agent
	 	 	37	 
	Section 2.9 Payments by Borrowers
	 	 	38	 
	Section 2.10 Fees
	 	 	39	 
	Section 2.11 Increased Costs; Capital Adequacy; Illegality
	 	 	40	 
	Section 2.12 Taxes
	 	 	41	 
	Section 2.13 Designation of a Different Lending Office
	 	 	42	 
	Section 2.14 Usury
	 	 	42	 
	 
	 	 	 	 
	ARTICLE III CONDITIONS TO TRANSACTIONS
	 	 	43	 
	Section 3.1 Conditions to Restatement Date
	 	 	43	 
	Section 3.2 Conditions Precedent to all Loans
	 	 	46	 
	 
	 	 	 	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	48	 
	Section 4.1 Representations and Warranties
	 	 	48	 
	 
	 	 	 	 
	ARTICLE V COVENANTS
	 	 	57	 
	Section 5.1 Covenants
	 	 	57	 
	 
	 	 	 	 
	ARTICLE VI [RESERVED]
	 	 	71	 
	 
	 	 	 	 
	ARTICLE VII JOINT AND SEVERAL LIABILITY
	 	 	71	 
	Section 7.1 Joint and Several Liability; Full Recourse Obligations
	 	 	71	 
	 
	 	 	 	 
	ARTICLE VIII SECURITY INTEREST
	 	 	73	 
	Section 8.1 Security Interest
	 	 	73	 
	Section 8.2 Release of Lien on Collateral
	 	 	74	 
	Section 8.3 Further Assurances
	 	 	75	 
	Section 8.4 Remedies
	 	 	75	 
	Section 8.5 Waiver of Certain Laws
	 	 	75	 
	Section 8.6 Administrative Agent’s Duty of Care
	 	 	76	 
	 
	 	 	 	 
	ARTICLE IX POWER OF ATTORNEY
	 	 	76	 
	Section 9.1 Administrative Agent’s Appointment as Attorney-in-Fact
	 	 	76	 
	 
	 	 	 	 
	ARTICLE X EVENTS OF DEFAULT
	 	 	77	 
	Section 10.1 Events of Default
	 	 	78	 
	Section 10.2 Remedies
	 	 	81	 
	Section 10.3 Waiver
	 	 	84	 
	Section 10.4 Determination of Events of Default
	 	 	84	 
	 
	 	 	 	 
	 i







 









 






	 	 	 	 	 
	 	 	Page
	ARTICLE XI INDEMNIFICATION
	 	 	84	 
	Section 11.1 Indemnities by the Borrowers
	 	 	84	 
	Section 11.2 After–Tax Basis
	 	 	86	 
	 
	 	 	 	 
	ARTICLE XII THE ADMINISTRATIVE AGENT
	 	 	86	 
	Section 12.1 Appointment
	 	 	86	 
	Section 12.2 Delegation of Duties
	 	 	86	 
	Section 12.3 Exculpatory Provisions
	 	 	87	 
	Section 12.4 Reliance by Administrative Agent
	 	 	87	 
	Section 12.5 Notice of Default
	 	 	87	 
	Section 12.6 Non-Reliance on Administrative Agent and Other Lenders
	 	 	88	 
	Section 12.7 Indemnification
	 	 	88	 
	Section 12.8 The Administrative Agent in Its Individual Capacity
	 	 	89	 
	Section 12.9 Successor Administrative Agent
	 	 	89	 
	Section 12.10 Other Administrative Agents
	 	 	89	 
	 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS
	 	 	90	 
	Section 13.1 Amendments, Waivers and Release of Collateral
	 	 	90	 
	Section 13.2 Notices, Etc.
	 	 	92	 
	Section 13.3 Set-offs
	 	 	92	 
	Section 13.4 No Waiver; Remedies
	 	 	93	 
	Section 13.5 Binding Effect
	 	 	93	 
	Section 13.6 Term of this Agreement
	 	 	93	 
	Section 13.7 Governing Law
	 	 	93	 
	Section 13.8 Waivers
	 	 	93	 
	Section 13.9 Costs, Expenses and Taxes
	 	 	95	 
	Section 13.10 Legal Matters
	 	 	96	 
	Section 13.11 Recourse Against Certain Parties
	 	 	96	 
	Section 13.12 Protection of Right, Title and Interest in the Collateral; Further
Action Evidencing Loans
	 	 	97	 
	Section 13.13 Confidentiality
	 	 	98	 
	Section 13.14 Execution in Counterparts; Severability; Integration
	 	 	99	 
	Section 13.15 Borrowers Waiver of Setoff
	 	 	99	 
	Section 13.16 Assignments and Participations
	 	 	99	 
	Section 13.17 Heading and Exhibits
	 	 	101	 
	Section 13.18 Single Agreements
	 	 	101	 
	Section 13.19 Periodic Due Diligence Review
	 	 	102	 
	Section 13.20 Use of Employee Plan Assets
	 	 	102	 
	Section 13.21 Adjustments
	 	 	102	 
	Section 13.22 Filings, Recordation, etc.
	 	 	103	 
	Section 13.23 Resolution of Drafting Ambiguities
	 	 	103	 
	Section 13.24 Character of Loans for Income Tax Purposes
	 	 	103	 
	Section 13.25 Amendment and Restatement
	 	 	103	 
	Section 13.26 Modification of Other Loan Documents
	 	 	104	 






 ii





 









 





SCHEDULES




	 	 	 	 	 
	Schedule 1

	 	-
	 	Accounts
	Schedule 2

	 	-
	 	Commitments
	Schedule 3

	 	-
	 	Addresses
	Schedule 4.1(cc)

	 	-
	 	List of Contingent Liabilities
	Schedule 4.1(ff)

	 	-
	 	List of Existing Financing Facilities
	Schedule 4.1(ll)

	 	-
	 	Organizational Chart of the Borrowers






EXHIBITS




	 	 	 	 	 
	Exhibit I

	 	-
	 	Revolving Note
	Exhibit II

	 	-
	 	Form of Notice of Borrowing
	Exhibit III

	 	-
	 	Form of Confirmation
	Exhibit IV

	 	-
	 	Form of Closing Certificate of Borrower/Guarantor
	Exhibit V

	 	-
	 	Compliance Certificate
	Exhibit VI–1

	 	-
	 	Form of Irrevocable Instruction
	Exhibit VI–2

	 	 	 	Form of Irrevocable Instruction
	Exhibit VII

	 	-
	 	Form of Servicer Redirection Notice
	Exhibit VIII

	 	-
	 	Power of Attorney
	Exhibit IX

	 	-
	 	Form of Commitment Transfer Supplement
	Exhibit X

	 	-
	 	Form of Joinder Agreement
	Exhibit XI

	 	-
	 	Form of Account Control Agreement






 iii





 









 





FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT




     THIS FIRST AMENDED AND RESTATED REVOLVING LOAN AGREEMENT (as amended, modified, waived,
supplemented, extended, restated or replaced from time to time, this “Agreement”) is made
as of this 23rd day of July, 2009, by and among:



     (1) ARBOR REALTY TRUST, INC., a Maryland corporation, as a borrower (together with its
successors and permitted assigns, “ART”);



     (2) ARBOR REALTY GPOP, INC., a Delaware corporation, as a borrower (together with its
successors and permitted assigns, “GPOP”);



     (3) ARBOR REALTY LPOP, INC., a Delaware corporation, as a borrower (together with its
successors and permitted assigns, “LPOP”);



     (4) ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited partnership, as a borrower (together
with its successors and permitted assigns, “ARLP”);



     (5) ARBOR REALTY SR, INC., a Maryland corporation, as a borrower (together with its successors
and permitted assigns, “ARSR”);



     (6) ARBOR REALTY COLLATERAL MANAGEMENT, LLC, a Delaware limited liability company, as a
borrower (together with its successors and permitted assigns, “ARCM”);



     (7) EACH OTHER BORROWER THAT BECOMES A PARTY HERETO, each as a Borrower;



     (8) EACH OF THE GUARANTORS THAT BECOMES A PARTY HERETO, each as a guarantor (in such capacity,
together with its successors and permitted assigns, each a “Guarantor”);



     (9) WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association (together with its
successors and assigns, “Wachovia”), in its capacity as initial lender (together with its
successors and assigns in such capacity, the “Initial Lender”), and in its capacity as
administrative agent (together with its successors and assigns in such capacity, the
“Administrative Agent”); and



     (10) EACH OF THE LENDERS THAT BECOMES A PARTY HERETO, each as a lender (together with their
successors and assigns, each a “Lender” and collectively with the Initial Lender, the
“Lenders”).



R E C I T A L S




     WHEREAS, the Borrowers, the Lender, the Administrative Agent and the Guarantors that become a
party thereto are parties to that certain Revolving Loan Agreement, dated as of June 11, 2007, as
amended by the First Amendment to the Revolving Loan Agreement, dated as of November 6, 2007, the
Second Amendment to the Revolving Loan Agreement, dated as of June 9, 2008, the Third Amendment to
the Revolving Loan Agreement, dated as of June 26, 2008, the Fourth Amendment to the Revolving Loan
Agreement, dated as of July 9, 2008, the Fifth Amendment to the Revolving Loan Agreement, dated as
of September 30, 2008, the Sixth Amendment to the Revolving Loan Agreement,




 









 







dated as of December 31, 2008, the Seventh Amendment to the Revolving Loan Agreement, dated as
of December 31, 2008 and the Eighth Amendment to the Revolving Loan Agreement, dated as of June 8,
2009 (the “Original Agreement”);



     WHEREAS, the Borrowers, the Guarantors, the Lenders and the Administrative Agent desire to
amend and restate the Original Agreement in several respects.



     NOW, THEREFORE, based upon the foregoing Recitals, the mutual premises and agreements
contained herein, and other good and valuable consideration the receipt and sufficiency of which is
hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:



ARTICLE I




DEFINITIONS




     Section 1.1 Certain Defined Terms.



     (a) Certain capitalized terms used throughout this Agreement are defined above or in this
Article I.



     (b) As used in this Agreement and the schedules, exhibits and other attachments hereto, unless
the context requires a different meaning, the following terms shall have the following meanings:


“40 Act”: The Investment Company Act of 1940, as amended from time to time.



“450 Transaction”: The Preferred Equity Interests of ART and/or one or more of its
Consolidated Subsidiaries in AT 450 I LLC and AT 450 II LLC.



“Account Beneficiaries”: The Lenders and the Borrowers (but, in the case of the Borrowers,
solely to the extent any such Borrower shall have a right to receive amounts from the Collection
Account in accordance with Subsection 2.7(b) hereof).



“Account Control Agreement”: An amended and restated letter agreement, dated as of the
Restatement Date, among the Borrowers, the Administrative Agent and Wachovia, substantially in the
form of Exhibit XI attached hereto, regarding the Administrative Agent’s control over the
Collection Account and the CDO Management Fee Account.



“Accrual Period”: With respect to the first Payment Date, the period from and including
the applicable Borrowing Date to but excluding such first Payment Date, and, with respect to any
subsequent Payment Date, the period from and including the previous Payment Date to but excluding
such subsequent Payment Date.



“ACM”: Arbor Commercial Mortgage, LLC, a New York limited liability company.



“Additional Amount”: Defined in Subsection 2.12(a) of this Agreement.



“Additional Collateral”: Eligible Assets that are from time to time pledged to the
Administrative Agent, on behalf of the Lenders, as Collateral for the Loans and the other
Obligations (in each case excluding any Retained Interests).




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


2









 







“Additional Term Loan Collateral” Has the meaning set forth in the Arbor Credit Agreement.



“Adjusted Eurodollar Rate”: For any Eurodollar Period, a rate per annum equal to a
fraction, expressed as a percentage and rounded upwards (if necessary) to the nearest 1/100 of 1%,
(i) the numerator of which is equal to the Eurodollar Rate for such Eurodollar Period and (ii) the
denominator of which is equal to 100% minus the Eurodollar Reserve Percentage for such
Eurodollar Period.



“Adjusted Tangible Net Worth”: Tangible Net Worth plus the aggregate principal
amount outstanding under the Eligible Subordinated Debt plus deferred revenues relating to
the 450 Transaction to the extent classified as a liability according to GAAP.



“Administrative Agent”: Defined in the Preamble to this Agreement.



“Administrative Agent’s Account”: An account of the Administrative Agent disclosed to the
Borrower from time to time.



“Advance Rate”: The applicable advance rate set forth in Schedule 1-B to the Fee
Letter or such other advance rate set forth in the related Confirmation, provided that any advance
rate set forth in the Confirmation shall control over any applicable advance rate set forth in the
Fee Letter.



“Affected Party”: The Administrative Agent, each Lender, each Indemnified Party and the
transferees, pledgees, participants, successors and assigns of each of the foregoing, as
applicable.



“Affiliate”: With respect to a Person, means any other Person that, directly or
indirectly, controls, is controlled by or is under common control with such Person, or is a
director of such Person. For purposes of this definition, “control” (including the terms
“controlling”, “controlled by” and “under common control with”) when used with respect to any
specified Person means the possession, direct or indirect, of the power to vote 20% or more of the
voting securities of such Person or to direct or cause the direction of the management or policies
of such Person, whether through the ownership of voting securities, by contract or otherwise.



“Aggregate Outstanding Principal”: As of any day, the aggregate principal amount then
outstanding under the Revolving Notes.



“Aggregate Unpaids”: At any time, an amount equal to the sum of the Aggregate Outstanding
Principal, the aggregate unpaid and accrued Interest, Breakage Costs, Due Diligence Costs,
Increased Costs, Other Costs, Taxes, Additional Amounts, Late Payment Fees, Upfront Fee, Unused
Fees, Extension Fees and all other fees and other amounts owed by the Borrowers or the Guarantors
to the Administrative Agent, the Lenders or the Affected Parties under this Agreement, the Loan
Documents and any other document or agreement delivered in connection with the transactions
contemplated by this Agreement or the other Loan Documents and all interest and/or fees that accrue
after the commencement by or against any Borrower, any Guarantor or any Affiliate of the foregoing
of any proceeding under any Insolvency Laws naming such Person as the debtor in such proceeding,
regardless of whether such interest and fees are allowed claims in such proceeding (whether due or
accrued).



“Agreement”: Defined in the Preamble.



“Alpine Asset”: Defined in the Arbor Credit Agreement.



“Alpine ESH Release Amount”: Defined in the Arbor Credit Agreement.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


3









 







“Anti-Terrorism Laws”: Any Applicable Law relating to money laundering or terrorism,
including, but not limited to, Executive Order 13224, the OFAC Regulations and the USA Patriot Act.



“Applicable Law”: For any Person or Property of such Person, all existing and future
applicable laws, rules, regulations (including temporary and final income tax regulations),
statutes, treaties, codes, ordinances, permits, certificates, orders and licenses of and
interpretations by any Governmental Authority (including, without limitation, usury laws, the
Federal Truth in Lending Act, and Regulation Z and Regulation B of the Board of Governors of the
Federal Reserve System), applicable judgments, decrees, injunctions, writs, awards or orders of any
court, arbitrator or other administrative, judicial or quasi-judicial tribunal or agency of
competent jurisdiction and, as applicable, all Authority Documents applicable to such Person.



“Approved Fund”: With respect to any Lender that is a fund that invests in bank loans, any
other fund that invests in bank loans and is managed by the same investment advisor as such Lender
or by an Affiliate of such investment advisor.



“Arbor Credit Agreement”: That certain First Amended and Restated Credit Agreement, dated
as of July 23, 2009, among Arbor Realty Funding, LLC, a Delaware limited liability company, as a
borrower, ARSR Tahoe, LLC, a Delaware limited liability company, as a borrower, Arbor ESH II LLC, a
Delaware limited liability company, as a borrower, ARLP, as a borrower and a guarantor, ART 450
LLC, a Delaware limited liability company, as a borrower, ART, as a guarantor, ARSR, as a borrower
and a guarantor, the lenders from time to time party thereto and Wachovia, as administrative agent,
as such agreement is amended, modified, restated, replaced, waived, substituted, supplemented or
extended from time to time.



“Arbor Credit Documents”: Has the meaning given to the term “Credit Documents” in the
Arbor Credit Agreement.



“Arbor Credit Facility”: That certain facility evidenced by the Arbor Credit Agreement and
the other Arbor Credit Documents, as such agreements are amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time.



“Arbor Credit Facility Fee Letter”: Has the meaning given to the term “Fee Letter” in the
Arbor Credit Agreement, as such agreement is amended, modified, restated, replaced, waived,
substituted, supplemented or extended from time to time.



“Arbor Entity”: Each of the Borrowers and any Affiliate or Subsidiary of the Borrowers.



“ARCM”: Defined in the Preamble to this Agreement.



“ARLP”: Defined in the Preamble to this Agreement.



“ARSR”: Defined in the Preamble to this Agreement.



“ART”: Defined in the Preamble to this Agreement.



“Asset Valuation Period”: Has the meaning set forth in the Arbor Credit Facility Fee
Letter.



“Asset Value”: As of any date of determination for any Mortgage Asset included or to be
included as a part of the Additional Collateral, the lesser of (a) the product of the Advance Rate
times the Book Value


First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


4









 






of the such Mortgage Asset, as determined by the Administrative Agent in its discretion and (b) the
product of the Advance Rate times the Market Value of such Mortgage Asset, as determined by
the Administrative Agent in its discretion; provided, however, the Asset Value of
any Mortgage Asset shall not at any time exceed a last Dollar LTV of 85%, as determined by the
Administrative Agent in its discretion; provided, further, however, the
Asset Value of any Mortgage Asset may be reduced in the Administrative Agent’s discretion for any
reason by an amount determined by the Administrative Agent in its discretion (which amount may, in
the Administrative Agent’s discretion, be reduced to zero) with respect to any Mortgage
Asset, including, without limitation, (i) with respect to which the Administrative Agent does not
have a perfected, first priority security interest in such Mortgage Asset and the related
Collateral at any time and for any reason, (ii) in respect of which there is a breach of a
representation or warranty set forth in Article III of the Arbor Credit Agreement (to the
extent such representation or warranty relates to Mortgage Assets or the Administrative Agent’s
rights or remedies with respect thereto), Schedule 1.1(c) to the Arbor Credit Agreement or
the Mortgage Loan Documents (in each case, assuming each representation and warranty is made as of
the date the Asset Value is determined) without regard to (A) knowledge or lack of knowledge of a
breach, (B) any qualifications (if any) to such representations and warranties based on knowledge
(regardless of how such knowledge is qualified or phrased) and (C) representations or warranties
with respect to knowledge or lack of knowledge thereof, (iii) in respect of which any statement,
affirmation or certification made or information, document, agreement, report or notice provided
by any Borrower or the Guarantor to the Administrative Agent with respect to the related Mortgage
Asset is untrue in any material respect, (iv) in respect of which the complete Mortgage Asset File
has not been delivered to the Custodian within the time periods required by the Custodial
Agreement, the Custodial Agreement for the Arbor Credit Facility, (v) except as approved by the
Administrative Agent in writing, that is not or is no longer in any respect an Eligible Asset, (vi)
with respect to which any Retained Interest, funding commitment, funding obligation or any other
obligation of any kind shall have been transferred to the Administrative Agent, (vii) for which a
Mortgage Loan Document or Mortgage Asset File (y) has been released from the possession of the
Custodian under the Custodial Agreement to a Borrower or its designee and the same has not been
returned to the Custodian for a period in excess of twenty (20) calendar days or (z) is the subject
of Section 4.3 of the Custodial Agreement, (viii) any portion of which (including any
interest that is senior or pari passu to the Mortgage Asset) has been downgraded by any Rating
Agency, (ix) with respect to which there has occurred any Insolvency Proceeding with respect to
any Obligor or any co-participant or any Person having an interest in the Mortgage Asset or any
related Underlying Mortgaged Property which is pari passu with, in right of payment or priority,
the rights of the Administrative Agent in such Mortgage Asset, (x) in respect of which any Borrower
fails to comply with any covenant, duty, obligation or agreement set forth in the Arbor Credit
Documents as it relates to such Mortgage Asset or the Administrative Agent’s rights or remedies
with respect thereto, (xi) to the extent described in Subsection 2.5(c) to the Arbor Credit
Agreement, (xii) with respect to which any Preferred Equity Grantor or Equity Asset Grantor (or the
Borrowers on its behalf) fails to satisfy the requirements of Section 5.25 to the Arbor
Credit Agreement, (xiii) with respect to which any Borrower fails to deliver any reports, documents
or other information regarding any Mortgage Asset or Underlying Mortgaged Property and such failure
affects, impairs or interferes with the Administrative Agent’s rights or remedies with respect to
or the ability to determine the Asset Value of any Mortgage Asset and/or (xiv) with respect to any
Mortgage Asset (including the Underlying Mortgaged Property with respect thereto), the Underlying
Mortgaged Property has deteriorated materially in value or the Underlying Mortgaged Property and/or
any applicable asset or development plan are not performing as expected (whether related to
construction progress, re-leasing, zoning, reserve balances, servicing and any other similar
situations), including, without limitation, (A) the lease-up plan or lot or condo sales differ from
the original asset business plan, (B) the debt service reserve runs out with no replenishment
feature or guaranty of interest, (C) any construction timeline greater than six (6) months is off
the initial schedule, (D) cost overruns are greater than 15% to 20% or (E) required principal pay
downs are not met.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


5









 







“Authority Documents”: As to any Person, the articles or certificate of incorporation or
formation, by-laws, limited liability company agreement, general partnership agreement, limited
partnership agreement, trust agreement, joint venture agreement or other applicable organizational
or governing documents and the applicable resolutions of such Person.



“Availability”: At any time, an amount equal to the positive excess (if any) of (i) the
least of (a) the Maximum Amount, (b) four (4) times the Collateral Cash Flow for the
immediately preceding calendar quarter plus the Asset Value of all Additional Collateral,
(c) four (4) times the Projected Collateral Cash Flow for the immediately following
calendar quarter plus the Asset Value of all Additional Collateral, and (d) one (1)
times the Projected Collateral Cash Flow for the next four (4) quarters plus the
Asset Value of all Additional Collateral, minus (ii) the Aggregate Outstanding Principal
for all Loans on such day; provided, however, for so long as and to the extent that
either (i) the Administrative Agent does not have a first priority perfected security interest in
any item of Collateral or (ii) any Required Payment is not subject to an Irrevocable Instruction
that is in full force and effect, then such Collateral or Required Payment shall be disregarded for
the purposes of calculating Availability; provided, further, however, on
and after the occurrence of the Facility Maturity Date or an Event of Default, the Availability
shall be zero (0).



“Availability Correction Deadline”: Defined in Subsection 2.2(a)(i) of this
Agreement.



“Bankruptcy Code”: The United States Bankruptcy Reform Act of 1978 (11 U.S.C. § 101, et
seq.), as amended from time to time.



“Base Rate”: On any date, a fluctuating rate per annum equal to the lower of (a) the Prime
Rate or (b) the Federal Funds Rate plus 0.5%.



“Benefit Plan”: Any employee benefit plan as defined in Section 3(3) of ERISA in respect
of which any Borrower, any Guarantor or any ERISA Affiliate of any Borrower or any Guarantor is, or
at any time during the immediately preceding six (6) years was, an “employer” as defined in
Section 3(5) of ERISA.



“Benefited Lender”: Defined in Section 13.21 of this Agreement.



“Book Value”: With respect to any Mortgage Asset at any time, an amount equal to the
lesser of (a) face or par value and (b) the price that the applicable Borrower initially paid or
advanced for or in respect of such Mortgage Asset, as such Book Value may be marked down by the
Borrowers from time to time, including, as applicable, any loss/loss reserve/price adjustments,
less an amount equal to the sum of all principal payments or paydowns paid and realized
losses recognized relating to such Mortgage Asset.



“Borrower-Related Obligations”: Any obligations, liabilities and/or indebtedness of the
Borrowers and/or the Guarantors under the Loan Documents and under any other arrangement between
any Borrower, any Guarantor or any Consolidated Subsidiary of any Borrower or any Guarantor
(including, without limitation, Arbor Realty Funding LLC) on the one hand and the Administrative
Agent, the Initial Lender, an Affiliate of the Administrative Agent or the Initial Lender or any
commercial paper conduit for which the Administrative Agent, the Initial Lender or an Affiliate of
the Administrative Agent or Initial Lender acts as a liquidity provider on the other hand,
including, without limitation, such obligations, liabilities and/or indebtedness under the Wachovia
Indebtedness.



“Borrowers”: Individually or collectively, as the context requires, ART, GPOP, LPOP, ARCM,
ARLP, ARSR and each other Arbor Entity that becomes a borrower hereunder by execution of a joinder
agreement in form and substance satisfactory to the Administrative Agent. Each Borrower is jointly
and severally liable as a Borrower under this Agreement and other Loan Documents.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


6









 







“Borrowing Date”: In respect of any Loan, the date on which such Loan is made under this
Agreement.



“Breakage Costs”: Defined in Subsection 2.5(b) of this Agreement.



“Business Day”: Any day other than a Saturday or a Sunday on which (a) banks are not
required or authorized to be closed in Minneapolis, Minnesota, New York, New York, Charlotte, North
Carolina or any other state in which the Administrative Agent or a Lender is located, and (b) if
the term “Business Day” is used in connection with the determination of the Eurodollar Rate,
dealings in United States dollar deposits are carried on in the London interbank market.



“Capital Lease Obligations”: For any Person and its Consolidated Subsidiaries, all
obligations of such Person to pay rent or other amounts under a lease of (or other agreement
conveying the right to use) Property to the extent such obligations are required to be classified
and accounted for as a capital lease on a balance sheet of such Person under GAAP, and, for
purposes of this Agreement, the amount of such obligations shall be the capitalized amount thereof,
determined in accordance with GAAP.



“Cash Equivalents”: Any of the following: (i) securities issued or directly and fully
guaranteed or insured by the United States or any agency or instrumentality thereof (provided that
the full faith and credit of the United States is pledged in support thereof) having maturities of
not more than one (1) year from the date of acquisition, (ii) time deposits or certificates of
deposit of any commercial bank incorporated under the laws of the United States or any state
thereof, of recognized standing having capital and unimpaired surplus in excess of $1,000,000,000
and whose short-term commercial paper rating at the time of acquisition is at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody’s (any such bank, an
“Approved Bank”), with such deposits or certificates having maturities of not more than
one (1) year from the date of acquisition, (iii) repurchase obligations with a term of not more
than seven (7) days for underlying securities of the types described in clauses (i) and
(ii) above entered into with any Approved Bank, (iv) commercial paper or finance company
paper issued by any Person incorporated under the laws of the United States or any state thereof
and rated at least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent thereof
by Moody’s, and in each case maturing not more than one (1) year after the date of acquisition, and
(v) investments in money market funds that are registered under the 40 Act, which have net assets
of at least $1,000,000,000 and at least 85% of whose assets consist of securities and other
obligations of the type described in clauses (i) through (iv) above. All such Cash
Equivalents must be denominated solely for payment in Dollars.



“CDO Collateral Manager Distributions”: All dividends, distributions and other amounts
payable to ARSR as the holder of 100% of the Equity Interests in ARCM.



“CDO Equity Distributions”: All dividends, distributions and other amounts payable to ARSR
as holder of 100% of the Equity Interests in each Pledged CDO Subsidiary.



“CDO Issuance”: Any securitization transaction involving the issuance of collateralized
debt obligations.



“CDO Issuer”: The issuer of securities in a CDO Issuance.



“CDO Management Fee Account”: Defined in Subsection 2.7(a).



“CDO Management Fees”: Any and all fees and other amounts paid or to be paid to ARCM as
Collateral Manager under each Collateral Management Agreement.




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“CDO Payment Trigger”: Any calendar quarter in which ART satisfies the CDO Payment
Liquidity Threshold as of the last day of such quarter; provided, however, if (a)
ART does not satisfy the CDO Payment Liquidity Threshold for a calendar quarter but would have met
the CDO Payment Liquidity Threshold but for the fact that a Credit Party or an Affiliate of a
Credit Party repurchased debt securities during such calendar quarter and (b) ART does not satisfy
the CDO Payment Liquidity Threshold for the next calendar quarter but would have met the CDO
Payment Liquidity Threshold but for the fact that a Credit Party or an Affiliate of a Credit Party
repurchased debt securities during the immediately preceding calendar quarter and the current
calendar quarter, then ART will be deemed to have satisfied the CDO Payment Liquidity Threshold for
such second calendar quarter.



“CDO Payment Liquidity Threshold”: For any calendar quarter, ART has Liquidity in an amount
greater than or equal to TWENTY SEVEN MILLION FIVE HUNDRED THOUSAND DOLLARS ($27,500,000).



“CDO Subsidiary”: Each of ARMS 2006-1 Equity Holdings LLC, ARMS 2005-1 Equity Holdings
LLC, ARMS 2004-1 Equity Holdings LLC and, after the Restatement Date, any other Subsidiary of ARSR
that holds Equity Interests in a CDO Issuer in connection with a CDO Issuance and is otherwise
approved by the Administrative Agent in its discretion, provided that each such CDO Subsidiary is
or will be a Subsidiary of ARSR that holds Equity Interests in a CDO Issuer in connection with a
CDO Issuance and has a right to receive dividends, distributions and payments on or with respect to
such Equity Interests or from any notes, bonds or certificates or other Property or assets owned or
held by such CDO Subsidiary.



“Change of Control”: With respect to any Borrower or Guarantor, a change of control shall
be deemed to have occurred upon the occurrence of any of the following: (a) a Person or two or
more Persons acting in concert shall have acquired “beneficial ownership”, directly or indirectly,
of, or shall have acquired by contract or otherwise, or shall have entered into a contract or
arrangement that, upon consummation, will result in its or their acquisition of, or control over,
Voting Interests of such Borrower or such Guarantor (or other securities convertible into such
Voting Interests) representing more than 50% of the combined voting power of all Voting Interests
of any Borrower or any Guarantor, (b) Continuing Directors shall cease for any reason to constitute
a majority of the members of the board of directors of any Borrower or any Guarantor then in
office, (c) the sale, lease, transfer, conveyance or other disposition (other than by way of merger
or consolidation), in one or a series of related transactions, of all or substantially all of the
assets of any Borrower (together with its Subsidiaries), or any Guarantor (together with its
Subsidiaries) taken as a whole to any “person” (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act) or (d) the adoption by the equity holders of any Borrower or any Guarantor of a
plan or proposal for the liquidation or dissolution of any Borrower or any Guarantor. As used
herein, “beneficial ownership” shall have the meaning provided in Rule 13d-3 and 13d-5 of the
Exchange Act. Notwithstanding the foregoing, neither the Administrative Agent nor any Lender shall
be deemed to approve or have approved any internalization of management as a result of this
definition or any other provision.



“Closing Certificate”: A Closing Certificate, substantially in the form attached hereto as
Exhibit IV, including all attachments and exhibits thereto.



“Closing Date”: June 11, 2007.



“Code”: The Internal Revenue Code of 1986, as amended from time to time.



“Collateral”: Defined in Subsection 8.1(a) of this Agreement.



“Collateral Cash Flow”: The aggregate Income from all CDO Management Fees and CDO Equity
Distributions deposited into the Collection Account or CDO Management Fee Account, as applicable.




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“Collateral Management Agreements”: Any and all existing and future agreements entered
into by ARCM, in its capacity as Collateral Manager, for the management of all or any portion of
the collateral in a CDO Issuance involving any Borrower, Guarantor or any Consolidated Subsidiary
of the Borrower or Guarantor.



“Collateral Manager”: Any Person that manages all or a portion of the collateral for a CDO
Issuance, in its capacity as collateral manager (or any equivalent term).



“Collection Account”: Defined in Subsection 2.7(a) of this Agreement.



“Commitment Fee”: Defined in the Fee Letter.



“Commitment Period”: The period from and including the Closing Date to but excluding June
9, 2009. For the avoidance of doubt, as of the Restatement Date, the Commitment Period has expired
and no further borrowings shall be permitted hereunder.



“Commitment Transfer Supplement”: A Commitment Transfer Supplement, substantially in the
form of Exhibit IX.



“Commonly Controlled Entity”: An entity, whether or not incorporated, that is under common
control with any Borrower or any Guarantor within the meaning of Section 4001 of ERISA or is part
of a group which includes any Borrower or any Guarantor and that is treated as a single employer
under Section 414 of the Code.



“Compliance Certificate”: A Compliance Certificate, substantially in the form of
Exhibit V, demonstrating as of the date thereof compliance by ART with the Financial
Covenants and such other matters as are required to be set forth therein, in each case for the
periods specified therein.



“Confirmation”: An executed confirmation with respect to each pledge of Additional
Collateral, substantially in the form of Exhibit III attached hereto.



“Consolidated Subsidiaries”: As of any date and any Person, any Subsidiaries or other
entities that are consolidated with such Person in accordance with GAAP.



“Contingent Liabilities”: Means, with respect to any Person and its Consolidated
Subsidiaries (without duplication): (i) liabilities and obligations (including any Guarantee
Obligations) of such Person or any Consolidated Subsidiary of such Person in respect of
“off-balance sheet arrangements” (as defined in the SEC Off-Balance Sheet Rules), (ii) any
obligation, including, without limitation, any Guarantee Obligation, whether or not required to be
disclosed in the footnotes to such Person’s financial statements, guaranteeing partially or in
whole any Non-Recourse Indebtedness, lease, dividend or other obligation, exclusive of
(A) contractual indemnities (including, without limitation, any indemnity or price-adjustment
provision relating to the purchase or sale of securities or other assets) and (B) guarantees of
non-monetary obligations (other than guarantees of completion, environmental indemnities and
guarantees of customary carve-out matters made in connection with Non-Recourse Indebtedness, such
as (but not limited to) fraud, misappropriation, bankruptcy and misapplication) which have not yet
been called on or quantified, of such Person or of any other Person, and (iii) any forward
commitment or obligation to fund or provide proceeds with respect to any loan or other financing
which is obligatory and non-discretionary on the part of the lender. The amount of any Contingent
Liabilities described in clause (ii) shall be deemed to be, (a) with respect to a guarantee
of interest or interest and principal, or operating income guarantee, the sum of all payments
required to be made thereunder (which, in the case of an operating income guarantee,


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shall be deemed to be equal to the debt service for the note secured thereby), through, (x) in the
case of an interest or interest and principal guarantee, the stated date of maturity of the
obligation (and commencing on the date interest could first be payable thereunder), or (y) in the
case of an operating income guarantee, the date through which such guarantee will remain in effect,
and (b) with respect to all guarantees not covered by the preceding clause (a), an amount
equal to the stated or determinable amount of the primary obligation in respect of which such
guarantee is made or, if not stated or determinable, the maximum reasonably anticipated liability
in respect thereof (assuming such Person is required to perform thereunder) as recorded on the
balance sheet and on the footnotes to the most recent financial statements of such Person. As used
in this definition, the term “SEC Off-Balance Sheet Rules” means the Disclosure in Management’s
Discussion and Analysis About Off-Balance Sheet Arrangements and Aggregate Contractual Obligations,
Securities Act Release No. 33-8182, 34-47264; FR-67 International Series Release No. 1266 File No.
S7-42-02, 68 Fed. Reg. 5982 (Feb. 5, 2003) (codified at 17 CFR pts. 228, 229 and 249).



“Continuing Director”: Means (i) an individual who is a member of any Person’s board of
directors (or the equivalent thereof) on the date hereof or (ii) any new director (or the
equivalent thereof) whose appointment was approved by a majority of the individuals who were
already Continuing Directors at the time of such appointment, election or approval.



“Contractual Obligation”: With respect to any Person, any provision of any securities
issued by such Person or any indenture, mortgage, deed of trust, contract, undertaking, agreement,
instrument or other document to which such Person is a party or by which it or any of its Property
is bound or is subject.



“Correction Amount”: Defined in Subsection 2.2(a)(i) of this Agreement.



“Credit Party”: Any of the Borrowers, the Guarantors or the Pledgor.



“Credit Risk Security”: Has the meaning given to such term in the related CDO Issuance.



“Custodial Agreement”: The First Amended and Restated Custodial Agreement, dated as of the
Restatement Date, by and among the Borrowers, the Administrative Agent and the Custodian, as the
same shall be amended, modified, waived, supplemented, extended, replaced or restated from time to
time.



“Custodial Fee Letter”: The Custodial Fee Letter between the Borrowers and the Custodian,
as such letter may be amended, modified, waived, supplemented, extended, restated or replaced from
time to time.



“Custodian”: Wells Fargo Bank, National Association, and its successor in interest as the
custodian under the Custodial Agreement, and any successor Custodian under the Custodial Agreement.



“Debt Issuance”: Means the issuance of any indebtedness for borrowed money by any Borrower
or any Consolidated Subsidiary of ART, including, without limitation, (i) Preferred Securities to
the extent such Preferred Securities constitute Indebtedness and (ii) any such issuance in
accordance with Applicable Law relating to Taxes; provided, however, “Debt
Issuance” shall not include any CDO Issuance, the Arbor Credit Facility or any indebtedness under
any repurchase facility or any warehouse facility.



“Default”: Any event that, with the giving of notice or the lapse of time, or both, would
become an Event of Default.



“Defaulted Mortgage Asset”: Any Mortgage Asset (a) that is ninety (90) days or more
delinquent, (b) for which there is a breach of any of the representations and warranties set forth
on Schedule 1.1(c) to the Arbor Credit Facility (or, if not set forth therein, the related
Confirmation), or (c) for which there is a


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non-monetary default (beyond any applicable notice and cure period) under the related Mortgage Loan
Documents, including, without limitation, any Preferred Equity Interest that has not been paid
current during such period.



“Defaulted Security”: Has the meaning given to such term in the related CDO Issuance.



“Delinquent Mortgage Asset”: A Mortgage Asset that is thirty (30) or more days, but less
than ninety (90) days, delinquent under the related Mortgage Loan Documents, including, without
limitation, any Preferred Equity Interest that has not been paid current during such period.



“Derivatives Contract”: Any and all rate swap transactions, basis swaps, credit derivative
transactions, forward rate transactions, commodity swaps, commodity options, forward commodity
contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or
options or forward bond or forward bond price or forward bond index transactions, interest rate
options, forward foreign exchange transactions, cap transactions, floor transactions, collar
transactions, currency swap transactions, cross-currency rate swap transactions, currency options,
spot contracts, or any other similar transactions or any combination of any of the foregoing
(including any options to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement. Not in limitation of the foregoing, the term
“Derivatives Contract” includes any and all transactions of any kind, and the related
confirmations, which are subject to the terms and conditions of, or governed by, any form of master
agreement published by the International Swaps and Derivatives Association, Inc., any International
Foreign Exchange Master Agreement, or any other master agreement, including any such obligations or
liabilities under any such master agreement.



“Derivatives Termination Value”: Means, in respect of any one or more Derivatives
Contracts, after taking into account the effect of any legally enforceable netting agreement
relating to such Derivatives Contracts, (a) for any date on or after the date such Derivatives
Contracts have been closed out and termination value(s) determined in accordance therewith, such
termination value(s), and (b) for any date prior to the date referenced in clause (a), the
amount(s) determined as the mark-to-market value(s) for such Derivatives Contracts, as determined
based upon one or more mid-market or other readily available quotations provided by any recognized
dealer in such Derivatives Contracts (which may include the Administrative Agent).



“Dollars” and “$”: Lawful money of the United States of America.



“Due Diligence Costs”: Defined in Section 13.19 of this Agreement.



“Due Diligence Review”: The performance by the Administrative Agent or any of the Lenders
of any or all of the reviews permitted under Section 13.19 with respect to any or all of
the Collateral, the Borrowers or the Guarantors, as desired by the Administrative Agent from time
to time.



“Eligible Asset”: Any loan that satisfies the definition of Mortgage Asset (as defined in
the Arbor Credit Facility) (i) that is not a Defaulted Mortgage Asset, (ii) that is not a
Delinquent Mortgage Asset, (iii) with respect to which the funding obligations thereunder have been
satisfied in full and there is no unfunded commitment outstanding, (iv) that is owned by ARSR or
any other Borrower and (v) that has been approved in advance by the Administrative Agent in its
discretion for inclusion as Additional Collateral.



“Eligible Subordinated Debt”: Means (a) the debt securities of ARSR issued under (i) the
Junior Subordinated Indenture, dated as of May 6, 2009, between ARSR, as issuer, and The Bank of
New York Mellon Trust Company, National Association (“BONY”), as trustee, pursuant to which
ARSR issued $29,400,000 in original aggregate principal amount of Junior Subordinated Notes, (ii)
the Junior


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Subordinated Indenture, dated as of May 6, 2009, between ARSR, as issuer, and BONY, as trustee,
pursuant to which ARSR issued $168,000,000 in original aggregate principal amount of Junior
Subordinated Notes, (iii) the Junior Subordinated Indenture, dated as of May 6, 2009, between ARSR,
as issuer, ART, as guarantor, and Wilmington Trust Company, as trustee, pursuant to which ARSR
issued $21,224,000 in original aggregate principal amount of Junior Subordinated Notes, (iv) the
Junior Subordinated Indenture, dated as of May 6, 2009, between ARSR, as issuer, ART, as guarantor,
and Wilmington Trust Company, as trustee, pursuant to which ARSR issued $2,632,000 in original
aggregate principal amount of Junior Subordinated Notes, (v) the Junior Subordinated Indenture,
dated as of May 6, 2009, between ARSR, as issuer, ART, as guarantor, and Wilmington Trust Company,
as trustee, pursuant to which ARSR issued $47,180,000 in original aggregate principal amount of
Junior Subordinated Notes, (vi) Junior Subordinated Indenture, dated April 6, 2005 (as amended),
between ARSR, as issuer, ART, as guarantor, and Wilmington Trust Company, as trustee, and (vii)
Junior Subordinated Indenture, dated June 2, 2006, between ARSR, as issuer, ART, as guarantor, and
Wilmington Trust Company, as trustee (the indentures described in (vi) and (vii), collectively, the
“Original Kodiak Indentures”), (b) any future debt securities of ARSR issued in exchange
for the securities held under the Original Kodiak Indentures that (i) have express subordination
provisions substantially the same as those contained in the indentures for the transactions listed
in clause (a) of this definition of Eligible Subordinated Debt, (ii) has enforceable subordination
provisions, (iii) has a maturity date no earlier than the date that is six (6) months following the
Facility Maturity Date, (iv) the Administrative Agent is in receipt of an Opinion of Counsel
acceptable to the Administrative Agent in its discretion addressing the enforceability of the
subordination provisions contained in the documents governing the proposed Eligible Subordinated
Debt, and (c) any future debt securities of ART and its Consolidated Subsidiaries that (i) has
express subordination provisions substantially the same as those contained in the indentures for
the transactions listed in clause (i) of this definition of Eligible Subordinated Debt, (ii) has
enforceable subordination provisions, (iii) has a maturity date no earlier than the date that is
six (6) months following the Facility Maturity Date, (iv) the Administrative Agent is in receipt of
an Opinion of Counsel acceptable to the Administrative Agent in its discretion addressing the
enforceability of the subordination provisions contained in the documents governing the proposed
Eligible Subordinated Debt and (v) has been specifically approved in writing by the Administrative
Agent in its discretion.



“Encumbrance”: Any Lien or any rights, options, warrants, conversion rights or similar
agreements or understandings.



“Environmental Laws”: Any and all Applicable Laws and all other foreign, federal, state
and local laws, statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to the protection of
human health or the environment, including, but not limited to, requirements pertaining to the
manufacture, processing, distribution, use, treatment, storage, disposal, transportation, handling,
reporting, licensing, permitting, investigation or remediation of hazardous materials.
Environmental Laws include, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (“CERCLA”), as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. §9601 et seq., the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous
and Solid Waste Amendments of 1984, 42 U.S.C. §6901 et seq., the Hazardous Material
Transportation Act, as amended, 49 U.S.C. § 1501 et  seq., the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C. §1251 et
seq., the Toxic Substances Control Act of 1976, 15 U.S.C. §2601 et seq.,
the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §1101 et
seq., the Clean Air Act of 1966, as amended, 42 U. S. C. §7401 et seq., the
National Environmental Policy Act of 1969, 42 U.S.C. §4321, the River and Harbor Act of 1899, 33
U.S.C. §401 et seq., the Endangered Species Act of 1973, as amended, 16 U.S.C.
§1531 et seq., the Occupational Safety and Health Act of 1970, as amended, 29
U.S.C. §651 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.
§201 et seq., and the Environmental Protection Agency’s regulations relating to
underground storage


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tanks, 40 C.F.R. Parts 280 and 281, and the rules and regulations under each of the foregoing, each
as amended, modified, waived, supplemented, extended, restated or replaced from time to time.



“Equity Interests”: With respect to any Person, any share, interest, participation and
other equivalent (however denominated) of capital stock of (or other ownership, equity or profit
interests in) such Person, any warrant, option or other right for the purchase or other acquisition
from such Person of any share of capital stock of (or other ownership, equity or profit interests
in) such Person, any security convertible into or exchangeable for any share of capital stock of
(or other ownership or profit interests in) such Person or warrant, right or option for the
purchase or other acquisition from such Person of such shares (or such other interests), and any
other ownership or profit interest in such Person (including, without limitation, partnership,
member or trust interests therein), whether voting or nonvoting, and whether or not such share,
warrant, option, right or other interest is authorized or otherwise existing on any date of
determination.



“Equity Issuance”: Any issuance by any Borrower or any Consolidated Subsidiary of ART to
any Person that is not a Borrower, Guarantor or Consolidated Subsidiary of a Borrower or Guarantor
of (a) shares or interests of its Equity Interests, (b) any shares or interests of its Equity
Interests pursuant to the exercise of options, warrants or similar rights (other than shares issued
upon the exercise of options or warrants that were issued to officers, directors or employees of a
Borrower), (c) any shares or interests of its Equity Interests pursuant to the conversion of any
debt securities to equity or (d) (other than warrants issued by any Borrower or any Consolidated
Subsidiary of ART for which no cash is paid to the applicable Borrower or Consolidated Subsidiary
or options or warrants issued to officers, directors or employees of a Borrower) warrants, options
or similar rights that are exercisable or convertible into shares or interests of its Equity
Interests; provided, however, “Equity Issuance” shall not include an Equity
Issuance in connection with a CDO Issuance engaged in by a Consolidated Subsidiary of ARSR or an
issuance of shares in ART to ACM as compensation for acting as servicer.



“ERISA”: The Employee Retirement Income Security Act of 1974, as amended from time to
time, and the regulations promulgated and rulings issued thereunder, as the same are amended from
time to time.



“ERISA Affiliate”: (a) Any corporation that is a member of the same controlled group of
corporations (within the meaning of Section 414(b) of the Code) as any Borrower or any Guarantor,
(b) a trade or business (whether or not incorporated) under common control (within the meaning of
Section 414(c) of the Code) with any Borrower or any Guarantor, or (c) a member of the same
affiliated service group (within the meaning of Section 414(m) of the Code) as any Borrower or any
Guarantor, any corporation described in clause (a) above or any trade or business described
in clause (b) above.



“ESH Allocated Assets”: The Pledged Mortgage Assets (as defined in the Arbor Credit
Agreement) to which allocated loan amounts relating to the ESH Pledged Mortgage Assets were
allocated on the Restatement Date.



“Eurocurrency Liabilities”: Defined in Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.



“Eurodollar Disruption Event”: The occurrence of any of the following: (a) the
Administrative Agent, any Lender or any Affected Party has determined that it would be contrary to
law or to the directive of any central bank or other Governmental Authority (whether or not having
the force of law) to obtain United States dollars in the London interbank market to fund any Loan,
(b) the inability, for any reason, of the Administrative Agent, any Lender or any Affected Party to
determine the Adjusted Eurodollar Rate, (c) the Administrative Agent, any Lender or any Affected
Party have determined that the rate at which deposits of United States dollars are being offered to
the Administrative Agent, any Lender or any


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Affected Party in the London interbank market does not accurately reflect the cost to the
Administrative Agent, any Lender or any Affected Party of making, funding or maintaining any Loan,
or (d) the inability of the Administrative Agent, any Lender or any Affected Party to obtain United
States dollars in the London interbank market to make, fund or maintain any Loan.



“Eurodollar Period”: With respect to any Loan, (i) initially, the period commencing on the
Borrowing Date with respect to such Loan and ending on the earlier of (x) the Facility Maturity
Date and (y) the first Payment Date following the Borrowing Date, and (ii) thereafter, each period
commencing on the day following the last day of the preceding Eurodollar Period applicable to such
Loan and ending on the earlier of (x) the date that is one-month thereafter or (y) the Facility
Maturity Date.



“Eurodollar Rate”: With respect to each Eurodollar Period, the rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the rate appearing at Reuters Screen
LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars,
at or about 9:00 a.m., Charlotte, North Carolina time, three (3) Business Days prior to the
beginning of such Eurodollar Period for a term comparable to such Eurodollar Period, or, if no such
rate appears on Reuters Screen LIBOR01 Page (or any successors page) at such time and day, then the
Eurodollar Rate shall be determined by the Administrative Agent at its principal office (so long as
the Initial Lender is the Administrative Agent, in Charlotte, North Carolina) as its rate (each
such determination, absent manifest error, to be conclusive and binding on all parties hereto and
their assignees) at which thirty (30) day deposits in United States Dollars are being, have been,
or would be offered or quoted by the Administrative Agent to major banks in the applicable
interbank market for Eurodollar deposits at or about 11:00 a.m. on such day. The Administrative
Agent’s determination of Eurodollar Rate shall be conclusive and binding upon the parties absent
manifest error on the part of the Administrative Agent.



“Eurodollar Reserve Percentage”: For any period means the percentage, if any, applicable
during such period (or, if more than one such percentage shall be so applicable, the daily average
of such percentages for those days in such period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve requirement (including,
without limitation, any basic, emergency, supplemental, marginal or other reserve requirements)
with respect to liabilities or assets consisting of or including Eurocurrency Liabilities having a
term equal to the applicable Eurodollar Period.



“Event of Default”: Defined in Section 10.1 of this Agreement.



“Excepted Persons”: Defined in Subsection 13.13(a) of this Agreement.



“Exchange Act”: The Securities Exchange Act of 1934, as amended from time to time.



“Excluded Accounts”: All accounts established to hold Obligor Reserve Payments, all
accounts holding funds that are required to be disbursed to an Obligor under the terms of the
related Mortgage Loan Documents.



“Existing Borrower”: Collectively, the Credit Parties who were Borrowers under the Original
Agreement.



“Existing Financing Facilities”: The financing facilities identified on
Schedule 4.1(ff) hereto, as the same may be modified, amended, extended or renewed,
together with any additional facility entered into with the approval of the Administrative Agent in
its discretion. For the avoidance of doubt, Existing Financing Facilities shall not include any
Debt Issuance or any replacement of an Existing Financing Facility or any modification to an
Existing Financing Facility that is not in accordance with substantially the same terms (or terms
more favorable to Borrowers) unless approved by the Administrative Agent in its discretion,


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provided that the amount of an Existing Financing Facility may be decreased or increased without
the approval of the Administrative Agent so long as such modification shall not result in a Default
or an Event of Default hereunder.



“Facility Maturity Date”: Subject to Article X, the earliest of (a) June 8, 2012,
(b) the termination of the Arbor Credit Facility, (c) the date on which this Agreement shall
terminate in accordance with the provisions hereof or by operation of Applicable Law and (d) one
hundred twenty (120) calendar days after the enactment date of a Tax Law Change. For the avoidance
of doubt, the Borrowers may not extend the Facility Maturity Date without the Lenders’ and the
Administrative Agent’s consent in their discretion.



“Fair Market Value”: With respect to (a) a security listed on a national securities
exchange or recognized automated quotation system, the price of such security as reported on such
exchange by any widely recognized reporting method customarily relied upon by financial
institutions, and (b) with respect to any other assets or Property, including realty, the price
which could be negotiated in an arm’s-length free market transaction, for cash, between a willing
seller and a willing buyer, neither of which is under pressure or compulsion to complete the
transaction.



“Federal Funds Rate”: For any period, a fluctuating interest rate per annum equal for each
day during such period to the weighted average of the overnight federal funds rates as in H.15 or
any successor or substitute publication selected by the Administrative Agent (or, if such day is
not a Business Day, for the next succeeding Business Day), or, if, for any reason, such rate is not
available on any day, the rate determined, in the sole opinion of the Administrative Agent, to be
the rate at which overnight federal funds are being offered in the national federal funds market at
9:00 a.m.



“Fee Letter”: The First Amended and Restated Fee Letter, dated as of the Restatement Date,
between the Borrowers and the Administrative Agent, as amended, modified, waived, supplemented,
extended, restated or replaced from time to time.



“Final Termination”: With respect to any Loan Document, the termination of this Agreement
in accordance with Subsection 13.6(a).



“Financial Covenants”: The covenants set forth in Subsection 5.1(w) of this
Agreement.



“Financing Spread”: The applicable spread set forth in Schedule 1 to the Fee
Letter or, with respect to Additional Collateral only, to the extent the Administrative Agent
requires a different applicable spread than is set forth in the Fee Letter or if the Fee Letter
does not address the applicable spread, the applicable spread set forth in the related
Confirmation.



“Foreclosed Loans”: A loan the security for which has been foreclosed upon by a Borrower.



“GAAP”: Generally accepted accounting principles as in effect from time to time in the
United States, consistently applied.



“Governmental Authority”: Any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
body or entity exercising executive, legislative, judicial, regulatory or administrative functions
of or pertaining to government, any court or arbitrator having jurisdiction over such Person, any
of its Subsidiaries or any of its Properties, and any accounting board or authority (whether or not
a part of government) that is responsible for the establishment or interpretation of national or
international accounting principles, in each case whether foreign or domestic.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


15









 







“GPOP”: Defined in the Preamble of this Agreement.



“Guarantee Obligation”: Means, as to any Person (the “guaranteeing person”),
without duplication, any obligation of (a) the guaranteeing person or (b) another Person
(including, without limitation, any bank under any letter of credit) to induce the creation of the
obligations for which the guaranteeing person has issued a reimbursement, counterindemnity or
similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases,
dividends, Contractual Obligation, Derivatives Contract or other obligations (the “primary
obligations”) of any other third Person (the “primary obligor”) in any manner, whether
directly or indirectly, including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or any property constituting
direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring the owner of any
such primary obligation of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantee
Obligation shall not include endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be
deemed to be the maximum stated amount of the primary obligation relating to such Guarantee
Obligation (or, if less, the maximum stated liability set forth in the instrument embodying such
Guarantee Obligation); provided, however, that in the absence of any such stated
amount or stated liability, the amount of such Guarantee Obligation shall be such guaranteeing
person’s maximum reasonably anticipated liability in respect thereof as reasonably determined by
such Person in good faith.



“Guarantor”: Each Arbor Entity that becomes a Guarantor hereunder.



“Guaranty”: Each Guaranty entered into by a Guarantor for the benefit of the
Administrative Agent, the Lenders and the other Affected Parties.



“H.15”: Federal Reserve Statistical Release H.15(519).



“Initial Lender”: Defined in the Preamble to this Agreement.



“Income”: With respect to the Collateral, all payments, collections, prepayments,
recoveries, insurance and condemnation proceeds (with respect to the Additional Collateral, other
than to the extent that an Obligor is or may be entitled to the same under the related Mortgage
Loan Documents), distributions, principal, interest, fees, dividends, gains, receipts, allocations,
profits, payments in kind, returns or repayment of contributions, Proceeds and all other amounts
payable to a Borrower on or with respect to the foregoing, less the Servicing Fee in the case of
Additional Collateral. Income shall not include any Obligor Reserve Payments.



“Increased Costs”: Any amounts required to be paid by the Borrowers to the Administrative
Agent, the Lenders and the other Affected Parties pursuant to Section 2.11 of this
Agreement.



“Indebtedness”: Means, with respect to any Person (in reference to ART and its
Subsidiaries, Person shall mean ART and its Consolidated Subsidiaries determined on a consolidated
basis), at the time of computation thereof, all of the following (without duplication): (a) all
obligations of such Person in respect of money borrowed (including, without limitation, principal,
interest, assumption fees (to the extent they are due during the period in question), prepayment
fees (to the extent they are due during the period in question), contingent interest (to the extent
it is due during the period in question), and other


First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


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monetary obligations whether choate or inchoate); (b) all obligations of such Person, whether or
not for money borrowed (i) represented by notes payable, letters of credit, or drafts accepted, in
each case representing extensions of credit, (ii) evidenced by bonds, debentures, notes or similar
instruments, or (iii) constituting purchase money indebtedness, conditional sales contracts, title
retention debt instruments or other similar instruments, upon which interest charges are
customarily paid or that are issued or assumed as full or partial payment for property or services
rendered; (c) Capital Lease Obligations of such Person; (d) all reimbursement obligations of such
Person under any letters of credit or acceptances (whether or not the same have been presented for
payment); (e) all Off-Balance Sheet Obligations of such Person; (f) all obligations of such Person
to purchase, redeem, retire, defease or otherwise make any payment in respect of any Mandatory
Redeemable Stock issued by such Person or any other Person (inclusive of forward equity contracts),
valued at the greater of its voluntary or involuntary liquidation preference plus accrued and
unpaid dividends; (g) as applicable, all obligations of such Person (but not the obligation of
others) in respect of any keep well arrangements, credit enhancements, contingent or future funding
obligations, unfunded interest reserve amounts, purchase obligations, repurchase obligations,
takeout commitments or forward equity commitments, in each case evidenced by a binding agreement
(excluding any such obligation to the extent the obligation can be satisfied by the issuance of
Equity Interests (other than Mandatory Redeemable Stock)); (h) net obligations under any Derivative
Contract not entered into as a hedge against existing Indebtedness, in an amount equal to the
Derivatives Termination Value thereof; (i) all Indebtedness of other Persons which such Person has
guaranteed or is otherwise recourse to such Person (except for guaranties of customary exceptions
for fraud, misapplication of funds, environmental indemnities and other similar exceptions to
recourse liability (but not exceptions relating to bankruptcy, insolvency, receivership or other
similar events)); (j) all Indebtedness of another Person secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien (other
than certain Permitted Liens) on property or assets owned by such Person, even though such Person
has not assumed or become liable for the payment of such Indebtedness or other payment obligation;
provided, however, if such Person has not assumed or become liable for the payment
of such Indebtedness, then for the purposes of this definition the amount of such Indebtedness
shall not exceed the market value of the property subject to such Lien and (k) Contingent
Liabilities.



“Indemnified Amounts”: Defined in Subsection 11.1(a) of this Agreement.



“Indemnified Parties”: Defined in Subsection 11.1(a) of this Agreement.



“Insolvency Event”: With respect to a specified Person, (a) the filing of a decree or
order for relief by a court having jurisdiction in the premises in respect of such Person or any
substantial part of its Property in an involuntary case under any applicable Insolvency Law now or
hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of its Property, or
ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall
remain unstayed and in effect for a period of ninety (90) consecutive days; or (b) the commencement
by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for
any substantial part of its Property, or the making by such Person of any general assignment for
the benefit of creditors, or the failure by such Person generally to pay its debts as such debts
become due, or the taking of action by such Person in furtherance of any of the foregoing.



“Insolvency Laws”: The Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments or similar debtor relief laws from time to time in effect affecting the
rights of creditors generally.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


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“Insolvency Proceeding”: Any case, action or proceeding before any court or other
Governmental Authority relating to any Insolvency Event.



“Instrument”: Any “instrument” (as defined in Article 9 of the UCC), other than an
instrument that constitutes part of chattel paper.



“Intercreditor Agreement”: That certain Intercreditor Agreement to be entered into by and
among the Administrative Agent and Wachovia, as administrative agent under the Arbor Credit
Facility, as amended, restated, modified or supplemented from time to time.



“Interest”: For each Accrual Period and all Loans outstanding, the sum of the products
(for each day during such Accrual Period) of:




	 	 	 	 	 
	 

	R x AOP x   	   1   


D
	 	 






where:




	 	 	 	 	 	 	 
	 

	 	R
	 	=
	 	the Rate applicable on such day;
	 
	 	 	 	 	 	 
	 

	 	AOP
	 	=
	 	the Aggregate Outstanding Principal on such day; and
	 
	 	 	 	 	 	 
	 

	 	D
	 	=
	 	360;





provided, however, that (i) no provision of this Agreement shall require the
payment or permit the collection of any Interest in excess of the maximum permitted by Applicable
Law and (ii) the Interest shall not be considered paid by any distribution if at any time such
distribution is rescinded or must otherwise be returned for any reason.



“Interest Expense”: For ART and its Consolidated Subsidiaries, the total interest expense
incurred (in accordance with GAAP), including capitalized or accruing interest (but excluding
interest funded under a construction loan), by ART and its Consolidated Subsidiaries, without
duplication for the most recent period.



“Interest Rate Protection Agreement”: (i) Any Derivatives Contract required under the
terms of the related Mortgage Loan Documents providing for protection against fluctuations in
interest rates or the exchange of nominal interest obligations, either generally or under specific
contingencies, and acceptable to the Administrative Agent in its discretion and (ii) any
Derivatives Contract put in place by any Borrower or any Consolidated Subsidiary of a Borrower with
respect to any Collateral or any assets or other Property of such Person.



“Investment”: Means, with respect to any Person, any acquisition or investment (whether or
not of a controlling interest) by such Person, whether by means of (a) the purchase or other
acquisition of any Equity Interests in another Person, (b) a loan, advance or extension of credit
to, capital contribution to, guaranty or credit enhancement of Indebtedness of, or purchase or
other acquisition of any Indebtedness of, another Person, including any partnership or joint
venture interest in such other Person, or (c) the purchase or other acquisition (in one transaction
or a series of transactions) of assets of another Person that constitute the business or a division
or operating unit of another Person. Any binding commitment or option to make an Investment in any
other Person shall constitute an Investment. Except as expressly provided otherwise, for purposes
of determining compliance with any covenant contained in the Loan Documents, the amount of any
Investment shall be the amount actually invested, without adjustment for subsequent increases or
decreases in the value of such Investment.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


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“Irrevocable Instruction”: (a) An instruction letter in the form of Exhibit VI,
which (i) shall be executed by (A) (1) ARCM, with respect to the CDO Management Fees, (2) ARSR,
with respect to the CDO Equity Distributions and the CDO Collateral Manager Distributions and (3)
such other Persons as the Administrative Agent may require in its discretion with respect to the
Collateral, the Required Payments or any other payments required under the Loan Documents, and
(B) each Person obligated to pay or disburse any payments described above in
clauses (A)(1)-(3), respectively, (ii) shall provide that it is irrevocable, and
(iii) shall provide that such Irrevocable Instruction shall not be modified without the prior
written consent of the Administrative Agent and (b) any Servicer Redirection Notice required in
connection with the pledge of Additional Collateral.



“Junior Interest”: (a) A senior, pari passu or junior participation interest in a
performing Commercial Real Estate Loan or (b) a senior, pari passu or junior note or certificate in
an “A/B” or similar structure in a performing Commercial Real Estate Loan.



“Late Payment Fee”: Defined in Subsection 2.5(a) of this Agreement.



“Lead Based Paint”: Paint containing more than 0.5% lead by dry weight.



“Lender”: Defined in the Preamble to this Agreement.



“Lien”: Any mortgage, lien, pledge, charge, right, claim, security interest or encumbrance
of any kind of or on any Person’s assets or Properties in favor of any other Person.



“Liquidity”: An amount equal to the (a) sum of (without duplication) (i) the amount of
unrestricted cash and unrestricted Cash Equivalents, plus (ii) the borrowing availability
(if any) under the Arbor Credit Facility, in each case in clauses (i) and (ii), solely to the
extent that such amounts exceed the amounts necessary to satisfy at such time all of the Financial
Covenants (other than Subsection 5.1(w)(i) hereunder and all financial covenants (other
than any liquidity covenants) under the Arbor Credit Facility and, in each case, to the extent ART
continues to be in compliance thereof, less, (b) amounts necessary to satisfy margin
deficits or other prepayment obligations under the Arbor Credit Facility.



“Loan”: Defined in Subsection 2.1(a) of this Agreement.



“Loan Documents”: This Agreement, the Revolving Notes, the Account Control Agreement, the
Fee Letter, the Custodial Agreement, the Pledge and Security Agreement, the Preferred Equity Pledge
Agreement, the Guaranties, the Irrevocable Instructions, any UCC financing statements (and
amendments thereto) filed pursuant to the terms of this Agreement or any other Loan Document, and
any additional document the execution of which is necessary or incidental to carrying out the terms
of the foregoing documents, as each of the foregoing is amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time.



“LPOP”: Defined in the Preamble of this Agreement.



“Mandatory Redeemable Stock”: Means, with respect to any Person and any Subsidiary
thereof, any Equity Interests of such Person which by the terms of such Equity Interests (or by the
terms of any security into which it is convertible or for which it is exchangeable or exercisable),
upon the happening of any event or otherwise (a) matures or is required to be redeemed, pursuant to
a sinking fund obligation or otherwise (other than an Equity Interest to the extent redeemable in
exchange for common stock or other equivalent common Equity Interests), (b) is convertible into or
exchangeable or exercisable for Indebtedness or Mandatory Redeemable Stock, or (c) is redeemable at
the option of the holder thereof, in whole or in part (other than an Equity Interest which is
redeemable solely in exchange for common stock


First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


19









 






or other equivalent common Equity Interests); in the case of each clause (a) through
(e), on or prior to the Facility Maturity Date.



“Market Value”: As of any date in respect of any Mortgage Asset, the price at which such
Mortgage Asset could readily be sold, as determined by the Administrative Agent in its discretion
(which price may be determined to be zero).



“Material Adverse Effect”: Any material adverse effect on (a) the Properties, assets,
business, operations, financial condition, credit quality or prospects of any Borrower or any
Guarantor, (b) the ability of any Borrower or any Guarantor to perform its obligations under any of
the Loan Documents to which it is a party, (c) the validity or enforceability of any of the Loan
Documents, (d) the rights and remedies of the Administrative Agent or any Lender under any of the
Loan Documents, (e) the timely payment of any amounts payable under the Loan Documents, or (f) any
Collateral or the value of any Collateral.



“Materials of Environmental Concern”: Any mold, petroleum (including, without limitation,
crude oil or any fraction thereof), petroleum products or by-products (including, without
limitation, gasoline), or any hazardous, toxic or harmful substances, materials, wastes, pollutants
or contaminants, defined as such in or regulated under any Environmental Law, including, without
limitation, asbestos, asbestos containing materials, polychlorinated biphenyls, urea-formaldehyde
insulation, radioactive materials, Lead Based Paint, Toxic Mold, flammable explosives and radon.



“Maximum Amount”: As of the Restatement Date, $57,164,228.00; at any time following the
Restatement Date, the Aggregate Outstanding Principal.



“Moody’s”: Moody’s Investors Service, Inc., and any successor thereto.



“Multiemployer Plan”: A “multiemployer plan” as defined in Section 4001(a)(3) of ERISA
that is or was at any time during the current year or the immediately preceding five (5) years
contributed to by any Borrower, a Guarantor or any ERISA Affiliate on behalf of its employees.



“Net Income”: With respect to ART and its Consolidated Subsidiaries for any period, the
net income of ART and its Consolidated Subsidiaries for such period as determined in accordance
with GAAP.



“Net Proceeds”: With respect to any Equity Issuance or Debt Issuance by a Person, the
aggregate amount of all cash, Cash Equivalents and the Fair Market Value of all other assets or
Property received by or payable to such Person in respect of such Equity Issuance or Debt Issuance
net of investment banking fees, legal fees, accountants’ fees, underwriting discounts and
commissions and other customary fees and expenses actually incurred by such Person in connection
with such Equity Issuance or Debt Issuance. With respect to any Securitization, Net Proceeds shall
mean the proceeds received by a Person in connection with such Securitization after the payment of
all amounts required to be paid in order to obtain a release of all Liens related to the assets
contributed in such Securitization and the payment of all investment banking fees, legal fees,
accountants’ fees, underwriting discounts and commissions and other customary fees and expenses
actually incurred by such Person in connection with each such Securitization.



“Net Total Liabilities”: Total Liabilities minus the sum of (a) aggregate
principal amount outstanding under the Eligible Subordinated Debt and (b) deferred revenues
relating to the 450 Transaction to the extent classified as a liability according to GAAP.



“New Stock Class”: Defined in the Fee Letter.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


20









 







“Non-Recourse Indebtedness”: Means, with respect to any Person, Indebtedness for borrowed
money in respect of which recourse for payment (except for customary exceptions for fraud,
misapplication of funds, environmental indemnities, and other similar exceptions to non-recourse
provisions (but not exceptions relating to bankruptcy, insolvency, receivership or other similar
events)) is contractually limited to specific assets of such Person encumbered by a Lien securing
such Indebtedness.



“Notice of Borrowing”: A request for a Loan in the form of Exhibit II, attached
hereto.



“Obligations”: Without duplication, (i) the Aggregate Unpaids, and (ii) all
Borrower-Related Obligations.



“Obligor”: Individually and collectively, as the context may require, the obligor or
obligors under a Mortgage Asset, including, but not limited to, any guarantor thereof and any
Person that has not signed the related Mortgage Note, Junior Interest Note, a Mezzanine Note or any
other note, instrument or certificate, but owns an interest in the related Underlying Mortgaged
Property, which interest has been encumbered to secure such Mortgage Asset.



“Obligor Reserve Payments”: Any payments made by an Obligor under the applicable Mortgage
Loan Documents which, pursuant to the terms of such Mortgage Loan Documents, are required to be
deposited into escrow or into a reserve to be used for a specific purpose (e.g., tax and insurance
escrows), but not including such amounts that are entitled or permitted to be disbursed to the
holder of the Mortgage Asset.



“OFAC”: The U.S. Department of the Treasury’s Office of Foreign Assets Control or any
successor thereto.



“OFAC Regulations”: The regulations promulgated by OFAC, as amended from time to time.



“Off-Balance Sheet Obligations”: With respect to any Person (in reference to ART and its
Subsidiaries, Person shall mean ART and its Consolidated Subsidiaries ) as of any date of
determination thereof, without duplication and to the extent not included as a liability on the
consolidated balance sheet of ART and its Consolidated Subsidiaries in accordance with GAAP:
(a) the monetary obligations under any financing lease or so-called “synthetic”, tax retention or
off-balance sheet lease transaction which, upon the application of any Insolvency Laws to such
Person or any of its Consolidated Subsidiaries, would be characterized as indebtedness; (b) the
monetary obligations under any sale and leaseback transaction which does not create a liability on
the consolidated balance sheet of such Person and its Consolidated Subsidiaries; or (c) any other
monetary obligation arising with respect to any other transaction which (i) is characterized as
indebtedness for tax purposes but not for accounting purposes in accordance with GAAP or (ii) is
the functional equivalent of or takes the place of borrowing but which does not constitute a
liability on the consolidated balance sheet of such Person and its Consolidated Subsidiaries (for
purposes of this clause (c), any transaction structured to provide tax deductibility as
interest expense of any dividend, coupon or other periodic payment will be deemed to be the
functional equivalent of a borrowing).



“Officer’s Certificate”: A certificate signed by a Responsible Officer of a Borrower.



“Operating Account”: The account designated by the Borrowers set forth on
Schedule 1 hereto.



“Opinion of Counsel”: A written opinion of counsel, which opinion and counsel are
acceptable to the Administrative Agent in its discretion.



“Original Agreement”: Defined in the Recitals of this Agreement.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


21









 








“Original Kodiak Indenture”: Defined in the definition of “Eligible Subordinated Debt.”



“Other Costs”: Defined in Subsection 13.9(d) of this Agreement.



“Payment Date”: The second to last Business Day of each calendar month.



“PBGC”: The Pension Benefit Guaranty Corporation or any entity succeeding to any or all of
its functions under ERISA.



“Pension Plans”: Defined in Subsection 4.1(r) of this Agreement.



“Permitted Investments”: Investments of any one or more of the following types:




     (a) marketable obligations of the United States, the full and timely payment of which are
backed by the full faith and credit of the United States of America and that have a maturity of not
more than 270 days from the date of acquisition;



     (b) marketable obligations, the full and timely payment of which are directly and fully
guaranteed by the full faith and credit of the United States and that have a maturity of not more
than 270 days from the date of acquisition;



     (c) bankers’ acceptances and certificates of deposit and other interest-bearing obligations
(in each case having a maturity of not more than 270 days from the date of acquisition) denominated
in dollars and issued by any bank with capital, surplus and undivided profits aggregating at least
$100,000,000, the short-term obligations of which are rated of least A-1 by S&P and P-1 by Moody’s;



     (d) repurchase obligations with a term of not more than ten (10) days for underlying
securities of the types described in clauses (a), (b) and (c) above entered
into with any bank of the type described in clause (c) above;



     (e) commercial paper rated at least A-1 by S&P and P-1 by Moody’s;



     (f) demand deposits, time deposits or certificates of deposit (having original maturities of
no more than 365 days) of depository institutions or trust companies incorporated under the laws of
the United States of America or any state thereof (or domestic branches of any foreign bank) and
subject to supervision and examination by federal or state banking or depository institution
authorities; provided, however, that at the time such investment, or the commitment
to make such investment, is entered into, the short-term debt rating of such depository institution
or trust company shall be at least A-1 by S&P and P-1 by Moody’s; and



     (g) money market mutual funds possessing the highest available rating from S&P and Moody’s.


“Permitted Liens”: Any of the following as to which no enforcement, collection, execution,
levy or foreclosure proceeding shall have been commenced: (a) Liens for state, municipal or other
local taxes if such taxes shall not at the time be due and payable, (b) Liens imposed by Applicable
Law, such as materialmen’s, mechanics’, carriers’, workmen’s and repairmen’s Liens and other
similar Liens, arising in the ordinary course of business securing obligations that are not overdue
for a period of more than thirty (30) days, (c) Liens granted pursuant to or by the Loan Documents,
and (d) in the case of Additional Collateral only and not any Borrower’s interest therein, with
respect to the Underlying


First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


22









 






Mortgaged Property applicable thereto, Liens which are permitted pursuant to the terms of the
related Mortgage Loan Documents.



“Permitted Credit Facility”: Any credit facility of ARSR or its Consolidated Subsidiaries
of which the Borrowers have given the Administrative Agent at least thirty (30) days advance notice
and that (a) has terms and conditions substantially the same as those in the Arbor Credit Facility,
(b) has financial covenants no more restrictive than those in the Arbor Credit Facility, (c) does
not permit collateral other than Whole Loans, Junior Interests, Mezzanine Loans, Preferred Equity
Interests, Condominium Loans, Land Loans and/or Bridge Loans and/or any equity interests in an
entity that acts as a borrower of such credit facility and (d) is otherwise acceptable to the
Administrative Agent in its reasonable discretion.



“Person”: An individual, partnership, corporation (including a business trust), limited
liability company, joint stock company, trust, unincorporated association, sole proprietorship,
joint venture, government (or any agency or political subdivision thereof) or other entity.



“Plan”: An employee benefit or other plan established or maintained by any Borrower, any
Guarantor or any ERISA Affiliate and covered by Title IV of ERISA, other than a Multiemployer Plan.



“Plan Party”: Defined in Subsection 13.20(a) of this Agreement.



“Pledge and Security Agreement”: That certain First Amended and Restated Pledge and
Security Agreement, dated as of the Restatement Date, by ARSR, in its capacity as pledgor of Equity
Interests in the Pledged CDO Subsidiaries, for the benefit of the Administrative Agent, as amended,
modified, restated, replaced, waived, substituted, supplemented or extended from time to time.



“Pledge Date”: Defined in Subsection 2.1(f)(i) of this Agreement.



“Pledged CDO Subsidiary”: (i) Each CDO Subsidiary existing on the Closing Date and (ii)
each additional CDO Subsidiary created after the Closing Date with respect to which the Equity
Interests are pledged, at the option of ARSR, to the Administrative Agent as Collateral.



“Pledged Collateral”: Defined in the Pledge and Security Agreement.



“Pledged Preferred Equity Collateral”: Defined in the Preferred Equity Pledge Agreement.



“Pledgor” Arbor Realty SR, Inc., a Maryland corporation, together with its successors and
assigns.



“Post-Default Rate”: In respect of any day a Loan is outstanding or any other amount under
this Agreement or any other Loan Document is not paid when due to the Administrative Agent, the
Lenders or the Affected Parties at the stated repayment date or otherwise when due (a
“Post-Default Day”), a rate per annum determined on a 360 day per year basis during the
period from and including the due date to but excluding the date on which such amount is paid in
full equal to the applicable Rate plus 500 basis points.



“Pre-Approved Lender”: A bank, financial institution, insurance company, Approved Fund,
any Person similar to any of the foregoing or any special purpose vehicle.



“Preferred Equity Pledge Agreement”: The First Amended and Restated Preferred Equity
Interests Pledge and Security Agreement, dated as of the Restatement Date, by the Borrowers, in
their capacity as pledgors, for the benefit of the Administrative Agent, as amended, modified,
restated, replaced, waived, substituted, supplemented or extended from time to time.




First Amended and Restated Revolving Loan Agreement

(Wachovia and Arbor)


23









 







“Preferred Securities”: Means, with respect to any Person, Equity Interests in such Person
that are entitled to preference or priority over any other Equity Interests in such Person in
respect of the payment (or accrual) of dividends or distribution of assets upon liquidation, or
both.



“Prime Rate”: The rate announced by Wachovia from time to time as its prime rate in the
United States, such rate to change as and when such designated rate changes. The Prime Rate is not
intended to be the lowest rate of interest charged by Wachovia in connection with extensions of
credit to debtors.



“Prohibited Person”: Means (i) a Person that is listed in the annex to, or is otherwise
subject to the provisions of, Executive Order No. 13224, (ii) a Person owned or controlled by, or
acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to
the provisions of, Executive Order No. 13224, (iii) a Person with whom any Borrower or any
Guarantor is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism
Law, (iv) a Person who commits, threatens or conspires to commit or supports “terrorism” as defined
in Executive Order No. 13224, (v) an agency of the government of, an organization directly or
indirectly controlled by, or a Person resident in, a country that is subject to a sanctions program
identified on the list maintained by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sanctions/index.html, or as otherwise published from time
to time, as such program may be applicable to such agency, organization or Person, (vi) a Person
that is named as a “specially designated national or blocked person” on the most current list
maintained or published by OFAC and available at
http://www.treas.gov/offices/eotffc/ofac/sdn.index.html or at any replacement website or in any
other official publication of such list, and (vii) a Person who is affiliated with a Person
described in clauses (i)-(vi) above.



“Projected Collateral Cash Flow”: For any calendar quarter, future projections of
Collateral Cash Flow for the immediately following calendar quarter or for the immediately
following four (4) calendar quarters, as applicable, determined in reliance on an Officer’s
Certificate signed by a Responsible Officer of a Borrower after due inquiry, which Officer’s
Certificate shall provide future projections of Collateral Cash Flow, together with the relevant
facts supporting such projections, which Projected Collateral Cash Flow may be adjusted by the
Administrative Agent in its discretion.



“Property”: Any right or interest in or to property of any kind whatsoever, whether real,
personal or mixed, and whether tangible or intangible.



“QRS”: Means a qualified REIT subsidiary within the meaning of Section 856(i)(2) of the
Code.



“Rate”: For any Accrual Period and for all Loans outstanding and for each day during such
Accrual Period, the rate per annum equal to the Adjusted Eurodollar Rate plus the
applicable Financing Spread; provided, however, the Rate for any Accrual Period
shall be the Base Rate (plus the applicable Financing Spread) if a Eurodollar Disruption
Event has occurred and is continuing.



“Rating Agency”: Each of S&P, Moody’s and any other statistical rating agency that has
been requested to issue a rating in connection with the matter at issue.



“Real Property Assets”: Means, as of any time, the real Property assets (including
interests in preferred equity and participating mortgages in which the lender’s interest therein is
characterized as equity according to GAAP) owned directly or indirectly by ART or a Consolidated
Subsidiary of ART at such time.



“Register”: Defined in Subsection 13.16(f).



“Registration Rights Agreement”: Defined in the Arbor Credit Agreement.




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“Regulations T, U and X”: Regulations T, U and X of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be amended from time to time.



“REIT”: A “real estate investment trust” within the meaning of the Code.



“Related Party Loan”: Any loan, Indebtedness or preferred equity investment identified or
presented as a related party loan in ART’s consolidated financial statements or in the notes to the
consolidated financial statements, in accordance with GAAP; provided, however,
Related Party Loan shall not include any loan or preferred equity investment (i) which is held as
collateral in a CDO Issuance involving ART or any Consolidated Subsidiary of ART or (ii) to which
the Administrative Agent in its discretion has consented in writing to its exclusion from the
definition of Related Party Loan.



“Release”: Any generation, treatment, use, storage, transportation, manufacture,
refinement, handling, production, removal, remediation, disposal, presence or migration of
Materials of Environmental Concern on, about, under or within all or any portion of any Property or
Underlying Mortgaged Property.



“Remedial Work”: Any investigation, inspection, site monitoring, containment, clean-up,
removal, response, corrective action, mitigation, restoration or other remedial work of any kind or
nature because of, or in connection with, the current or future presence, suspected presence,
Release or threatened Release in or about the air, soil, ground water, surface water or soil vapor
at, on, about, under or within all or any portion of any Property or Underlying Mortgaged Property
of any Materials of Environmental Concern, including any action to comply with any applicable
Environmental Laws or directives of any Governmental Authority with regard to any Environmental
Laws.



“REO Property”: Real property acquired by any Person by foreclosure or by deed in lieu of
such foreclosure.



“Reportable Event”: Any of the events set forth in Section 4043(c) of ERISA or a successor
provision thereof, other than those events as to which the notice requirement has been waived by
regulation.



“Requested Borrowing Date”: The date specified in Subsection 2.1(b)(i) of this
Agreement.



“Required Payments”: All payments required under Section 2.2 of this Agreement or
subject to or required to be subject to an Irrevocable Instruction, which amounts shall be free of
any deductions for or on account of any set-off, counterclaim or defense and shall be deposited
into the Collection Account for application in accordance with the terms of this Agreement.



“Requisite Lenders”: As of any date, Lenders holding Revolving Commitment Percentages
totaling at least 66-2/3%; provided, however, that any Lender that is in default
hereunder shall not be included in calculating such Revolving Commitment Percentages.



“Responsible Officer”: With respect to any Person, any duly authorized Senior Vice
President (or equivalent or higher office) of such Person with direct responsibility for the
administration of the Loan Documents and also, with respect to a particular matter, any other duly
authorized Senior Vice President (or equivalent or higher office) to whom such matter is referred
because of such officer’s knowledge of and familiarity with the particular subject.



“Restatement Date”: The date of this Agreement.




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“Restricted Payment”: Means (a) any dividend or other distribution, direct or indirect, on
account of any Equity Interests of ART or any Consolidated Subsidiary now or hereafter outstanding,
except a dividend payable solely in Equity Interests of identical class to the holders of that
class; (b) any redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any Equity Interests of ART or any
Consolidated Subsidiary now or hereafter outstanding; and (c) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to acquire any Equity
Interests of ART or any Consolidated Subsidiary now or hereafter outstanding.



“Retained Interest”: (a) With respect to any Mortgage Asset with an unfunded commitment on
the part of a Borrower, all of the obligations, if any, to provide additional funding or
contributions with respect to such Mortgage Asset, and, (b) with respect to any Mortgage Asset that
is pledged by a Borrower to the Administrative Agent, (i) all of the obligations, if any, of the
agent(s) under the documentation evidencing such Mortgage Asset and (ii) the applicable portion of
the interests, rights and obligations under the documentation evidencing such Mortgage Asset that
relate to such portion(s) of the Indebtedness that is owned by another lender or is being retained
by a Borrower pursuant to clause (a) of this definition.



“Revolving Commitment”: With respect to each Lender, the commitment of such Lender to make
Loans in an aggregate principal amount at any time outstanding up to such Lender’s Revolving
Commitment as specified in Schedule 2 of this Agreement, as such amount may be reduced or
increased from time to time in accordance with the provisions hereof. For the avoidance of doubt,
the Revolving Commitment shall terminate upon the expiration of the Commitment Period or upon the
request of the Borrower.



“Revolving Commitment Percentage”: For each Lender, the percentage identified as its
Revolving Commitment Percentage on Schedule 2 of this Agreement, as such percentage may be
modified in connection with any assignment made in accordance with the provisions of
Section 13.16 of this Agreement.



“Revolving Notes”: The Amended and Restated Revolving Notes, in the form attached hereto
as Exhibit I, issued in favor of the Lenders under this Agreement, as the same may be
amended, modified, waived, supplemented, extended, restated or replaced from time to time.



“S&P”: Standard & Poor’s, a division of The McGraw Hill Companies, Inc., and any successor
thereto.



“Securitization”: Defined in Subsection 2.2(a)(iv) of this Agreement.



“Servicer Redirection Notice”: An executed Servicer Redirection Notice with respect to
each pledge of Additional Collateral, substantially in the form of Exhibit VII attached
hereto.



“Solvent”: As to any Person at any time, having a state of affairs such that all of the
following conditions are met: (a) the fair value of the Property of such Person is greater than the
amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated for purposes of Section 101(32) of the
Bankruptcy Code; (b) the present fair salable value of the Property of such Person in an orderly
liquidation of such Person is not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including disputed,
contingent and unliquidated liabilities) as they mature in the normal course of business; (d) such
Person does not intend to, and does not believe that it will, incur debts or liabilities beyond
such Person’s ability to pay as such debts and liabilities mature; and (e) such Person is not
engaged in a business or a transaction, and is not about to engage in a business or a transaction,
for which such Person’s Property would constitute unreasonably small capital.




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“Stock Exchange”: Defined in Subsection 4.1(nn) of this Agreement.



“Subsidiary”: With respect to any Person, any corporation, partnership, limited liability
company or other entity of which at least a majority of the securities or other ownership interests
having by the terms thereof ordinary voting power to elect a majority of the board of directors or
other Persons performing similar functions of such corporation, partnership, limited liability
company or other entity (irrespective of whether or not at the time securities or other ownership
interests of any other class or classes of such corporation, partnership or other entity shall have
or might have voting power by reason of the happening of any contingency) is at the time directly
or indirectly owned or controlled by such Person or one or more Subsidiaries of such Person.



“Tangible Net Worth”: Net worth as determined in accordance with GAAP.



“Tax Law Change”: A change in the Applicable Law relating to Taxes that would cause a
transfer of the entire membership interests in a CDO Subsidiary to a REIT, a QRS or a disregarded
entity (for federal income tax purposes) that is wholly owned by a REIT to result in a loss of the
QRS status of the CDO Issuer owned by that CDO Subsidiary.



“Taxes”: Any present or future taxes, levies, imposts, duties, charges, assessments or
fees of any nature (including interest, penalties, and additions thereto) that are imposed by any
Governmental Authority.



“Test Period”: The immediately preceding calendar quarter.



“Total Assets”: Total assets of ART and its Consolidated Subsidiaries, determined in
accordance with GAAP.



“Total ESH Release Amount”: Defined in the Arbor Credit Agreement.



“Total Liabilities”: Means all Indebtedness of any Person (without duplication) and all of
such Person’s Consolidated Subsidiaries determined on a consolidated basis.



“Toxic Mold”: Any mold or fungus at any Property which is a type that (i) might pose a
significant risk to human health or the environment or (ii) that would negatively impact any
Property.



“Transfer Effective Date”: The meaning set forth in each Commitment Transfer Supplement.



“Transferee”: Defined in Subsection 13.16(b) of this Agreement.



“Trust Preferred Debt”: Means (a) the existing indebtedness of ART and its Consolidated
Subsidiaries under any securities and guarantees issued by them in any debt securities transaction
related to any of the indentures identified in clause (a) of the definition of “Eligible
Subordinated Debt” and (b) any future indebtedness of ART and its Consolidated Subsidiaries in
connection with any debt securities transaction for which the related indenture (i) has
subordination provisions substantially the same as those in the indentures identified in
clause (a) of the definition of “Eligible Subordinated Debt” and (ii) has enforceable
subordination provisions, and (c) has a maturity date no earlier than the date that is six (6)
months following the Facility Maturity Date.



“Uniform Commercial Code” or “UCC”: The Uniform Commercial Code as in effect on
the date hereof in the State of New York; provided, that if by reason of mandatory
provisions of Applicable Law, the perfection, priority or the effect of perfection or
non-perfection or priority or lack of priority of the


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security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than New York, “Uniform Commercial Code” shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection or priority or lack of priority.



“United States”: The United States of America.



“Unused Fee”: The “Unused Fee” defined in and payable under the Fee Letter.



“Upfront Fee”: The “Upfront Fee” defined in and payable under the Fee Letter.



“USA Patriot Act”: The “United and Strengthening America by providing Tools Required to
Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as amended from time to time.



“Voting Interests”: With respect to any Person, Equity Interests issued by such Person the
holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election
of directors (or persons performing similar functions) of such Person, even though the right so to
vote has been suspended by the happening of such a contingency.



“Wachovia”: Defined in the Preamble of this Agreement.



“Wachovia Indebtedness”: All indebtedness, obligations or liabilities of any Borrower, any
Guarantor or any Consolidated Subsidiary of any Borrower or any Guarantor to Wachovia or any of its
Affiliates, and shall include, without limitation, indebtedness, obligations and liabilities
arising under the Arbor Credit Facility and any Wachovia Interest Rate Protection Agreements.



“Wachovia Interest Rate Protection Agreements”: Any and all of a Borrower’s, a Guarantor’s
or any of their Consolidated Subsidiary’s obligations, liabilities and indebtedness arising under,
or in connection with, any Interest Rate Protection Agreements to which the Initial Lender or any
of its Affiliates is a counterparty thereto.



“Warrant Agreements”: Defined in the Arbor Credit Agreement.



“WFS”: Wells Fargo Securities, LLC (formerly known as Wachovia Capital Markets, LLC), a
Delaware limited liability company.




     Section 1.2 Other Terms.



     (a) All accounting terms used but not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of New York, and used
but not specifically defined herein, are used herein as defined in such Article 9.



     (b) Capitalized terms used with respect to the Additional Collateral but not defined in this
Agreement shall have the meanings given to such terms in the Arbor Credit Documents,
mutatis mutandis.



     Section 1.3 Computation of Time Periods.



     Unless otherwise stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word “from” means “from and including” and the words
“to” and “until” each mean “to but excluding.”



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     Section 1.4 Interpretation.


     In each Loan Document, unless a contrary intention appears:





     (i) the singular number includes the plural number and vice versa;




     (ii) reference to any Person includes such Person’s successors and assigns but, if
applicable, only if such successors and assigns are permitted by the Loan Documents;




     (iii) reference to any gender includes each other gender;




     (iv) reference to day or days without further qualification means calendar days;




     (v) reference to any time means Charlotte, North Carolina time;




     (vi) the term “including” means “including without limitation;”




     (vii) the term “through” means “to and including;”




     (viii) unless the context clearly requires or the language provides otherwise,
reference to a section, subsection, paragraph, subparagraph, clause, exhibit, schedule,
annex, appendix, attachment, rider or other attachment means a section, subsection,
paragraph, subparagraph, clause, exhibit, schedule, annex, appendix, attachment, rider or
other attachment of or to this Agreement;




     (ix) to the extent this Agreement uses or requires different limitations, tests or
measurements to regulate the same or similar matters, all such limitations, tests and
measurements are cumulative and shall each be performed in accordance with their terms;




     (x) unless the context clearly requires or the language provides otherwise, the words
“herein,” “hereof,” “hereunder” or similar words refer to this Agreement as a whole and not
to any particular provision of this Agreement;




     (xi) reference to any agreement (including any Loan Document), document or instrument
means such agreement, document or instrument as amended, modified, restated, replaced,
waived, substituted, supplemented or extended from time to time in accordance with the terms
thereof and, if applicable, the terms of the other Loan Documents, and reference to any
promissory note, certificate, instrument or trust receipt includes any promissory note,
certificate, instrument or trust receipt that is an extension or renewal thereof or a
substitute or replacement therefor;




     (xii) reference to any Applicable Law, including any reference to any specific
provision of Applicable Law, means such Applicable Law as amended, modified, codified,
replaced or reenacted, in whole or in part, and in effect from time to time, including rules
and regulations promulgated thereunder and reference to any Section or other provision of
any Applicable Law means that provision of such Applicable Law from time to time in effect
and constituting the substantive amendment, modification, codification, replacement or
reenactment of such Section or other provision;



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     (xiii) unless otherwise expressly provided in this Agreement, reference to any notice,
request, approval, consent or determination provided for, permitted or required under the
terms of this Agreement with respect to a Borrower, a Guarantor, the Administrative Agent or
a Lender means, in order for such notice, request, approval, consent or determination to be
effective hereunder, such notice, request, approval or consent must be in writing; and




     (xiv) reference herein or in any Loan Documents to the Administrative Agent’s or any
Lender’s discretion shall mean, unless otherwise stated herein or therein, the
Administrative Agent’s or Lender’s sole and absolute discretion, and the exercise of such
discretion shall be final and conclusive. In addition, whenever the Administrative Agent or
a Lender has a decision or right of determination or request, exercises any right given to
it to agree, disagree, accept, consent, grant waivers, take action or no action or to
approve or disapprove, or any arrangement or term is to be satisfactory or acceptable (or
any similar language or terms) to the Administrative Agent or a Lender, the decision of the
Administrative Agent or a Lender with respect thereto shall be in the sole and absolute
discretion of the Administrative Agent or the Lender, and such decision shall be final and
conclusive, except as may be otherwise specifically provided herein.



ARTICLE II




THE LOANS




     Section 2.1 Loans.



     (a) Revolving Commitment. During the Commitment Period, and subject to the terms and
conditions of this Agreement, the Initial Lender agrees initially and, upon an assignment of any
portion of the Revolving Commitment to one or more Lenders, all Lenders, including, without
limitation, the Initial Lender, severally, agree to make revolving loans (each a “Loan” and
collectively the “Loans”) to the Borrowers from time to time for the purposes hereinafter
set forth; provided, however, (i) no Loans shall be made (A) when a Default or any
Event of Default has occurred and is continuing, (B) if, before or after giving effect to the
requested Loan, the Availability is or would be negative, and (C) after the Commitment Period, and
(ii) in the event of an assignment of any portion of the Maximum Amount to one or more Lenders,
with regard to each Lender individually, the sum of such Lender’s share of the outstanding Loans
shall not exceed such Lender’s Revolving Commitment Percentage of the Maximum Amount.



     (b) Revolving Loan Borrowings.




     (i) Notice of Borrowing. ARSR, on behalf of the Borrowers, shall request a
Loan by giving written notice (or telephonic notice promptly confirmed in writing which
confirmation may be by fax) to the Administrative Agent in the form of a duly completed and
executed Notice of Borrowing, together with a duly completed and executed Compliance
Certificate, not later than 11:00 a.m. on or before two (2) Business Days prior to the date
of the requested borrowing (unless a shorter notice period is approved by the Administrative
Agent) (the “Requested Borrowing Date”). Each Notice of Borrowing shall be
irrevocable and shall specify (A) that a Loan is requested, (B) the date of the requested
borrowing (which shall be a Business Day), (C) the aggregate principal amount to be
borrowed, (D) the purpose for the Loan, which purpose must be approved by the Administrative
Agent in its discretion, (E) the proposed source of repayment of the Loan, (F) the
Borrower’s calculation of the Availability and the Borrower’s compliance therewith after
giving effect to the requested borrowing, and (G) such other information as the
Administrative Agent may require in its discretion. The Administrative Agent



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shall give notice to each Lender promptly upon receipt of each Notice of Borrowing and
Compliance Certificate, the contents thereof and each such Lender’s share thereof.




     (ii) Loan Approval. The Administrative Agent shall notify the Borrowers on or
prior to the Requested Borrowing Date whether the Administrative Agent on behalf of the
Lenders has (A) rejected the proposed Loan based on the Administrative Agent’s review of the
Notice of Borrowing and/or the Compliance Certificate, (B) has agreed to the proposed Loan
or (C) has agreed to make the requested Loan subject to certain terms, conditions or
modifications. The Administrative Agent’s failure to timely respond to a Notice of
Borrowing shall be deemed to be a rejection of the proposed Loan. If the Administrative
Agent rejects the proposed Loan as provided in clause (A) above or the Borrowers
reject the terms, conditions or modifications required by the Administrative Agent under
clause (C) above, the Lenders shall not be obligated to make the proposed Loan
requested in the Notice of Borrowing, and the submitted Notice of Borrowing shall thereafter
become void automatically without further action by any party.




     (iii) Minimum Amounts. Subject to the other provisions of this
Article II, each Loan shall be in a minimum aggregate amount of $1,000,000.




     (iv) Advances. Provided that each condition precedent set forth in
Articles II and III of this Agreement and all other terms and conditions are
satisfied, as determined by the Administrative Agent in its discretion, each Lender will
make its Revolving Commitment Percentage of each approved Loan available to the
Administrative Agent for the account of the Borrowers at the office of the Administrative
Agent identified on Schedule 3, or at such other office as the Administrative Agent
may designate in writing, upon reasonable advance notice by 1:00 p.m. on the Requested
Borrowing Date specified in the applicable Notice of Borrowing, in Dollars and in funds
immediately available to the Administrative Agent. Such borrowing will then be made
available to the Borrowers by the Administrative Agent by crediting the Operating Account
with the amounts made available to the Administrative Agent by the Lenders and in like funds
as received by the Administrative Agent. The obligations of the Lenders hereunder are
several and not joint or joint and several. The failure of any Lender to fulfill its
obligations hereunder shall not result in any other Lender becoming obligated to advance
more than its Revolving Commitment Percentage of any Loan, nor shall such failure release or
diminish the obligations of any other Lender to fund its Revolving Commitment Percentage
provided for in this Agreement.




     (v) Borrower’s Use of Proceeds. The proceeds of all Loans shall be used solely
for the purpose requested and approved by the Administrative Agent. Neither the Lenders nor
the Administrative Agent shall have any liability, obligation or responsibility whatsoever
with respect to a Borrower’s use of the proceeds of the Loans, and neither the Lenders nor
the Administrative Agent shall be obligated to determine whether or not a Borrower’s use of
the proceeds of the Loans are for purposes permitted under a Borrower’s Authority Documents,
Applicable Law, under any other applicable document or agreement or otherwise. Nothing,
including, without limitation, any borrowing or any acceptance of any other document or
instrument, shall be construed as a representation or warranty, express or implied, to any
party by the Lenders or the Administrative Agent as to whether any investment by a Borrower
qualifies under this Agreement or is otherwise permitted by the terms of the Borrower’s
Authority Documents, Applicable Law, under any other applicable document or agreement or
otherwise.



     (c) Revolving Loans. Loans may be repaid subject to and in accordance with the terms,
provisions and conditions of this Agreement and the other Loan Documents. Notwithstanding any
contained in the Loan Documents to the contrary, Loans may not be repaid and reborrowed.



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     (d) Revolving Notes. The Borrowers’ obligation to pay each Lender’s Loans shall be
evidenced by a Revolving Note made payable to each such Lender, if requested by such Lender.



     (e) Repayment of Loans. Borrowers covenant and agree to repay the Loans in accordance
with the terms and conditions of this Agreement and the Revolving Notes. Subject to earlier
repayment under Article X and Subsection 2.1(g), the Aggregate Outstanding
Principal, accrued and unpaid Interest and all other Aggregate Unpaids shall be paid in full on or
before the Facility Maturity Date.



     (f) Additional Collateral.




     (i) In order to increase the Availability under this Agreement, the Administrative
Agent may, subject to the terms of this Subsection 2.1(f), approve certain Eligible
Assets to be included in the Additional Collateral included in the Collateral hereunder (the
date of any such approval and pledge hereunder, the “Pledge Date”). The addition of
any Additional Collateral to the Collateral pool shall be permitted in the Administrative
Agent’s discretion, in accordance with the terms of this Subsection 2.1(f).




     (ii) Unless otherwise expressly provided herein and without duplication, all of the
terms, provisions, requirements, deliveries, representations, warranties, covenants, duties,
liabilities, defaults, rights, remedies and agreements that are contained in or required by
the Arbor Credit Documents and apply in any way to the Mortgage Assets and related Purchased
Items under the Arbor Credit Facility (as opposed to the Arbor Credit Facility generally)
shall, unless waived in writing by the Administrative Agent pursuant to a written request of
the Borrowers, be equally applicable to the Mortgage Assets and the related Collateral under
this Agreement, with all of the necessary changes having been or deemed to have been made to
such terms, provisions, requirements, deliveries, representations, warranties, covenants,
duties, liabilities, defaults, rights, remedies and agreements as necessary.
Notwithstanding the foregoing, however, (A) the terms Deficit, Notice of Borrowing, Table
Funded Mortgaged Asset and Table Funded Trust Receipt contained in the Arbor Credit
Facility, (B) the provisions of Sections 2.5 and 2.9 of the Arbor Credit
Agreement and Schedule 1-A to the Arbor Credit Facility Fee Letter shall be
inapplicable to this Agreement and the other Loan Documents. For the avoidance of doubt,
the terms Asset Value, Confirmation, Custodian, Custodial Agreement, Custodial Fee Letter,
Junior Interest and Servicer Redirection Notice shall have the meaning set forth in this
Agreement or the other Loan Documents and not as defined in the Arbor Credit Facility. With
respect to the Additional Collateral, the applicable Advance Rates, the Maximum LTV (or
Maximum LTC), Minimum DSCR and financing spreads shall be contained in the related
Confirmation. To the extent there is any question or dispute as to the applicability,
interpretation, implication, impact, effect or scope of any term, provision, requirement,
delivery, representation, warranty, covenant, duty, liability, default, right, remedy or
agreement from the Arbor Credit Facility, the Administrative Agent shall resolve all such
questions and disputes in its reasonable and good faith discretion. Notwithstanding
anything contained herein to the contrary, the terms of the financing of any Additional
Collateral may be set forth in the related Confirmation and such terms shall be controlling
over any contrary terms in this Agreement, the Fee Letter or any other Loan Document.




     (iii) To the extent the Borrowers desire to include any Mortgage Asset as a part of the
Additional Collateral under this Agreement and the other Loan Documents, the Borrowers shall
make a written request to the Administrative Agent and, in connection therewith, provide the
Administrative Agent with the Underwriting Package and Seller-Asset Schedule for such
Mortgage Asset and such other information as the Administrative Agent may require in its



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discretion. Provided a Mortgage Asset is an Eligible Asset and the Administrative
Agent in its discretion approves of the inclusion of such Mortgage Asset as a part of the
Additional Collateral, the Administrative Agent shall provide written notice thereof to the
Borrowers and the Borrowers shall, with respect to the Mortgage Assets and related
Collateral under this Agreement, (A) take all actions and provide all deliveries to the same
extent as required for the transfer and pledge of Mortgage Assets under the Arbor Credit
Facility, (B) take all actions and provide all deliveries required for the grant to the
Administrative Agent of a first priority perfected security interest in the Mortgage Assets
and the related Collateral, (C) take all such other actions as the Administrative Agent may
require in its discretion, and (D) take all actions required with respect to such Additional
Collateral as set forth in Subsection 2.1(f)(ii). The Borrowers acknowledge and
agree that the Administrative Agent in its discretion may reject any Mortgage Asset for
inclusion as a part of the Additional Collateral for any reason or no reason whatsoever.
The Administrative Agent’s failure to respond to a request to include a Mortgage Asset as a
part of the Additional Collateral shall be deemed to be a denial of such a request and the
rejection of such Mortgage Asset. Upon the issuance of a Trust Receipt by the Custodian
under the Custodial Agreement with respect to a Mortgage Asset that is an Eligible Asset and
approved by the Administrative Agent in its discretion, a Mortgage Asset shall be deemed to
be included as a part of the Additional Collateral under this Agreement and the other Loan
Documents. With respect to any proposed Additional Collateral that is a Preferred Equity
Interest, the Administrative Agent may, as a condition to the pledge of such Additional
Collateral, require that such Additional Collateral be held and pledged by a special purpose
entity acceptable to the Administrative Agent and that such entity become a Borrower under
the Loan Documents.



     (g) Tax Law Change. Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, if there is a Tax Law Change, the Commitment Period shall
automatically terminate, no further Loans shall be made, the Facility Maturity Date will be deemed
to occur one hundred twenty (120) calendar days from the enactment date of such Tax Law Change and
the Borrowers shall pay to the Administrative Agent on behalf of the Lenders all Aggregate Unpaids
and all other amounts owed hereunder or under the other Loan Documents within one hundred twenty
(120) calendar days of the enactment date of such Tax Law Change; provided,
however, the foregoing shall not affect or impair the Administrative Agent’s rights to
accelerate the Obligations and to exercise its rights and remedies under the Loan Documents (other
than with respect to a foreclosure on the impacted Pledged Collateral) upon the occurrence of an
Event of Default.



     (h) Expiration of Commitment Period. Notwithstanding anything contained in the Loan
Documents to the contrary, the Commitment Period has expired on or prior to the Restatement Date.
As such, no additional Loans may be made to the Borrowers after the Restatement Date.
Notwithstanding the foregoing, each Loan made on or prior to the Restatement Date shall be a “Loan”
hereunder.



     Section 2.2 Mandatory Prepayments.



     (a) The Borrowers shall pay the following amounts upon the occurrence of any of the following
events:




(i) Availability. The Administrative Agent may calculate Availability on any day
during an Asset Valuation Period. If the Availability, as determined by the Administrative
Agent in its discretion, is negative on any day during an Asset Valuation Period the
Borrowers shall, immediately upon notice from the Administrative Agent and, in any event,
within two (2) Business Days (the “Availability Correction Deadline”), prepay the
Loans in cash in an amount determined by the Administrative Agent so that, after giving
effect to such payment, the Availability will not be negative (each such amount, a
“Correction Amount”); provided, however,



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to the extent the Administrative Agent has calculated the Availability based on either
clause (i)(b), (i)(c) or (i)(d) of the definition of Availability
and provided no Event of Default has occurred and the Facility Maturity Date has not
occurred, the Borrowers may, subject to the Administrative Agent’s right of approval
pursuant to Subsection 2.1(f), pledge Additional Collateral to the Administrative
Agent on or before the Availability Correction Deadline, provided that such Additional
Collateral is acceptable to the Administrative Agent in its discretion, and the Asset Value
of such Additional Collateral is equal to or greater than the Correction Amount.




(ii) Debt Issuances. The terms and provisions governing mandatory prepayments in
connection with Debt Issuances are set forth in the Fee Letter and are hereby incorporated
by reference.




(iii) Equity Issuances. The terms and provisions governing mandatory prepayments in
connection with Equity Issuances are set forth in the Fee Letter and are hereby incorporated
by reference.




(iv) Securitizations. The terms and provisions governing mandatory prepayments in
connection with the closing of any securitization of any assets (“Securitization”)
are set forth in the Fee Letter and are hereby incorporated by reference.




(v) Tax Law Change. In the event of a Tax Law Change, the Borrowers shall pay all
Aggregate Unpaids and all other amounts owed hereunder and under the other Loan Documents
within one hundred twenty (120) calendar days of the enactment date of the Tax Law Change.




(vi) Principal Payments. For each calendar quarter in which the CDO Payment Trigger
is satisfied (or deemed to be satisfied), the Borrowers shall repay the outstanding
principal balance of the Loans in an aggregate amount equal to ONE MILLION DOLLARS
($1,000,000) for each CDO Issuance that makes CDO Equity Distributions in such calendar
quarter, which amounts will be applied to the outstanding principal amounts of the Loans;
provided that the principal payment required pursuant to this clause (vi) shall be reduced
by any amounts previously received pursuant to clauses (vii) and (viii). Each such
repayment, to the extent required, shall be made on the first Business Day of the month
following the end of the applicable calendar quarter.




(vii) Additional Term Loan Collateral. The terms and provisions governing mandatory
prepayments in connection with repayments, prepayments and/or reductions of the Loans with
respect to Additional Term Loan Collateral are set forth in the Fee Letter and are hereby
incorporated by reference.




(viii) Prime Distribution Prepayment. To the extent there are annual dividends or
distributions in excess of $10,000,000 from the Prime Pledged Mortgage Asset, the Borrowers
shall prepay the Loans in an aggregate principal amount equal to one hundred percent (100%)
of all such excess dividends or distributions. Such amounts shall be applied in such manner
as the Administrative Agent may determine in its discretion.



     (b) Application of Mandatory Prepayments. All amounts required to be paid pursuant to
this Section 2.2 shall be deposited into the Collection Account and shall be accompanied by
Breakage Costs (if any). All such amounts shall be applied in accordance with the payment
priorities set forth in Subsection 2.7(b) (i) on the Business Day received if received
prior to 3:00 pm or (ii) on the next Business Day if received after 3:00 pm.



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     Section 2.3 Optional Prepayments.



     (a) [Reserved].



     (b) The Borrowers shall have the right to make optional prepayments hereunder from time to
time upon the delivery of one (1) Business Day prior written notice, which notice shall be
irrevocable; provided, however, each optional prepayment of Loans (other than an
optional prepayment resulting from the prepayment of any Eligible Asset included in Additional
Collateral by the Obligor under the related Mortgage Loan Documents) shall be in a minimum
principal amount of $1,000,000 and in integral multiples of $500,000. Amounts prepaid under this
Subsection 2.3(b) shall be accompanied by Breakage Costs (if any). All such prepayment
amounts shall be deposited into the Collection Account and shall be applied in accordance with the
payment priorities set forth in Subsection 2.7(b) (i) on the Business Day received if
received prior to 3:00 pm or (ii) on the next Business Day if received after 3:00 pm. For the
avoidance of doubt, all prepayments are subject to Section 8.2.



     Section 2.4 [Reserved].



     Section 2.5 Payment of Interest.



     (a) The Borrowers shall pay to the Administrative Agent for the benefit of the Lenders the
accrued Interest on each Loan on each Payment Date. The Administrative Agent shall deliver to the
Borrowers notice of the amount of Interest due (along with the calculation of the Unused Fee, if
any, and other amounts owed and to be paid on the Payment Date) on or prior to the second (2nd)
Business Day preceding each Payment Date; provided, however, the Administrative
Agent’s failure to give notice to the Borrowers of any amount due shall not waive such amount or
relieve the Borrowers of their obligation to pay such amount but such failure shall extend the due
date of such amount until the Business Day after such notice is received by the Borrowers. If the
Borrowers fail to pay the Interest and the other amounts due by 3:00 p.m. on the Payment Date, the
Borrowers shall be obligated to pay to the Administrative Agent on behalf of the Lenders (in
addition to, and together with, the Interest and the other amounts due) interest on the unpaid
amounts at a rate per annum equal to the Post-Default Rate (the “Late Payment Fee”) until
the unpaid amounts are received in full by the Administrative Agent. If the Interest includes any
estimated Interest, the Administrative Agent shall recalculate such Interest after the Payment Date
and, if necessary, make adjustments to the Interest amount due on the following Payment Date.



     (b) If the Borrowers pay or prepay any principal on any day that is not either the last day of
the Eurodollar Period or the maturity date for such Loan, the Borrowers shall indemnify the
Administrative Agent, the Lenders and the other Affected Parties and hold the Administrative Agent,
the Lenders and the other Affected Parties harmless from any losses, costs and/or expenses that the
Administrative Agent, the Lenders and the other Affected Parties may sustain or incur arising from
the reemployment of funds obtained by the Administrative Agent, the Lenders and the other Affected
Parties hereunder or from fees payable to terminate the deposits from which such funds were
obtained (“Breakage Costs”), in each case for the remainder of the Eurodollar Period. The
Administrative Agent shall deliver to the Borrowers a statement setting forth the amount and basis
of determination of any Breakage Costs in such detail as determined in good faith by the
Administrative Agent, the Lenders and the other Affected Parties to be adequate, it being agreed
that such statement and the method of its calculation shall be conclusive and binding upon the
Borrowers, absent manifest error. This Subsection 2.5(b) shall survive termination of this
Agreement and the payment in full of the Obligations.



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     Section 2.6 Pro Rata Treatment and Payments.



     Each borrowing of Loans shall be made pro rata by the Lenders according to the respective
Revolving Commitment Percentages of the Lenders. Each payment to the Lenders under this Agreement
or any Revolving Note shall be applied pro rata among the Lenders entitled thereto (based on the
respective Revolving Commitment Percentages).



     Section 2.7 Accounts; Payments.



     (a) On or before the Closing Date, the Borrowers shall establish and maintain with Wachovia an
account (as more specifically identified on Schedule 1 hereto, the “Collection
Account”) into which all Income, CDO Equity Distributions and other amounts required to be paid
pursuant to this Agreement shall be deposited and ARCM shall establish and maintain with Wachovia
an account into which all CDO Management Fees shall be deposited (as more specifically identified
on Schedule 1 hereto, the “CDO Management Fee Account”). The Collection Account
and the CDO Management Fee Account shall be established at Wachovia’s Charlotte, North Carolina
location. The Collection Account shall be in the name of one (1) or more Borrowers and the CDO
Management Fee Account shall be established in the name of ARCM. The Collection Account shall be
for the benefit of each beneficiary of the security interest in favor of the Administrative Agent
and for the benefit of each Borrower (but only to the extent any such Borrower is entitled to any
cash flow in accordance with Subsection 2.7(b) hereof). The Administrative Agent shall
invest any cash deposited in the Collection Account in such Permitted Investments as a Borrower
shall direct the Administrative Agent in writing. The CDO Management Fee Account shall be for the
benefit of each beneficiary of the security interest in favor of the Administrative Agent and for
the benefit of ARCM (but only to the extent ARCM is entitled to any cash flow in accordance with
Subsection 2.7(b) hereof).



     (b) The Administrative Agent shall be entitled to receive on behalf of the Lenders and the
other Affected Parties an amount equal to all Income paid or distributed on or in respect of the
Collateral, the Required Payments and all other payments and amounts required or permitted
hereunder or under the other Loan Documents, which amounts shall be deposited by the Borrowers and
all other applicable Persons into the Collection Account or the CDO Management Fee Account, as
applicable. On or before each Payment Date and on such other dates as the Administrative Agent may
determine in its discretion, the Administrative Agent shall transfer all amounts on deposit in the
CDO Management Fee Account to the Collection Account. On each Payment Date, any amounts on deposit
in the Collection Account shall be withdrawn by the Administrative Agent and shall be applied as
follows:



     FIRST, to the payment of all reasonable out-of-pocket costs and expenses (including, without
limitation, reasonable attorneys’ fees) of the Administrative Agent in connection with enforcing
the rights of the Lenders under the Loan Documents and any protective advances made by the
Administrative Agent with respect to the Collateral under or pursuant to the terms of the Loan
Documents;



     SECOND, pro rata to the Lenders to the payment of any expenses, costs, advances and other
obligations then due and owing by the Borrowers to the Lenders under the Loan Documents (including,
without limitation, reasonable attorneys’ fees and costs), other than amounts described in any
subsequent clause of this Section 2.7;



     THIRD, pro rata to the Lenders to the payment of any fees then due and owing by the Borrowers
to the Lenders under the Loan Documents (including, without limitation, the Unused Fee and any
Extension Fee);



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     FOURTH, pro rata to the Lenders to the payment of Late Payment Fees outstanding and any other
Interest at the Post-Default Rate;



     FIFTH, pro rata to the Lenders to the payment of accrued and unpaid Interest then due;



     SIXTH, pro rata to the Lenders to the payment of the Aggregate Outstanding Principal of the
Loans to the extent of any mandatory prepayment pursuant to Section 2.2 of this Agreement;



     SEVENTH, pro rata to the Lenders to the payment of the Aggregate Outstanding Principal of the
Loans to the extent of any voluntary prepayment pursuant to Section 2.3 of this Agreement;



     EIGHTH, on and after the Facility Maturity Date, pro rata to the Lenders to the payment of the
Aggregate Outstanding Principal of the Loans;



     NINTH, pro rata to the Administrative Agent, the Lenders, the other Affected Parties and the
Indemnified Parties, to the payment of Breakage Costs, Indemnified Amounts, Increased Costs,
Additional Amounts, Due Diligence Costs and all other Aggregate Unpaids and other amounts then due
and owing to the Administrative Agent, the Lenders, the other Affected Parties and the Indemnified
Parties pursuant to this Agreement and the other Loan Documents;



     TENTH, to the extent any mandatory or voluntary prepayments were made under
Sections 2.2 or 2.3 of this Agreement, to the extent of funds available therefor,
and to the extent the parties under the Arbor Credit Facility subsequently agree that any excess
proceeds under this clause TENTH shall be applied under either or both such facilities, to Wachovia
for application to such facilities in accordance with the terms of such facilities; and



     ELEVENTH, to the extent of funds available therefor, to the Operating Account, for such
purposes as the Borrowers shall determine in their sole discretion;



provided, however, if a Default or Event of Default has occurred and is continuing
or a Tax Law Change has occurred, such amounts shall not be transferred to the Operating Account
but shall remain in the Collection Account and, (i) in the case of a Tax Law Change and no Default
or Event of Default has occurred, the Administrative Agent shall apply such amounts in reduction of
all Aggregate Unpaids or, upon request of the Borrowers, the Administrative Agent may in its
discretion determine whether and in what amounts it will release such funds, or (ii) in the case of
a Default or Event of Default, the Administrative Agent shall apply such amounts in reduction of
all Obligations.



     Notwithstanding anything to the contrary contained herein, in the event any Obligor Reserve
Payments are deposited into the Collection Account, such Obligor Reserve Payments shall, upon
written request of a Borrower, be promptly transferred from the Collection Account to the Operating
Account for such Borrower to transfer into the appropriate escrow or reserve accounts.



     Section 2.8 Non-Receipt of Funds by the Administrative Agent.



     (a) Unless the Administrative Agent shall have been notified in writing by a Lender prior to
the date a Loan is to be made by such Lender (which notice shall be effective upon receipt) that
such Lender does not intend to make the proceeds of such Loan available to the Administrative
Agent, the Administrative Agent may assume that such Lender has made such proceeds available to the
Administrative Agent on such date, and the Administrative Agent may, in reliance upon such
assumption, make available to (but shall not be required to) make available to) the Borrowers a
corresponding amount. If such corresponding amount is not in fact made available to the
Administrative Agent, the



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Administrative Agent shall be able to recover such corresponding amount from such Lender. If
such Lender does not pay such corresponding amount forthwith upon the Administrative Agent’s demand
therefor, the Administrative Agent will promptly notify the Borrowers, and the Borrowers shall
immediately pay such corresponding amount to the Administrative Agent. The Administrative Agent
shall also be entitled to recover from the Lender or the Borrowers, as the case may be, interest on
such corresponding amount in respect of each day from the date such corresponding amount was made
available by the Administrative Agent to the Borrowers to the date such corresponding amount is
recovered by the Administrative Agent at a per annum rate equal to, (i) if payable by the
Borrowers, the Rate, and (ii) if payable by a Lender, the Federal Funds Rate.



     (b) Unless the Administrative Agent shall have been notified in writing by the Borrowers,
prior to the date on which any payment is due hereunder (which notice shall be effective upon
receipt) that the Borrowers do not intend to make such payment, the Administrative Agent may assume
that such Borrowers have made such payment when due, and the Administrative Agent may in reliance
upon such assumption (but shall not be required to) make available to each Lender on such payment
date an amount equal to the portion of such assumed payment to which such Lender is entitled
hereunder, and if the Borrowers have not in fact made such payment to the Administrative Agent,
such Lender shall, on demand, repay to the Administrative Agent the amount made available to such
Lender. If such amount is repaid to the Administrative Agent on a date after the date such amount
was made available to such Lender, such Lender shall pay to the Administrative Agent on demand
interest on such amount in respect of each day from the date such amount was made available by the
Administrative Agent to such Lender to the date such amount is recovered by the Administrative
Agent at a per annum rate equal to the Rate.



     (c) A certificate of the Administrative Agent submitted to the Borrowers or any Lender with
respect to any amount owing under this Section 2.8 shall be conclusive in the absence of
manifest error.



     Section 2.9 Payments by Borrowers.



     (a) Unless otherwise expressly provided herein, all amounts to be paid or deposited by the
Borrowers hereunder shall be paid or deposited in accordance with the terms hereof no later than
3:00 p.m. on the day when due in lawful money of the United States, in immediately available funds
to the Administrative Agent’s Account and, if not received before such time, shall be deemed to be
received on the next Business Day. The Borrowers shall, to the extent permitted by Applicable Law,
pay to the Administrative Agent interest on any amounts not paid when due hereunder or under the
Loan Documents at the Post-Default Rate, payable on demand; provided, however, that
such interest rate shall not at any time exceed the maximum rate permitted by Applicable Law. Such
interest shall be for the account of, and distributed to, the Lenders. All computations of
Interest and all computation of other interest and fees hereunder shall be made on the basis of a
year consisting of 360 days for the actual number of days (including the first but excluding the
last day) elapsed. The Borrowers acknowledge that they have no rights of withdrawal from the
Collection Account, the CDO Management Fee Account or from the Administrative Agent’s Account;
provided, however, the Borrowers may have a right to distributions from the
Collection Account in accordance with Subsection 2.7(b).



     (b) Whenever any payment hereunder shall be stated to be due on a day other than a Business
Day, such payment shall be made on the next succeeding Business Day, and such extension of time
shall in such case be included in the computation of the payment of the Interest, other interest or
any fee payable hereunder, as the case may be.



     (c) If (i) any Loan requested by the Borrowers and approved in writing by the Administrative
Agent is not, for any reason, made or effectuated, as the case may be, on the date specified
therefor, (ii) the Borrowers fail to pay the principal amount of or any Interest on any Loan in
accordance with the



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terms hereof or (iii) the Borrowers fail to make any prepayment after receiving or giving
notice thereof, the Borrowers shall indemnify the Administrative Agent against any reasonable loss,
cost or expense incurred by the Administrative Agent and the Lenders, including, without
limitation, any loss (including loss of anticipated profits, net of anticipated profits, if any, in
the reemployment of any funds in the manner determined by the Administrative Agent or Lenders in
their discretion), any reasonable cost or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by the Administrative Agent or the Lenders to fund
or maintain such Loan and any Interest, other interest or fees payable by the Administrative Agent
or any Lender to lenders of funds obtained by it in order to maintain any Loan hereunder. A
certificate as to any such amounts payable under this Subsection 2.9(c) submitted by the
Administrative Agent to the Borrowers shall be conclusive absent manifest errors.



     (d) Except as set forth to the contrary in the Loan Documents, all sums payable by the
Borrowers and the Guarantors hereunder or under the Loan Documents shall be paid without notice,
demand, counterclaim, setoff, deduction or defense (as to any Person or any reason whatsoever) and
without abatement, suspension, deferment, diminution or reduction (as to any Person or any reason
whatsoever), and the obligations and liabilities of each Borrower and each Guarantor hereunder
shall in no way be released, discharged or otherwise affected (except as expressly provided herein)
by reason of: (a) any damage to or destruction of or any taking of any asset, any Property, any
Collateral or any portion of the foregoing; (b) any restriction or prevention of or interference
with any use of any asset, any Property, any Collateral or any portion of the foregoing; (c) any
title defect or encumbrance or any eviction from any Property, by title paramount or otherwise;
(d) any Insolvency Proceeding relating to any Borrower, any Guarantor, any Affiliate or Subsidiary
of the foregoing or any obligor, account debtor or indemnitor under the Collateral, or any action
taken with respect to this Agreement or any other Loan Document by any trustee or receiver of any
Borrower, any Guarantor, any Affiliate or Subsidiary of the foregoing or any obligor, account
debtor or indemnitor under the Collateral, or by any court, in any such proceeding; (e) any claim
that any Borrower or any Guarantor has or might have against the Administrative Agent, any Lender,
any Affected Party and/or any Indemnified Party; (f) any default or failure on the part of the
Administrative Agent, any Lender, any Affected Party and/or any Indemnified Party to perform or
comply with any of the terms hereof, the Loan Documents or of any other agreement with any
Borrower, any Guarantor, any Consolidated Subsidiary of the foregoing and/or any other Person;
(g) the invalidity or unenforceability of any Collateral or Loan; (h) anything related to or
arising out of any Borrower-Related Obligation; or (i) any other occurrence whatsoever, whether
similar or dissimilar to the foregoing, whether or not any Borrower, any Guarantor or any Affiliate
or Subsidiary of the foregoing shall have notice or knowledge of any of the foregoing.



     (e) This Section 2.9 shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 2.10 Fees.



     (a) On or prior to the Restatement Date, the Borrowers shall pay to the Administrative Agent
the fees then due and payable, as agreed to by the Borrowers and the Administrative Agent in the
Fee Letter.



     (b) To the extent not separately paid by the Borrowers under the Fee Letter or this Agreement,
and without waiving the Borrowers’ obligations to pay such amounts, the unpaid Interest, the
Commitment Fee and all other fees shall be paid to the Administrative Agent from the Collection
Account to the extent funds are available on each Payment Date pursuant to Section 2.7.



     (c) The Borrowers shall pay to Moore & Van Allen PLLC, as counsel to the Administrative Agent,
on the Restatement Date, its reasonable estimated fees and out-of-pocket expenses in immediately



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available funds and shall pay all additional reasonable fees and out-of-pocket expenses of
Moore & Van Allen PLLC within ten (10) days after receiving an invoice for such amounts.



     Section 2.11 Increased Costs; Capital Adequacy; Illegality.



     (a) If either (i) the introduction of or any change (including, without limitation, any change
by way of imposition or increase of reserve requirements) in or in the interpretation of any law or
regulation, or (ii) the compliance by the Administrative Agent, any Lender or any Affected Party
with any guideline or request from any central bank or other Governmental Authority (whether or not
having the force of law) shall (A) subject the Administrative Agent, any Lender or any Affected
Party to any Tax (except for Taxes on, or Taxes one or more of the alternative bases for which are,
the overall net income of the Administrative Agent, any Lender or any Affected Party, and except
for franchise taxes imposed in lieu thereof), duty or other charge with respect to any ownership
interest in the Collateral, or any right to enter into Loans hereunder, or on any payment made
hereunder, (B) impose, modify or deem applicable any reserve requirement (including, without
limitation, any reserve requirement imposed by the Board of Governors of the Federal Reserve
System, but excluding any reserve requirement, if any, included in the determination of Interest),
special deposit or similar requirement against assets of, deposits with or for the account of, or
credit extended by, the Administrative Agent, any Lender or any Affected Party or (C) impose any
other condition affecting the ownership interest in the Collateral conveyed to the Administrative
Agent hereunder or the Administrative Agent’s or any Lender’s or Affected Party’s rights hereunder,
the result of which is to increase the cost to the Administrative Agent, any Lender or any Affected
Party or to reduce the amount of any sum received or receivable by the Administrative Agent, any
Lender or any Affected Party under this Agreement or the other Loan Documents, then within ten (10)
days after demand by the Administrative Agent (which demand shall be accompanied by a statement
setting forth the basis for such demand), the Borrowers shall pay directly to the Administrative
Agent such additional amount or amounts as will compensate the Administrative Agent, any Lender or
any Affected Party for such additional or increased cost incurred or such reduction suffered.



     (b) If either (i) the introduction of or any change in or in the interpretation of any law,
guideline, rule, regulation, directive or request or (ii) compliance by the Administrative Agent,
any Lender or any Affected Party with any law, guideline, rule, regulation, directive or request
from any central bank or other Governmental Authority or agency (whether or not having the force of
law), including, without limitation, compliance by the Administrative Agent, any Lender or any
Affected Party with any request or directive regarding capital adequacy, has or would have the
effect of reducing the rate of return on the capital of the Administrative Agent, any Lender or any
Affected Party as a consequence of its obligations hereunder or arising in connection herewith to a
level below that which the Administrative Agent, any Lender or any Affected Party could have
achieved but for such introduction, change or compliance (taking into consideration the policies of
the Administrative Agent, any Lender or any Affected Party with respect to capital adequacy) by an
amount deemed by the Administrative Agent, any Lender or any Affected Party to be material, then
from time to time, within ten (10) days after demand by the Administrative Agent (which demand
shall be accompanied by a statement setting forth the basis for such demand), the Borrowers shall
pay directly to the Administrative Agent such additional amount or amounts as will compensate the
Administrative Agent, any Lender and any Affected Party for such reduction. For the avoidance of
doubt, any interpretation of Accounting Research Bulletin No. 51 by the Financial Accounting
Standards Board shall constitute an adaptation, change, request or directive subject to this
Subsection 2.11(b).



     (c) If as a result of any event or circumstance similar to those described in
clause (a) or (b) of this Section 2.11, the Administrative Agent, any
Lender or any Affected Party is required to compensate a bank or other financial institution
providing liquidity support, credit enhancement or other similar support to the Administrative
Agent, any Lender or any Affected Party in connection with this Agreement, the



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other Loan Documents or the funding or maintenance of any Loan hereunder, then within ten (10)
days after demand by the Administrative Agent, the Borrowers shall pay to the Administrative Agent
such additional amount or amounts as may be necessary to reimburse the Administrative Agent, any
Lender or any Affected Party for any amounts payable or paid by it.



     (d) In determining any amount provided for in this Section 2.11, the Administrative
Agent, any Lender or any Affected Party may use any reasonable averaging and attribution methods.
The Administrative Agent, any Lender or any Affected Party making a claim under this
Section 2.11 shall submit to the Borrowers a written description as to such additional or
increased cost or reduction and the calculation thereof, which written description shall be
conclusive absent demonstrable error.



     (e) If any Lender shall notify the Administrative Agent that a Eurodollar Disruption Event as
described in clause (a) of the definition of “Eurodollar Disruption Event” has occurred,
the Administrative Agent shall in turn so notify the Borrowers, whereupon all Loans in respect of
which the Interest accrues at the Adjusted Eurodollar Rate shall immediately be converted into
Loans in respect of which the Interest accrues at the Base Rate.



     (f) If, as a result of any event or circumstance described in clause (a), (b)
or (c) of this Section 2.11, the Borrowers are required to make payments to the
Administrative Agent, any Lender or any Affected Party, the Borrowers shall have the right to
elect, by written notice to the Administrative Agent, to convert the Rate at which the Interest
accrues to the Base Rate.



     (g) Without prejudice to the survival of any other agreement of the Borrowers and the
Guarantors hereunder, the agreements and obligations of the Borrowers and the Guarantors contained
in this Section 2.11 shall survive the termination of this Agreement and the payment in
full of the Obligations.



     Section 2.12 Taxes.



     (a) All payments made by the Borrowers and the Guarantors under this Agreement and/or the
other Loan Documents will be made free and clear of and without deduction or withholding for or on
account of any Taxes. If any Taxes are required to be withheld from any amounts payable to the
Administrative Agent, the Lenders or any other Affected Party then the amount payable to such
Person will be increased (such increase, the “Additional Amount”) such that every net
payment made under this Agreement and/or the other Loan Documents after withholding for or on
account of any Taxes (including, without limitation, any Taxes on such increase) is not less than
the amount that would have been paid had no such deduction or withholding been deducted or
withheld. The foregoing obligation to pay Additional Amounts, however, will not apply with respect
to net income or franchise taxes imposed on the Administrative Agent, any Lender or any other
Affected Party, with respect to payments required to be made by the Borrowers and the Guarantors
under this Agreement and/or the other Loan Documents, by a taxing jurisdiction in which the
Administrative Agent, any Lender or any other Affected Party is organized, conducts business or is
paying taxes (as the case may be).



     (b) The Borrowers and the Guarantors will indemnify the Administrative Agent, any Lender or
any other Affected Party for the full amount of Taxes payable by such Person in respect of
Additional Amounts and any liability (including penalties, interest and expenses) arising therefrom
or with respect thereto. All payments in respect of this indemnification shall be made within
ten (10) days from the date a written invoice therefor is delivered to the Borrowers or the
Guarantors.



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     (c) Within thirty (30) days after the date of any payment by the Borrowers or the Guarantor of
any Taxes, the Borrowers and the Guarantors will furnish to the Administrative Agent, at its
address set forth under its name on Schedule 3, appropriate evidence of payment thereof.



     (d) If the Administrative Agent, any Lender or any other Affected Party is created or
organized under the laws of the United States or a political subdivision thereof, the
Administrative Agent, any Lender or any other Affected Party shall deliver to the Borrowers, within
fifteen (15) days after the date hereof (or the date on which a Lender or Affected Party becomes a
party hereto), two (or such other number as may from time to time be prescribed by Applicable Laws)
duly completed copies of IRS Form W-9 (or any successor forms or other certificates or statements
that may be required from time to time by the relevant United States taxing authorities or
Applicable Laws). If the Administrative Agent, any Lender or any other Affected Party is not
created or organized under the laws of the United States or a political subdivision thereof, the
Administrative Agent, the Lenders or any other Affected Party shall deliver to the Borrowers,
(i) within fifteen (15) days after the date hereof (or the date on which a Lender or Affected Party
becomes a party hereto), two (or such other number as may from time to time be prescribed by
Applicable Laws) duly completed copies of IRS Form W-8BEN or Form W-8ECI (or any successor forms or
other certificates or statements that may be required from time to time by the relevant United
States taxing authorities or Applicable Laws), as appropriate, to permit the Borrowers and
Guarantors to make payments hereunder for the account of the Administrative Agent, the Lenders and
the Affected Parties without deduction or withholding of United States federal income or similar
Taxes, and (ii) upon the obsolescence of, or after the occurrence of any event requiring a change
in, any form or certificate previously delivered pursuant to this Section 2.12, copies (in
such numbers as may from time to time be prescribed by Applicable Laws or regulations) of such
additional, amended or successor forms, certificates or statements as may be required under
Applicable Laws or regulations to permit the Borrowers and Guarantor to make payments hereunder and
under the Loan Documents for the account of the Administrative Agent, the Lenders and the Affected
Parties without deduction or withholding of United States federal income or similar Taxes.



     (e) Without prejudice to the survival of any other agreement of the Borrowers and the
Guarantors hereunder, the agreements and obligations of the Borrowers and the Guarantors contained
in this Section 2.12 shall survive the termination of this Agreement and the payment in
full of the Obligations.



     Section 2.13 Designation of a Different Lending Office.



     If any Lender requests compensation under Section 2.11, or requires any Borrower to
pay any additional amount to any Lender or any governmental authority for the account of any Lender
pursuant to Section 2.12, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of
such Lender, such designation or assignment (a) would eliminate or reduce amounts payable pursuant
to Section 2.11 or 2.12, as the case may be, in the future and (b) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous
to such Lender.



     Section 2.14 Usury.



     It is the intent of the Lenders and the Borrowers to conform to and contract in strict
compliance with applicable usury law from time to time in effect. All agreements between the
Lenders and the Borrowers are hereby limited by the provisions of this Section 2.14, which
shall override and control all such agreements, whether now existing or hereafter arising and
whether written or oral. In no way, nor in any event or contingency (including, but not limited
to, prepayment or acceleration of the maturity of any



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Obligation), shall the interest taken, reserved, contracted for, charged, or received under
this Agreement, under the Revolving Notes or otherwise, exceed the maximum nonusurious amount
permissible under Applicable Law. If, from any possible construction of any of the Loan Documents
or any other document, interest would otherwise be payable in excess of the maximum nonusurious
amount, any such construction shall be subject to the provisions of this Section 2.14 and
such interest shall be automatically reduced to the maximum nonusurious amount permitted under
Applicable Law, without the necessity of execution of any amendment or new document. If any Lender
shall ever receive anything of value which is characterized as interest on the Loans under
Applicable law and which would, apart from this provision, be in excess of the maximum nonusurious
amount, an amount equal to the amount which would have been excessive interest shall, without
penalty, be applied to the reduction of the principal amount owing on the Loans and not to the
payment of interest, or refunded to the Borrowers or the other payor thereof if and to the extent
such amount which would have been excessive exceeds such unpaid principal amount of the Loans. The
right to demand payment of the Loans or any other Obligations does not include the right to receive
any interest which has not otherwise accrued on the date of such demand, and the Lenders do not
intend to charge or receive any unearned interest in the event of such demand. All interest paid
or agreed to be paid to the Lenders with respect to the Loans shall, to the extent permitted by
Applicable Law, be amortized, prorated, allocated, and spread throughout the full stated term
(including any renewal or extension) of the Loans so that the amount of interest on account of such
indebtedness does not exceed the maximum nonusurious amount permitted by Applicable Law.



     Section 2.15 No Additional Collateral. Notwithstanding anything contained in the
Agreement to the contrary (including, without limitation, Subsections 2.1(f) and
2.2(a)(i)), Additional Collateral (i) will not be considered by the Administrative Agent for
inclusion in the Collateral under Subsection 2.1(f) of the Agreement or any other provision
of the Agreement or the other Loan Documents, (ii) is not (as of the Restatement Date) and may not
be pledged as Collateral for the Loans, (iii) will not be included in the calculation of
Availability and (iv) may not be pledged to cure any negative Availability under Subsection
2.2(a)(i).



ARTICLE III




CONDITIONS TO TRANSACTIONS




     Section 3.1 Conditions to Restatement Date.



     This Agreement shall become effective upon, and the obligation of the Lender to make the Loans
on the Restatement Date, is subject to, the satisfaction of the following conditions precedent:



     (a) Each Loan Document shall have been duly executed by, and delivered to, the parties
thereto, and the Administrative Agent shall have received such other documents, instruments and
agreements as the Administrative Agent shall reasonably request in connection with the Loans
contemplated by this Agreement, each in form and substance satisfactory to the Administrative
Agent;



     (b) Each Borrower and each Guarantor has obtained all required consents and approvals of all
Persons, including, but not limited to, all requisite Governmental Authorities, to the execution,
delivery and performance of this Agreement and the other Loan Documents to which each is a party
and the consummation of the transactions contemplated hereby or thereby;



     (c) The Borrowers and the Guarantors shall each be in compliance in all material respects with
all Applicable Laws, Contractual Obligations, all Indebtedness and all Guarantee Obligations;



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     (d) The Borrowers and the Guarantors shall each have delivered to the Administrative Agent a
power of attorney in the form of Exhibit VIII;



     (e) [Reserved];



     (f) Any and all consents and waivers applicable to the Collateral shall have been obtained;



     (g) The Administrative Agent shall be in receipt of (i) such Opinions of Counsel from the
counsel to each Borrower and each Guarantor as the Administrative Agent may require in its
discretion, each in form and substance satisfactory to the Administrative Agent in its discretion,
including, without limitation, corporate opinions and perfection opinions, (ii) an Opinion of
Counsel from a nationally recognized tax counsel experienced in such matters opining that, under
current Tax law, (x) the pledge of the Pledged Collateral under the Pledge and Security Agreement
will not cause each CDO Issuer owned by any Pledged CDO Subsidiary, solely as a result of such
transfer, to cease to be treated as a QRS and (y) a transfer of ownership (as determined by U.S.
federal income tax principles) of all of the Equity Interests in each Pledged CDO Subsidiary
directly to a REIT, a QRS or a disregarded entity (as determined by U.S. federal income tax
principles) that is wholly owned by a REIT will not cause any CDO Issuer owned by any Pledged CDO
Subsidiary to cease to be treated as a QRS or, after such transfer, the CDO Issuer will be treated
as a foreign corporation that is not engaged in a trade or business in the United States for United
States federal income tax purposes, and (iii) Opinions of Counsel from counsel to the applicable
Borrower or the applicable Consolidated Subsidiary of a Borrower opining as to the enforceability
of the subordination provisions contained in all Eligible Subordinated Debt, each in form and
substance satisfactory to the Administrative Agent in its discretion;



     (h) The Administrative Agent shall be in receipt of good standing certificates with respect to
each Credit Party certified as of a recent date by the appropriate Governmental Authorities of the
state of incorporation or organization, a secretary’s certificate (or the equivalent), certified
copies of the Authority Documents and certified copies of the applicable resolutions of each
Borrower and each Guarantor evidencing the corporate or other authority for each Borrower and each
Guarantor with respect to the execution, delivery and performance of the Loan Documents and each of
the other documents to be delivered by each Borrower and each Guarantor from time to time in
connection herewith;



     (i) The Administrative Agent is in receipt of certified copies of the Authority Documents of
each Pledged CDO Subsidiary and such other Affiliates and Subsidiaries of the Borrowers and the
Guarantors as the Administrative Agent may request in its discretion and the Authority Documents
for each such Pledged CDO Subsidiary shall permit the pledge of Equity Interests in such entity as
contemplated by the Pledge and Security Agreement;



     (j) The Administrative Agent shall have received fully executed Irrevocable Instructions
satisfactory to the Administrative Agent in its discretion;



     (k) The Administrative Agent shall be in receipt of an Officer’s Certificate certifying that
there has been no change in the following since the date of delivery of the copies thereof in
connection with the Original Agreement: Collateral Management Agreements to which ARCM is a party,
all documents related to or governing the payment or the right to receive payment of the CDO
Management Fees, all documents relating to or governing the right of ARSR to receive payments,
dividends and distributions from ARCM, all documents relating to or governing the right of any
Pledged CDO Subsidiary to receive payments, dividends or distributions from a CDO Issuer in any CDO
Issuance, all documents relating to any CDO Equity Distributions and Authority Documents of any CDO
Issuer;



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     (l) The Administrative Agent shall have received payment from the Borrowers of the fees
payable under the Fee Letter and the amount of actual costs and expenses, including, without
limitation, the fees and expenses of counsel to the Administrative Agent as contemplated by this
Agreement and the Fee Letter, incurred by the Administrative Agent in connection with the
development, preparation and execution of this Agreement, the other Loan Documents and any other
documents prepared in connection herewith or therewith;



     (m) The Administrative Agent shall have received, in form and substance satisfactory to the
Administrative Agent:




     (i) searches of Uniform Commercial Code filings in the jurisdiction of the state of
incorporation or formation of each Borrower, in and each jurisdiction where any Collateral
is located or where a filing would need to be made in order to perfect the Administrative
Agent’s security interest in the Collateral, copies of the financing statements on file in
such jurisdictions and evidence that no Liens exist on the Collateral other than Permitted
Liens;




     (ii) UCC financing statements against each Borrower for each appropriate jurisdiction
as is necessary, in the Administrative Agent’s discretion, to perfect the Administrative
Agent’s security interest in the Collateral; and




     (iii) duly executed consents as are necessary, in the Administrative Agent’s
discretion, to perfect the Lenders’ security interest in the Collateral;



     (n) There shall not exist any pending or threatened litigation, investigation, injunction,
order or claim affecting or relating to any Borrower, any Guarantor or any of their Consolidated
Subsidiaries, this Agreement, the other Loan Documents or the Collateral that has not been settled,
dismissed, vacated, discharged or terminated prior to the Restatement Date which could reasonably
be expected to result in a Material Adverse Effect;



     (o) The corporate capital and ownership structure of the Borrowers, the Guarantor and their
Consolidated Subsidiaries as of the Restatement Date shall be as reflected on
Schedule 4.1(ll);



     (p) There shall be no Insolvency Proceedings commenced or threatened to be commenced against
any Borrower or any Guarantor, and, to the best knowledge of each Borrower and each Guarantor,
there shall be no Insolvency Proceedings commenced or threatened to be commenced against any
Affiliate or Subsidiary (other than a Consolidated Subsidiary) of a Borrower or a Guarantor;



     (q) The Administrative Agent shall have received copies of such financial statements as the
Administrative Agent may require in its discretion;



     (r) Since the date of the most recent financial information provided to the Administrative
Agent, there has been no material adverse change in the business, properties, prospects, operations
or condition (financial or otherwise) of the Borrowers, the Guarantors and their Consolidated
Subsidiaries taken as a whole;



     (s) The Administrative Agent shall have received a Closing Certificate executed by a
Responsible Officer of each Borrower and each Guarantor as of the Restatement Date;



     (t) The Borrowers and the Guarantors shall have provided to the Administrative Agent, for
benefit of the Administrative Agent and the Initial Lender, the necessary information required by
the Anti-Terrorism Laws, including, without limitation, the identity of the Borrowers, the
Guarantors and



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their Consolidated Subsidiaries, the name and address of the Borrowers, the Guarantors and
their Consolidated Subsidiaries and other information that will allow the Administrative Agent or
the Initial Lender, as applicable, to identify the Borrowers, the Guarantors and their Consolidated
Subsidiaries in accordance with the Anti-Terrorism Laws, together with such other information with
respect to any Arbor Entity that may be required in accordance with the Anti-Terrorism Laws;



     (u) No Default, Event of Default or Material Adverse Effect shall exist;



     (v) The Administrative Agent shall have completed to its satisfaction such due diligence as it
may require in its discretion; and



     (w) The Administrative Agent shall have received all such other and further documents,
certifications, reports, approvals and legal opinions as the Administrative Agent may reasonably
require.



     Section 3.2 Conditions Precedent to all Loans.



     The obligation of the Initial Lender and any other Lenders to make any Loan hereunder is
subject to the satisfaction of the following further conditions precedent on the date of making
such Loan, both immediately prior to making the Loan and also after giving effect to the
consummation thereof and the intended use of the proceeds of the Loan:



     (a) No Applicable Law shall prohibit or render it unlawful, and no order, judgment or decree
of Governmental Authority shall prohibit, enjoin or render it unlawful, to enter into such Loan by
the Lenders in accordance with the provisions hereof or any other transaction contemplated herein;



     (b) Each Borrower, each Guarantor and all other applicable Persons shall have delivered to the
Administrative Agent all documents, agreements, certificates, reports and other information
required to be delivered as of the date of such Loan;



     (c) The Borrowers shall have delivered a Notice of Borrowing and such other information and
documents requested by the Administrative Agent in connection therewith, all conditions precedent
and other requirements set forth in Article II of this Agreement shall have been satisfied,
and the Administrative Agent shall have approved the Loan;



     (d) No Default, Event of Default or Material Adverse Effect shall have occurred and be
continuing;



     (e) The Administrative Agent shall have received a Compliance Certificate from a Responsible
Officer of ART and ARSR that, among other things: (i) shows in detail the calculations
demonstrating that, before and after giving effect to the requested Loan, the Availability shall
not be negative, (ii) states that each Borrower and each Guarantor has observed or performed all of
their covenants and other agreements, and satisfied every condition, contained in this Agreement,
the Loan Documents and the related documents to be observed, performed or satisfied by them,
(iii) states that such Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate, (iv) states that all representations and
warranties contained in this Agreement, the other Loan Documents and all other documents delivered
to the Administrative Agent are true and correct on and as of such day as though made on and as of
such day and shall be deemed to be made on such day, and (v) states that ART is in compliance with
the Financial Covenants;



     (f) Before and after giving effect to the requested Loan, the Availability shall not be
negative;



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     (g) The Borrowers shall have delivered to the Administrative Agent any and all documents and
agreements relating to the Collateral or the Required Payments entered into since the Restatement
Date, including, without limitation, Collateral Management Agreements, all documents and agreements
related to or governing the payment or the right to receive payment of the CDO Management Fees, all
documents relating to or governing ARSR’s right to receive payments, dividends, or distributions
from ARCM, all documents relating to or governing any proposed CDO Issuance, all documents relating
to any CDO Equity Distributions, and all documents and agreements related to or governing the right
of a CDO Subsidiary to receive payments, dividends or distributions from a CDO Issuer in a CDO
Issuance;



     (h) The Administrative Agent shall have received all fees and expenses of the Administrative
Agent and the Lenders and counsel to the Administrative Agent and the Lenders as contemplated by
this Agreement and the Fee Letter, and the Administrative Agent and the Lenders shall have received
the reasonable costs and expenses incurred by them in connection with the entering into of any Loan
hereunder, including, without limitation, costs associated with due diligence recording or other
administrative expenses necessary or incidental to any Loan hereunder, which amounts, at the
Administrative Agent’s option, may be withheld from proceeds of any Loan hereunder;



     (i) None of the following shall have occurred and/or be continuing:




     (i) an event or events shall have occurred in the good faith determination of the
Administrative Agent resulting in the effective absence of a “repo market” or related
“lending market” for purchasing (subject to repurchase) or financing debt obligations
secured by commercial mortgage loans or securities, or an event or events shall have
occurred resulting in the Administrative Agent not being able to finance mortgage assets
through the “repo market” or “lending market” with traditional counterparties at rates that
would have been reasonable prior to the occurrence of such event or events;




     (ii) an event or events shall have occurred resulting in the effective absence of a
“securities market” for securities backed by mortgage assets, or an event or events shall
have occurred resulting in the Administrative Agent not being able to sell securities backed
by mortgage assets at prices that would have been reasonable prior to such event or events;
or




     (iii) there shall have occurred a material adverse change in the financial condition of
the Administrative Agent or any Lender that affects (or can reasonably be expected to
affect) materially and adversely the ability of the Administrative Agent or any Lender to
fund its obligations under this Agreement.



     (j) To the extent the same were not delivered or the Collateral did not exist on the
Restatement Date, the Administrative Agent shall have received with respect thereto fully executed
Irrevocable Instructions satisfactory to the Administrative Agent in its discretion;



     (k) Both immediately prior to the requested Loan and also after giving effect thereto and to
the intended use thereof, the representations and warranties made by each Borrower and each
Guarantor shall be true, correct and complete on and as of such Borrowing Date in all material
respects with the same force and effect as if made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made only as of a specific date, as of
such specific date);



     (l) The Borrowers and Guarantors shall have delivered any other opinion or closing item that
was, with the written consent of the Administrative Agent, not delivered on the Restatement Date;



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     (m) Other conditions to such Loan set forth in this Agreement or the other Loan Documents are
satisfied;



     (n) [Reserved];



     (o) The Borrowers shall have satisfied, in all respects, all of the conditions precedent set
forth in the Arbor Credit Documents that are applicable to the Additional Collateral and the
related Collateral by virtue of Subsection 2.1(f) of this Agreement;



     (p) To the extent the Equity Interests in any other CDO Subsidiary (other than the Pledged CDO
Subsidiaries) are pledged to the Administrative Agent after the Restatement Date, in addition to
all requirements of the Administrative Agent, including such requirements as are necessary for the
Administrative Agent to perfect its security interest in the Equity Interests in such CDO
Subsidiary, the Borrowers shall provide to the Administrative Agent prior to such pledge an Opinion
of Counsel in substantially the form of the Opinion of Counsel provided pursuant to
Subsection 3.1(g)(ii) of this Agreement.



     (q) The Administrative Agent shall have received all such other and further documents,
reports, certifications, approvals and legal opinions as the Administrative Agent in its discretion
shall reasonably require.



     Each request for a Loan and each acceptance by the Borrowers of any such Loan shall be deemed
to constitute a representation and warranty by the Borrowers as of the date of such Loan that the
applicable conditions contained in Sections 3.1 and 3.2 have been satisfied (as of
the date of the request for a Loan and the Borrowing Date).



     The failure of any Borrower or any Guarantor, as applicable, to satisfy any of the foregoing
conditions precedent contained in Article III of this Agreement shall, unless such failure
was expressly waived in writing by the Administrative Agent on or prior to the related Borrowing
Date, give rise to a right of the Lenders, which right may be exercised at any time on the demand
of the Administrative Agent, to rescind the related Loan and direct the Borrowers to pay to the
Administrative Agent for the benefit of the Lenders an amount equal to the principal amount of the
Loan outstanding, the accrued Interest thereon, Breakage Costs and other amounts due in connection
therewith during any such time that any of the foregoing conditions precedent were not satisfied.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     Section 4.1 Representations and Warranties.



     Each Borrower and each Guarantor represents and warrants, as of the date of this Agreement and
any Loan hereunder and until the occurrence of a Final Termination, as follows:



     (a) Organization and Good Standing. Each Borrower’s and each Guarantor’s exact legal
name is set forth on Schedule 3. Each Borrower and each Guarantor has been duly organized,
and is validly existing as a corporation, partnership or limited liability company, as applicable,
in good standing, under the laws of the state of its corporation or formation, with all requisite,
corporate, partnership or limited liability company, as applicable, power and authority to own or
lease its Properties and conduct its



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business as such business is presently conducted, and had, at all relevant times, and now has,
all necessary power, authority and legal right to acquire, own and pledge the Collateral.



     (b) Due Qualification. Each Borrower and each Guarantor is duly qualified to do
business and is in good standing as a corporation, limited partnership or limited liability
company, as applicable, and has obtained all necessary licenses and approvals, in all jurisdictions
in which the ownership or lease of Property or the conduct of its business requires such
qualification, licenses or approvals.



     (c) Power and Authority; Due Authorization; Execution and Delivery. Each Borrower and
each Guarantor (i) has all necessary power, authority and legal right (A) to execute and deliver
the Loan Documents to which it is a party, (B) to carry out the terms of the Loan Documents to
which it is a party, and (C) to pledge the Collateral on the terms and conditions provided herein,
(ii) has duly authorized by all necessary corporate, partnership or limited liability company, as
applicable, action (A) the execution, delivery and performance of the Loan Documents to which it is
a party, and (B) the pledge of the Collateral on the terms and conditions herein provided, and
(iii) has duly executed and delivered each Loan Document to which it is a party.



     (d) Binding Obligation. Each of the Loan Documents to which the Borrowers and the
Guarantors are a party constitutes the legal, valid and binding obligation of each Borrower and
each Guarantor enforceable against each Borrower and each Guarantor in accordance with its
respective terms, except as such enforceability may be limited by Insolvency Laws and by general
principles of equity (whether considered in a suit at law or in equity).



     (e) No Violation. The consummation of the transactions contemplated by the Loan
Documents to which the Borrowers and the Guarantors are a party and the fulfillment of the terms
hereof and thereof will not (i) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time or both) a default under, any
Borrower’s or any Guarantor’s Authority Documents or any material Indebtedness, Guarantee
Obligation or Contractual Obligation of any Borrower or any Guarantor, (ii) result in the creation
or imposition of any Lien (other than Permitted Liens) upon any Borrower’s or any Guarantor’s
Properties pursuant to the terms of any such Indebtedness, Guarantee Obligation or Contractual
Obligation, other than this Agreement, or (iii) violate any Applicable Law.



     (f) No Proceedings. There is no material litigation, proceeding or investigation
pending or, to the best knowledge of each Borrower and each Guarantor, threatened against any
Borrower or any Guarantor, before any Governmental Authority (i) asserting the invalidity or
unenforceability of any of the Loan Documents to which any of the Borrowers or the Guarantors are a
party, (ii) seeking to prevent the consummation of any of the transactions contemplated by any Loan
Documents to which the Borrowers or the Guarantors are a party, or (iii) seeking any determination
or ruling that could reasonably be expected to have Material Adverse Effect.



     (g) All Consents Required. All approvals, authorizations, consents, orders or other
actions of any Person or of any Governmental Authority (if any) required for the due execution,
delivery and performance by each Borrower and each Guarantor of the Loan Documents to which the
Borrowers and the Guarantors are a party (including the grant of a security interest in the
Collateral) have been obtained, effected or given and are in full force and effect.



     (h) Bulk Sales. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby do not require compliance with any “bulk sales” act or similar law
by any Borrower.



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     (i) Solvency. None of the Borrowers or the Guarantors is the subject of any
Insolvency Proceedings or Insolvency Event. The Loans under this Agreement and any other Loan
Document do not and will not render any Borrower or any Guarantor not Solvent.



     (j) Taxes. Each Borrower and each Guarantor has filed or caused to be filed all tax
returns that are required to be filed by it. Each Borrower and each Guarantor has paid or made
adequate provisions for the payment of all Taxes and all assessments made against it or any of its
Property (other than any amount of Tax the validity of which is currently being contested in good
faith by appropriate proceedings and with respect to which reserves in accordance with GAAP have
been provided on the books of a Borrower or a Guarantor), and no tax Lien has been filed and, to
each Borrower’s and each Guarantor’s knowledge, no claim is being asserted, with respect to any
such Tax, fee or other charge.



     (k) Exchange Act Compliance; Regulations T, U and X. None of the transactions
contemplated herein will violate or result in a violation of Section 7 of the Exchange Act, or any
regulations issued pursuant thereto, including, without limitation, Regulations T, U and X. No
Borrower owns or intends to carry or purchase, and no proceeds from the Loans will be used to carry
or purchase, any “margin stock” within the meaning of Regulation U or to extend “purpose credit”
within the meaning of Regulation U.



     (l) Environmental Matters.




     (i) No Properties owned or leased by any Borrower or any Consolidated Subsidiary
thereof and, to the knowledge of each Borrower, no Properties formerly owned or leased by
any Borrower or any Consolidated Subsidiary thereof, contain, or have previously contained,
any Materials of Environmental Concern in amounts or concentrations that constitute or
constituted a violation of, or reasonably could be expected to give rise to liability under,
Environmental Laws;




     (ii) Each Borrower is in compliance, and has in the last five (5) years (or such
shorter period as each Borrower shall have been in existence) been in compliance, with all
applicable Environmental Laws, and, to the knowledge of each Borrower, there is no violation
of any Environmental Laws that reasonably could be expected to interfere with the continued
operations of each Borrower;




     (iii) No Borrower has received any notice of violation, alleged violation,
non-compliance, liability or potential liability under any Environmental Law, nor does any
Borrower have any knowledge that any such notice will be received or is being threatened;




     (iv) Materials of Environmental Concern have not been transported or disposed of by any
Borrower in violation of, or in a manner or to a location that reasonably could be expected
to give rise to liability under, any applicable Environmental Law, nor has any of them
generated, treated, stored or disposed of at, on or under any of the Properties in violation
of, or in a manner that reasonably could be expected to give rise to liability under, any
applicable Environmental Law;




     (v) No judicial proceedings or governmental or administrative action is pending, or, to
the knowledge of each Borrower, threatened, under any Environmental Law to which any
Borrower is or will be named as a party, nor are there any consent decrees or other decrees,
consent orders, administrative orders or other orders, or other administrative or judicial
requirements arising out of judicial proceedings or governmental or administrative actions,
outstanding under any Environmental Law to which any Borrower is a party;



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     (vi) There has been no release or, to the best knowledge of each of the Borrowers,
threat of release of Materials of Environmental Concern in violation of or in amounts or in
a manner that reasonably could be expected to give rise to liability under any Environmental
Law for which any Borrower may become liable; and




     (vii) To the best knowledge of each of the Borrowers, each of the representations and
warranties set forth in the preceding clauses (i) through (vi) is true and
correct with respect to each parcel of real property owned or operated by each Borrower.



     (m) Security Interest.




     (i) This Agreement and the other Loan Documents constitute a grant of a security
interest in all Collateral to the Administrative Agent, that, upon delivery to the
Administrative Agent of any Collateral that requires possession to perfect (if any) and the
filing of the financing statements described in this Subsection 3.1(m)(ii) in the
jurisdictions and recording offices listed on the Closing Certificate delivered with respect
to the applicable Borrower, shall be a first priority perfected security interest in all
Collateral to the extent such Collateral can be perfected by possession or by filing,
subject only to Permitted Liens;




     (ii) Neither the Borrowers nor any Person claiming through or under the Borrowers shall
have any claim to or interest in the Collection Account or the CDO Management Fee Account,
except for the interest of the Borrowers in such Property under this Agreement or as a
debtor for purposes of the UCC;




     (iii) The Collateral constitute either a “general intangible,” an “instrument,” an
“account,” “investment property,” a “security,” a “deposit account,” a “financial asset,” an
“uncertificated security,” a “securities account,” a “securities entitlement” and/or
“chattel paper” within the meaning of the applicable UCC;




     (iv) Other than Permitted Liens, neither the Borrowers nor the Guarantors have sold,
assigned, pledged, encumbered or otherwise conveyed any of the Collateral or any Required
Payment to any Person, and, immediately prior to the pledge to the Administrative Agent, the
Borrowers, as applicable, were the sole owners of such Collateral, and the Borrowers
directly own and have good and marketable title to the Collateral free and clear of any Lien
(other than Permitted Liens);




     (v) The Borrowers have received all consents and approvals, if any, required by the
terms of any Collateral to the granting of a security interest in the Collateral hereunder
to the Administrative Agent;




     (vi) The Administrative Agent (on behalf of the Account Beneficiaries) shall have
exclusive control of, and the sole right of withdrawal from, the Collection Account, the CDO
Management Fee Account and the deposits and investment property in the foregoing accounts;




     (vii) None of the Borrowers have authorized the filing of and none is aware of any
financing statements against any Borrower that includes a description of collateral covering
the Collateral or the Required Payments other than any financing statement (A) that has been
terminated, or (B) filed or to be filed pursuant to the Loan Documents.




     (viii) The Borrowers and Guarantors are not aware of the filing of any judgment or tax
Lien filings against any Borrower or any Guarantor; and



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     (ix) None of the Collateral has any marks or notations indicating that it has been
pledged, assigned or otherwise conveyed to any Person other than the Administrative Agent.



     (n) Location of Offices. Each Borrower’s location (within the meaning of Article 9 of
the UCC) is set forth on Schedule 3. The office where each Borrower keep all the records
(within the meaning of Article 9 of the UCC) is at the address set forth on Schedule 3 to
this Agreement (or at such other locations as to which the notice and other requirements specified
in Subsection 5.1(l) shall have been satisfied). Each Borrower’s organizational
identification number is set forth in the Closing Certificate.



     (o) Tradenames. The Borrowers have no trade names, fictitious names, assumed names or
“doing business as” names or other names under which it has done or is doing business.



     (p) Compliance with Anti-Terrorism Laws. No Borrower nor any Guarantor (i) is or will
be in violation of any Anti-Terrorism Law, (ii) is or will be a Prohibited Person, (iii) conducts
any business or engages in any transaction or dealing with any Prohibited Person, including the
making or receiving any contribution of funds, goods or services to or for the benefit of any
Prohibited Person, (iv) deals in, or otherwise engages in any transaction relating to, any property
or interests in property blocked pursuant to Executive Order No. 13224, (v) engages in or conspires
to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or
attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law, (vi) has more
than 10% of its assets in a Prohibited Person or derives more than 10% of its operating income from
direct or indirect investments in, or transactions with, any Prohibited Person, and (vii) engages
in or will engage in any of the foregoing activities in the future. To the extent applicable, each
Borrower and each Guarantor has established an adequate anti-money laundering compliance program as
required by the Anti-Terrorism Laws, has conducted the requisite due diligence in connection with
the Collateral and the Loans for purposes of the Anti-Terrorism Laws, and maintains, and will
maintain, sufficient information to identify the applicable obligors for purposes of the
Anti-Terrorism Laws. No Collateral is subject to nullification pursuant to any Anti-Terrorism Law,
and no Collateral is in violation of any Anti-Terrorism Law. The proceeds of any Loan have not
been used and shall not be used to fund any operations in, finance any investments or activities in
or make any payments to a Prohibited Person.



     (q) Investment Company Act. None of the Borrowers nor the Guarantors is, and none is
controlled by, an “investment company” within the meaning of the 40 Act, as amended, or the
Borrowers and the Guarantors are exempt from the provisions of the 40 Act.



     (r) ERISA. The Borrowers, the Guarantors and each ERISA Affiliate have made all
required contributions to each Benefit Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to Section 412 of the Code
has been made with respect to any Benefit Plan. Neither the Borrowers, the Guarantors nor any
ERISA Affiliate have incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan, nor has there
been a complete or partial withdrawal by the Borrowers, the Guarantors or any ERISA Affiliate from
a Multiemployer Plan or notification that a Multiemployer Plan is in reorganization. The present
value of all benefits vested under all “employee pension benefit plans”, as such term is defined in
Section 3(2) of ERISA, maintained by each Borrower and each Guarantor, or in which employees of any
Borrower or any Guarantor are entitled to participate, as from time to time in effect (herein
called the “Pension Plans”), does not exceed the value of the assets of the Pension Plan
allocable to such vested benefits (based on the value of such assets as of the last annual
valuation date). No prohibited transactions, accumulated funding deficiencies, withdrawals or
reportable



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events have occurred with respect to any Pension Plans that, in the aggregate, could subject
any Borrower or any Guarantor to any material tax, penalty or other liability. No Lien in favor of
the PBGC or a Pension Plan has arisen or is likely to arise on account of any Pension Plan. No
notice of intent to terminate a Pension Plan under Section 4041(b) of ERISA has been filed, nor has
any Pension Plan been terminated under Section 4041(c) of ERISA, nor has the PBGC instituted
proceedings to terminate or appoint a trustee to administer a Pension Plan, and no event has
occurred or condition exists that might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan.



     (s) PUHCA. No Borrower and no Guarantor is a “holding company” or a “subsidiary
holding company” of a “holding company” within the meaning of the Public Utility Holding Company
Act of 1935, as amended, or any successor statute.



     (t) Compliance with Law. Each Borrower and Guarantor has complied in all respects
with all Applicable Laws to which it may be subject, and no Collateral or Loan contravenes any
Applicable Laws (including, without limitation, laws, rules and regulations relating to licensing,
usury, truth in lending, fair credit billing, fair credit reporting, equal credit opportunity, fair
debt collection practices and privacy).



     (u) Income and Required Payments. Each Borrower and Guarantor acknowledges that all
Income and Required Payments received, after the Restatement Date, by its Affiliates or its
Consolidated Subsidiaries and any Person acting on its behalf with respect to the Collateral shall
be held for the benefit of the Administrative Agent until deposited into the Collection Account as
required herein.



     (v) Set-Off, etc. No Collateral has been compromised, adjusted, extended, satisfied,
subordinated, rescinded, set-off or modified by the Borrowers, the Guarantors or any obligor
thereof, and no Collateral is subject to compromise, adjustment, extension (except as set forth in
the related documents provided to the Administrative Agent), satisfaction, subordination,
rescission, set-off, counterclaim, defense, abatement, suspension, deferment, deduction, reduction,
termination or modification, whether arising out of transactions concerning the Collateral or
otherwise, by the Borrowers, the Guarantors or any obligor with respect thereto.



     (w) Full Payment. No Borrower has any knowledge of any fact that should lead it to
expect that each Loan will not be paid in full.



     (x) Collateral. (i) The security interests granted under the Loan Documents do not
violate any provision of the Collateral, (ii) other than the Governing Documents for ARMS 2004-1
Equity Holdings LLC, ARMS 2005-1 Equity Holdings LLC and ARMS 2006-1 Equity Holdings LLC, the
agreements governing the Collateral do not contain any express or implied prohibitions on pledges
of the Collateral, (iii) the only express or implied prohibitions on pledges of the Collateral
contained in the Governing Documents for ARMS 2004-1 Equity Holdings LLC, ARMS 2005-1 Equity
Holdings LLC and ARMS 2006-1 Equity Holdings LLC are the requirement that the transferor obtain an
Opinion of Counsel opining (x) that the pledge or transfer of the Pledged Collateral will not cause
the CDO Issuer owned by the related CDO Subsidiary to cease to be treated as a QRS or (y) that,
after such transfer, the CDO Issuer will be treated as a foreign corporation that is not engaged in
a trade or business in the United States for United State federal income tax purposes, and (iv) the
agreements governing the Collateral are valid, binding and enforceable against the Borrowers, as
applicable. No Irrevocable Instruction violates any Applicable Law, any Contractual Obligation or
other prohibition and such Irrevocable Instructions are the valid and binding obligations of the
parties thereto.



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     (y) Irrevocable Instructions. The Borrowers have delivered each Irrevocable
Instruction required to be delivered by the terms of this Agreement. The Borrowers are not aware
of any Required Payment that has been made after the date of this Agreement but has not been
deposited into the Collection Account.



     (z) No Broker. No Borrower or any Guarantor has dealt with any broker, investment
banker, agent or other Person, except for the Administrative Agent (or an Affiliate of the
Administrative Agent), who may be entitled to any commission or compensation in connection with
this Agreement.



     (aa) Ability to Perform. No Borrower or Guarantor believes, nor does any Borrower or
any Guarantor have any reason or cause to believe, that it cannot perform each and every agreement
and covenant contained in the Loan Documents applicable to it to which it is a party.



     (bb) No Default. No Default or Event of Default or any Material Adverse Effect has
occurred and is continuing hereunder.



     (cc) Financial Condition.




     (i) The consolidated balance sheet of ART and its Consolidated Subsidiaries provided to
the Administrative Agent and the related consolidated statements of income and retained
earnings and of cash flows, copies of which have heretofore been furnished to the
Administrative Agent, are complete and correct and present fairly the consolidated financial
condition of ART and its Consolidated Subsidiaries as at such date, and the consolidated
results of their operations and their consolidated cash flows as of the date of such
financial statements and other information. All such financial statements, including the
related schedules and notes thereto (if any), have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as disclosed therein). Except
as set forth on Schedule 4.1(cc) attached hereto, neither ART nor any of its
Consolidated Subsidiaries had, at the date of the most recent balance sheet referred to
above, any material contingent liability or liability for taxes, or any long term lease or
unusual forward or long term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction or other financial derivative, that is not
reflected in the foregoing statements or in the notes thereto. During the period from the
date of the financial statements and other financial information delivered to the
Administrative Agent, to and including the date hereof, there has been no sale, transfer or
other disposition by ART or any of its Consolidated Subsidiaries of any material part of its
business or property and no purchase or other acquisition of any business or property
(including any Equity Interests of any other Person) material in relation to the
consolidated financial condition of ART and its Consolidated Subsidiaries on the date
hereof.




     (ii) The operating forecast and cash flow projections of ART and its Consolidated
Subsidiaries, copies of which have heretofore been furnished to the Administrative Agent,
have been prepared in good faith under the direction of a Responsible Officer of ART and in
accordance with GAAP. ART has no reason to believe that as of the date of delivery thereof
such operating forecast and cash flow projections are materially incorrect or misleading in
any material respect or omit to state any material fact which would render them misleading
in any material respect. ART shall not be required to provide information in its
projections if the disclosure of such information would violate Applicable Laws relating to
insider trading.



     (dd) Compliance with Covenants. ART is in full compliance with the Financial
Covenants and all other Borrowers and Guarantors are in full compliance with all other applicable
covenants, duties and agreements contained in the Loan Documents.



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     (ee) Collateral Agreements. The Borrowers have delivered to the Administrative Agent
all documents and agreements related to, governing or affecting the Collateral, including, without
limitation, Collateral Management Agreements, all documents related to or governing the payment or
the right to receive payment of the CDO Management Fees, all documents relating to any CDO Issuance
or proposed CDO Issuance, all Authority Documents of any CDO Subsidiary, all documents and
agreements relating to any CDO Equity Distributions and all documents relating to a CDO
Subsidiary’s right to receive payments or distributions from a CDO Issuer in any CDO Issuance, and,
to the best of the Borrowers’ knowledge, no material default or event of default exists thereunder.



     (ff) Existing Financing Facilities. All credit facilities, repurchase facilities or
substantially similar facilities of each Borrower that are presently in effect are listed under the
definition of “Existing Financing Facilities” or are Trust Preferred Debt. To each Borrower’s
knowledge, no material defaults or events of default exist thereunder. Other than the Wachovia
Indebtedness, other Indebtedness not prohibited under Section 5.1, Indebtedness under Existing
Financing Facilities, any Trust Preferred Debt and any other recourse Indebtedness approved by the
Administrative Agent after the Restatement Date (including, without limitation, any Permitted
Credit Facility), no Borrower has any Indebtedness that is recourse Indebtedness.



     (gg) True and Complete Disclosure. To each Borrower’s and each Guarantor’s actual
knowledge, the information, reports, certificates, documents, financial statements, books, records,
files, exhibits and schedules furnished in writing by or on behalf of each Borrower and each
Guarantor to the Administrative Agent in connection with the negotiation, preparation or delivery
of this Agreement and the other Loan Documents or included herein or therein or delivered pursuant
hereto or thereto, when taken as a whole, do not contain any untrue statement of material fact or
omit to state any material fact necessary to make the statements herein or therein, in light of the
circumstances under which they were made, not misleading. All written information furnished after
the date hereof by or on behalf of each Borrower and each Guarantor to the Administrative Agent and
the Lender in connection with this Agreement and the other Loan Documents and the transactions
contemplated hereby and thereby will be true, complete and accurate in every material respect, or
(in the case of projections) based on reasonable estimates, on the date as of which such
information is stated or certified. There is no fact known to a Responsible Officer of any
Borrower or any Guarantor, after due inquiry, that could reasonably be expected to have a Material
Adverse Effect that has not been disclosed to the Administrative Agent. All projections furnished
on behalf of each Borrower and each Guarantor to the Administrative Agent were prepared and
presented in good faith by or on behalf of each Borrower and each Guarantor.



     (hh) No Reliance. Each Borrower has made its own independent decisions to enter into
the Loan Documents and each Loan and as to whether such Loan is appropriate and proper for it based
upon its own judgment and upon advice from such advisors (including, without limitation, legal
counsel and accountants) as it has deemed necessary. No Borrower is relying upon any advice from
the Administrative Agent or any Lender as to any aspect of the Loans, including, without
limitation, the legal, accounting or tax treatment of such Loans.



     (ii) Insurance. Each Borrower has and maintains, with respect to its Properties and
business, insurance which meets the requirements of Subsection 5.1(bb).



     (jj) Collateral. (i) There are no outstanding rights, options, warrants or agreements
for the purchase, sale or issuance of the Collateral created by, through, or as a result of any
Borrower’s or Guarantor’s actions or inactions; and (ii) there are no agreements on the part of any
Borrower or any Guarantor to issue, sell or distribute the Collateral, other than this Agreement.



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     (kk) No Change. Since December 31, 2006, there has been no development or event, nor
any prospective development or event, which has had or could reasonably be expected to have a
Material Adverse Effect.



     (ll) Subsidiaries. The organizational chart attached as Schedule 4.1(ll) sets
forth the name of each Consolidated Subsidiary of each Borrower.



     (mm) Labor Relations. No Borrower is engaged in any unfair labor practice which could
reasonably be expected to have a Material Adverse Effect. There is (i) no unfair labor practice
complaint pending or, to the best knowledge of each of the Borrowers, threatened against any
Borrower before the National Labor Relations Board which could reasonably be expected to have a
Material Adverse Effect and no grievance or arbitration proceeding arising out of or under a
collective bargaining agreement is so pending or, to the knowledge of any Borrower, threatened,
(ii) no strike, labor dispute, slowdown or stoppage pending or, to the best knowledge of each
Borrower, threatened against any Borrower, and (iii) no union representation question existing with
respect to the employees of a Borrower and to the knowledge of each Borrower, no union organizing
activities are taking place with respect to any thereof.



     (nn) REIT Status. ART is a REIT, a publicly traded company that is listed, quoted or
traded on and is in good standing in respect of the New York Stock Exchange, NASDAQ or any other
nationally recognized stock exchanges (each, a “Stock Exchange”) and is not subject to any
ratings downgrade by any Rating Agency. ARSR is a REIT. ART has not engaged in any material
“prohibited transactions” as defined in Section 857(b)(6)(B)(iii) and (C) of the Code. ART for its
current “tax year” (as defined in the Code) is and for all prior tax years subsequent to its
election to be a REIT has been entitled to a dividends paid deduction under the requirements of
Section 857 of the Code with respect to any dividends paid by it with respect to each such year for
which it claims a deduction in its Form 1120-REIT filed with the United States Internal Revenue
Service for such year.



     (oo) Certain Tax Matters. Each Borrower represents and warrants, and acknowledges and
agrees, that it does not intend to treat the Loans and the related transactions hereunder as being
a “reportable transaction” (within the meaning of United States Treasury Department Regulation
Section 1.6011-4). In the event a Borrower determines to take any action inconsistent with such
intention, it will promptly notify the Administrative Agent and the Lenders. If a Borrower so
notifies the Administrative Agent and the Lenders, the Borrower acknowledges and agrees that the
Administrative Agent and the Lenders may treat the Loans as part of a transaction that is subject
to United States Treasury Department Regulation Section 301.6112-1, and the Administrative Agent
and the Lenders will maintain the lists and other records required by such Treasury Regulation.



     (pp) Insider. No Borrower is an “executive officer”, “director”, or “person who
directly or indirectly or acting through or in concert with one or more persons owns, controls, or
has the power to vote more than 10% of any class of voting securities” (as those terms are defined
in 12 U.S.C. § 375(b) or in regulations promulgated pursuant thereto) of any Lender, of a bank
holding company of which any Lender is a subsidiary, or of any subsidiary, of a bank holding
company of which any Lender is a subsidiary, of any bank at which any Lender maintains a
correspondent account or of any Lender which maintains a correspondent account with any Lender.



     (qq) No Defenses. There are no defenses, offsets, counterclaims, abatements, rights
of rescission or other claims, legal or equitable, available to any Borrower or any Guarantor with
respect to this Agreement, the Loan Documents, the Collateral or any other instrument, document
and/or agreement described herein or in the other Loan Documents, or with respect to the obligation
of the Borrowers to repay the Aggregate Unpaids or any other obligation under the Loan Documents.



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     (rr) Use of Proceeds. The proceeds of the Loans shall be used by the Borrowers solely
for the purpose requested and for no other purpose.



     (ss) Compliance with FCPA. Each of the Borrowers and their Subsidiaries is in
compliance with the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq., and any foreign
counterpart thereto. None of the Borrowers or their Subsidiaries has made a payment, offering, or
promise to pay, or authorized the payment of, money or anything of value (a) in order to assist in
obtaining or retaining business for or with, or directing business to, any foreign official,
foreign political party, party official or candidate for foreign political office, (b) to a foreign
official, foreign political party or party official or any candidate for foreign political office,
and (c) with the intent to induce the recipient to misuse his or her official position to direct
business wrongfully to such Borrower or its Subsidiary or to any other Person, in violation of the
Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.



     (tt) Additional Collateral. All of the representations and warranties under the Arbor
Credit Facility that are applicable to the Additional Collateral and the related Collateral by
virtue of Subsection 2.1(f) of this Agreement, including, without limitation, the
representations and warranties in Article III and Schedule 1.1(c) to the Arbor
Credit Agreement, in any Security Document (as defined in the Arbor Credit Agreement) or in any
Confirmation for any Additional Collateral, are true and correct in all respects, except as may be
specified in the applicable Confirmation.



     (uu) Eligible Subordinated Debt. All of the Trust Preferred Debt (i) has
subordination provisions substantially the same as those in the indentures for other transactions
listed in clause (i) of the definition of “Eligible Subordinated Debt,” (ii) has enforceable
subordination provisions, and (iii) has a maturity no earlier than the date that is six (6) months
following the Facility Maturity Date. To the extent any Eligible Subordinated Debt was issued
after the Closing Date, it has been specifically approved in writing by the Administrative Agent.



     (vv) [Reserved].



     (ww) Repurchase of Debt. The Borrowers and the Guarantors are in full compliance with
the covenants set forth in Subsection 5.1(uu) of this Agreement.



ARTICLE V




COVENANTS




     Section 5.1 Covenants.



     Each Borrower and each Guarantor hereby covenants and agrees that on the Restatement Date and
thereafter until the occurrence of a Final Termination, to the extent applicable:



     (a) Compliance with Laws and Contracts. Each Borrower and each Guarantor shall comply
in all material respects with all Applicable Laws (including Environmental Laws), including,
without limitation, those with respect to the Collateral or any part thereof, and comply with and
perform in all material respects all of their Contractual Obligations, all Indebtedness, all
Guarantee Obligations and all Borrower-Related Obligations.



     (b) Preservation of Company Existence. Each Borrower and each Guarantor shall
preserve and maintain its corporate, partnership or limited liability company, as applicable,
existence, rights, franchises and privileges in the jurisdiction of its formation and will qualify
and remain qualified in good



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standing as a corporation, limited partnership or limited liability company, as applicable, in
each jurisdiction where the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification has had, or could reasonably be expected to have, a Material Adverse
Effect.



     (c) Performance and Compliance with Collateral. The Borrowers and the Guarantors
shall, at their expense, timely and fully perform and comply (and shall cause their Consolidated
Subsidiaries to timely and fully perform and comply) with all provisions, covenants and other
promises required to be observed by them under the Collateral and all other agreements related to
such Collateral.



     (d) Keeping of Records and Books of Account. Each Borrower and Guarantor shall
maintain and implement administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Collateral in the event of the destruction of the
originals thereof) and will keep and maintain all documents, books, records and other information
reasonably necessary or advisable in which complete entries are made in accordance with GAAP and
Applicable Laws.



     (e) Delivery of Income and Required Payments. The Borrowers and the Guarantors shall
deposit, and shall cause each of their Consolidated Subsidiaries and all other Persons to deposit,
all Income, Required Payments and other amounts payable to the Borrowers in respect of the
Collateral into the Collection Account within two (2) Business Days of such Person’s receipt
thereof; provided, however, the CDO Management Fees shall first be deposited into
the CDO Management Fee Account and then swept to the Collection Account. The Borrowers shall
deposit, or cause to be deposited, into the Collection Account, on or before the date required by
the Loan Documents, all other amounts required by the terms of the Loan Documents. The Borrowers
and Guarantors shall provide the Administrative Agent with fully executed copies of all Irrevocable
Instructions required by this Agreement. The Borrowers and the Guarantors shall take steps
necessary to enforce such Irrevocable Instructions and shall immediately inform the Administrative
Agent of, and rectify any default, breach, failure or unwillingness to perform thereunder, any
dispute or controversy in connection therewith or any other matter that may, could or will result
in payments not being made as contemplated under the terms of such Irrevocable Instructions. The
Borrowers and the Guarantors shall not, and shall not permit any Consolidated Subsidiary to, modify
or revoke or permit any modifications or revocations of the Irrevocable Instructions without the
Administrative Agent’s prior written consent in its discretion. The Borrowers shall deliver such
other Irrevocable Instructions as the Administrative Agent may require in its discretion. All
distributions from the Collection Account and the CDO Management Fee Account shall be made solely
in accordance with the terms, provisions and conditions of this Agreement and the Account Control
Agreement, if any.



     (f) Events of Default. Each Borrower and each Guarantor shall provide the
Administrative Agent with immediate written notice of the occurrence of each Event of Default and
each Default of which any Borrower or any Guarantor has knowledge or have received notice. In
addition, no later than two (2) Business Days following any Borrower’s or Guarantor’s knowledge or
notice of the occurrence of any Event of Default or Default, the Borrowers shall provide to the
Administrative Agent a written statement of a Responsible Officer of the Borrowers setting forth
the details of such event and the action that the Borrowers or Guarantors, as applicable, propose
to take with respect thereto.



     (g) Perfection. With respect to the Collateral, the Borrowers shall (i) take all
action necessary to perfect, protect and more fully evidence the Administrative Agent’s first
priority perfected security interest in the Collateral, including, without limitation, (A) filing
and maintaining effective financing statements against the Borrowers in all necessary or
appropriate filing offices, and filing continuation statements, amendments or assignments with
respect thereto in such filing offices, (B) executing or causing to be executed such other
instruments, notices or control agreements as may be necessary or appropriate, and (C) to the
extent that anyone other than Wachovia Bank, National Association is the Administrative Agent,
entering into an Account Control Agreement, and (ii) taking all



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additional action that the Administrative Agent may reasonably request to perfect, protect and
more fully evidence the respective interests of the parties to this Agreement and the Loan
Documents in such Collateral. To the extent any Collateral is created or comes into existence
after the Restatement Date (including, without limitation, any CDO Issuance by a Consolidated
Subsidiary of a Borrower), the Borrowers shall take such actions as the Administrative Agent shall
require to obtain a first priority perfected security interest in such Collateral.



     (h) Security Interests. The Borrowers and Guarantors shall not sell, pledge, assign
or transfer to any other Person, or grant, create, incur, assume, suffer or permit to exist any
Lien on all or any portion of the Collateral or the Required Payments, other than Permitted Liens,
whether now existing or hereafter transferred hereunder, or any interest therein, and the Borrowers
and Guarantors shall not sell, pledge, assign or suffer to exist any Lien, or any circumstance
which, if adversely determined, would be reasonably likely to give rise to a Lien, on its interest,
if any, hereunder or under the other Loan Documents. Immediately upon notice to any Borrower of a
Lien or any circumstance which, if adversely determined would be reasonably likely to give rise to
a Lien (other than in favor of the Administrative Agent or created by or through the Administrative
Agent), on all or any portion of the Collateral or the Required Payments, the Borrowers shall
notify the Administrative Agent and the Borrowers shall further defend the Collateral and the
Required Payments against, and will take such other action as is necessary to remove, any Lien or
claim on or to the Collateral or the Required Payments (other than any Permitted Liens created
under this Agreement), and the Borrowers shall defend the right, title and interest of such
Borrower in and to any of the Collateral and the Required Payments against the claims and demands
of all Persons whomsoever.



     (i) Collateral Not to be Evidenced by Instruments. No Borrower nor any Guarantor
shall take any action to cause all or any portion of the Collateral that is not, as of the
applicable Borrowing Date, evidenced by an Instrument to be so evidenced except, with the
Administrative Agent’s consent, in connection with the enforcement or collection of such
Collateral.



     (j) Notices. Each of the Borrowers shall furnish notice to the Administrative Agent
with respect to the following:




     (i) Representations. Immediately upon notice or knowledge thereof, each
Borrower shall notify the Administrative Agent if any representation or warranty set forth
in Section 4.1 of this Agreement, any Loan Document or in any other document or
certificate delivered to the Administrative Agent or any asset level representation or
warranty with respect to the Additional Collateral was incorrect at the time it was given or
deemed to have been given;




     (ii) Proceedings. As soon as possible and in any event within three (3)
Business Days after notice or knowledge thereof, notice of any settlement of, material
judgment (including a material judgment with respect to the liability phase of a bifurcated
trial) in or commencement of any labor controversy (of a material nature), litigation,
action, suit, arbitration or proceeding before any court or governmental department,
commission, board, bureau, agency, arbitrator, investigation or instrumentality, domestic or
foreign, affecting (A) the Collateral or any Required Payment, (B) the Loan Documents,
(C) the Administrative Agent’s interest in the Collateral or any Required Payment, or
(D) any Borrower, any Guarantor or any of their Consolidated Subsidiaries and, with respect
to this clause (D) only, the amount in controversy exceeds $250,000;




     (iii) REIT Status. Promptly upon notice or knowledge thereof, notice of any
change in ART’s, ARSR’s, or any CDO Issuer’s status as a REIT, private REIT, QRS or taxable
REIT subsidiary, as applicable, or ART’s membership or good standing on any Stock Exchange;



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     (iv) Liens. Promptly upon receipt of notice or knowledge of any Lien on, or
claim asserted against, any Collateral or any Required Payments other than Permitted Liens;




     (v) CDO Issuance. Promptly upon notice or knowledge thereof, notice of any
downgrade, or potential downgrade (including any placement on a watch list) by Moody’s or
S&P of any CDO Issuance involving the Pledged Collateral.




     (vi) Defaults. Promptly upon notice or knowledge thereof, notice of (A) any
material default (beyond any applicable notice and cure period) related to all or any
portion of the Collateral, (B) any default (beyond any applicable notice and cure period)
under any Contractual Obligation, Indebtedness or Guarantee Obligation of any Borrower, any
Guarantor or any of their Consolidated Subsidiaries, which, if not cured, could reasonably
be expected to have a Material Adverse Effect and (C) any default or event of default under
any Borrower-Related Obligation;




     (vii) Collateral Managers. Immediately upon notice or knowledge thereof,
notice of the change in status, removal, resignation, termination or replacement of ARCM as
Collateral Manager under a Collateral Management Agreement or to the extent any Person other
than ARCM executes or is appointed as Collateral Manager under any Collateral Management
Agreement;




     (viii) Sales. Promptly upon notice or knowledge thereof, notice of the
conveyance, sale, lease, assignment, transfer or other disposition (any such transaction, or
related series of transactions, a “Sale”) of any Property, business or assets of any
Borrower or any Guarantor whether now owned or hereafter acquired, with the exception of
(A) this Agreement, (B) any Sale of Property by any Borrower or any Guarantor that is not
material to the conduct of its business and is effected in the ordinary course of business,
(C) any sale to a Consolidated Subsidiary, and (D) sales by ARSR or any special purpose
entity Subsidiary of ARSR of loans, participations and/or preferred equity interests
(including, without limitation, any sale under any repurchase facility or pledge or
collateral assignment under any warehouse facility);




     (ix) Ratings. Promptly upon notice or knowledge thereof, notice of the
establishment of a rating assigned to the long-term unsecured debt issued by any Borrower or
any Guarantor by Moody’s or S&P (or other rating agency acceptable to the Administrative
Agent) and of any downgrade in such rating once established;




     (x) Covenants. Promptly upon notice or knowledge thereof, notice of any
violation or breach of any covenant, duty or agreement contained in any Loan Document;




     (xi) Losses. Promptly upon notice or knowledge thereof, notice of any loss,
expected loss or material change in the value of any Collateral, any Required Payment, any
Property or asset of any Borrower, any Guarantor or any Consolidated Subsidiary of a
Borrower (to the extent that such loss with respect to any such Property or asset could
reasonably be expected to have a Material Adverse Effect), any determination by the
Collateral Manager that any asset in a CDO Issuance related to the Collateral is a Defaulted
Security or a Credit Risk Security, or any other event or change in circumstances or
expected event or change in circumstances that could reasonably be expected to result (A) in
a default with respect to any underlying asset relating to the Collateral (other than any
asset in a CDO Issuance related to the Collateral), or (B) in a material decline in value or
cash flow of any Collateral (other than any asset in a CDO Issuance related to the
Collateral), any Required Payment, Property or asset (to the extent that such event



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or change with respect to any such Property or asset could reasonably be expected to
have a Material Adverse Effect); and




     (xii) Material Events. Promptly upon notice or knowledge thereof, notice of
any other event or circumstances that, in the reasonable judgment of any Borrower, is likely
to have a Material Adverse Effect.


Each notice pursuant to this Subsection 5.1(j) shall be accompanied by a statement of a
Responsible Officer of the Borrowers setting forth details of the occurrence referred to therein
and stating what action the Borrowers have taken or proposes to take with respect thereto.




     (k) Deposits to Accounts. The Borrowers will not deposit or otherwise credit, or
cause or permit to be so deposited or credited, to the Collection Account or the CDO Management Fee
Account cash or cash proceeds other than Income in respect of Collateral, Required Payments or any
other amounts authorized or required under this Agreement or the other Loan Documents to be
deposited therein.



     (l) Change of Name or Location of Loan Files. No Borrower nor any Guarantor shall
(i) change its name, organizational number, identity, structure or jurisdiction of formation, move
the location of its principal place of business and chief executive office, or change the offices
where it keeps the records (as defined in the UCC) from the location referred to in
Subsection 4.1(n), or (ii) as applicable, move, or consent to any Person moving, the
Collateral from the location thereof on the Restatement Date, unless the Borrowers and Guarantors
have given at least thirty (30) days’ prior written notice to the Administrative Agent and have
taken all actions required under the UCC of each relevant jurisdiction in order to continue the
first priority perfected security interest of the Administrative Agent in the Collateral.



     (m) ERISA Matters. No Borrower nor any Guarantor shall (i) engage or permit any ERISA
Affiliate to engage in any prohibited transaction for which an exemption is not available or has
not previously been obtained from the United States Department of Labor, (ii) permit to exist any
accumulated funding deficiency, as defined in Section 302(a) of ERISA and Section 412(a) of the
Code, or funding deficiency with respect to any Benefit Plan other than a Multiemployer Plan,
(iii) fail to make any payments to a Multiemployer Plan that any Borrower, any Guarantor or any
ERISA Affiliate may be required to make under the agreement relating to such Multiemployer Plan or
any law pertaining thereto, (iv) terminate any Benefit Plan so as to result in any liability,
(v) permit to exist any occurrence of any Reportable Event or (vi) otherwise violate the provisions
of ERISA or the Code with respect to any Benefit Plan.



     (n) Compliance with Anti-Terrorism Laws. The Borrowers and the Guarantors shall
comply with all applicable Anti-Terrorism Laws. The Borrowers and the Guarantors shall conduct the
requisite due diligence in connection with the origination or acquisition of the Collateral and any
assets or Property for purposes of complying with the Anti-Terrorism Laws, including with respect
to the legitimacy of the applicable obligor or account debtor and the origin of the assets used by
the said obligor or account debtor to purchase the property in question, and will maintain
sufficient information to identify the applicable obligor or account debtor for purposes of the
Anti-Terrorism Laws. No Borrower, Guarantor nor any Consolidated Subsidiary thereof shall engage
in any conduct described in Subsection 4.1(p). The Borrowers and the Guarantors shall,
upon the request of the Administrative Agent from time to time, provide certification and other
evidence of the Borrowers’, the Guarantor’s and their Consolidated Subsidiaries’ compliance with
this Subsection 5.1(n).



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     (o) Financial Statements. The Borrowers and the Guarantors, as applicable, shall
deliver to the Administrative Agent:




     (i) as soon as available, and in any event within forty-five (45) calendar days after
the end of each fiscal quarter of ART, the unaudited consolidated and consolidating balance
sheets of ART and its Consolidated Subsidiaries as at the end of such period and the related
unaudited consolidated statements of income and retained earnings and of cash flows for ART
and its Consolidated Subsidiaries for such period and the portion of the fiscal year through
the end of such period, accompanied by a certificate of a Responsible Officer of ART, which
certificate shall state that said consolidated financial statements fairly present in all
material respects the consolidated financial condition and results of operations of ART and
its Consolidated Subsidiaries in accordance with GAAP, consistently applied, as at the end
of, and for, such period (subject to normal year-end adjustments);




     (ii) as soon as available, and in any event within one hundred twenty (120) days after
the end of each fiscal year of ART, the audited consolidated balance sheets of ART and its
Consolidated Subsidiaries as at the end of such fiscal year and the related consolidated
statements of income and retained earnings and of cash flows for ART and its Consolidated
Subsidiaries for such year, setting forth in each case in comparative form the figures for
the previous year, accompanied by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall not be qualified as to
scope of audit or going concern and shall state that said consolidated financial statements
fairly present the consolidated financial condition and results of operations of ART and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year in accordance with
GAAP;




     (iii) [Reserved];




     (iv) from time to time such other information regarding the financial condition,
operations, business, Properties or assets of the Borrowers and the Guarantors as the
Administrative Agent may reasonably request;




     (v) as soon as reasonably possible, and in any event within thirty (30) days after a
Responsible Officer of the Borrowers or Guarantors knows, or with respect to any Plan or
Multiemployer Plan to which the Borrowers, the Guarantors or any ERISA Affiliate makes
direct contributions, has reason to believe, that any of the events or conditions specified
below with respect to any Plan or Multiemployer Plan has occurred or exists, a statement
signed by a senior financial officer of the Borrowers or the Guarantors setting forth
details respecting such event or condition and the action, if any, that the Borrowers, the
Guarantors or their ERISA Affiliate proposes to take with respect thereto (and a copy of any
report or notice required to be filed with or given to the PBGC by the Borrowers, the
Guarantors or an ERISA Affiliate with respect to such event or condition):




     (A) any Reportable Event (provided that a failure to meet the minimum funding
standard of Section 412 of the Code or Section 302 of ERISA or any successor
provision thereof, including, without limitation, the failure to make on or before
its due date a required installment under Section 412(m) of the Code or
Section 302(e) of ERISA or any successor provision thereof, shall be a “Reportable
Event” regardless of the issuance of any waivers in accordance with Section 412(d)
of the Code or any successor provision thereof); and any request for a waiver under
Section 412(d) of the Code or any successor provision thereof for any Plan;



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     (B) the distribution under Section 4041(c) of ERISA or any successor provision
thereof of a notice of intent to terminate any Plan or any action taken by any
Borrower, any Guarantor or an ERISA Affiliate to terminate any Plan;




     (C) the institution by the PBGC of proceedings under Section 4042 of ERISA or
any successor provision thereof for the termination of, or the appointment of a
trustee to administer, any Plan, or the receipt by any Borrower, any Guarantor or
any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been
taken by the PBGC with respect to such Multiemployer Plan;




     (D) the complete or partial withdrawal from a Multiemployer Plan by any
Borrower, any Guarantor or any ERISA Affiliate that results in liability under
Section 4201 or 4204 of ERISA or any successor provision thereof (including the
obligation to satisfy secondary liability as a result of a purchaser default) that
would have a Material Adverse Effect or the receipt by any Borrower, any Guarantor
or any ERISA Affiliate of notice from a Multiemployer Plan that it is in
reorganization or insolvency pursuant to Section 4241 or 4245 of ERISA or any
successor provision thereof or that it intends to terminate or has terminated under
Section 4041A of ERISA or any successor provision thereof;




     (E) the institution of a proceeding by a fiduciary of any Multiemployer Plan
against any Borrower, any Guarantor or any ERISA Affiliate to enforce Section 515 of
ERISA or any successor provision thereof, which proceeding is not dismissed within
thirty (30) days; and




     (F) the adoption of an amendment to any Plan that would result in the loss of
tax exempt status of the trust of which such Plan is a part if any Borrower, any
Guarantor or an ERISA Affiliate fails to provide timely security to such Plan in
accordance with the provisions of Section 401(a)(29) of the Code or Section 307 of
ERISA or any successor provision thereof; and




     (vi) all such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed therein).



     (p) Certificates; Other Information. The Borrowers and the Guarantors, as applicable,
shall furnish to the Administrative Agent:




     (i) concurrently with the delivery of the financial statements referred to in
Subsections 5.1(o)(i) and (ii) above and in connection with the delivery of
each Notice of Borrowing, a Compliance Certificate from a Responsible Officer of each of ART
and ARSR, which Compliance Certificate shall, among other things, on a quarterly basis
describe in detail the calculations supporting the Responsible Officer’s certification of
ART’s compliance with the Financial Covenants;




     (ii) as soon as available, but in any event not later than one hundred twenty (120)
days after the end of each fiscal year of the Borrowers, and provided that the disclosure
does not violate Applicable Laws relating to insider trading, a copy of the projections of
the Borrowers (if any) of the operating budget and cash flow budget of Borrowers (if any),
for the succeeding fiscal



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year, such projections to be accompanied by a certificate of a Responsible Officer
certifying that such projections have been prepared in good faith based upon reasonable
assumptions;




     (iii) promptly upon receipt thereof, copies of all reports submitted to any of the
Borrowers (if any) by independent certified public accountants in connection with each
annual, interim or special audit of the books and records of the Borrowers (if applicable)
made by such accountants, including, without limitation, any management letter commenting on
any Borrower’s internal controls submitted by such accountants to management in connection
with their annual audit;




     (iv) within thirty (30) days after the same are sent, copies of all financial
statements, reports, notices and other documents that any Borrower or any Guarantor sends to
its stockholders and, within thirty (30) days after the same are filed, copies of all
financial statements and reports that any Borrower and/or any Guarantor may make to, or file
with, the Securities and Exchange Commission or any successor or analogous Governmental
Authority;




     (v) with respect to the Collateral, any and all documents, certificates, agreements,
instruments, reports or notices received by or available to any Borrower or any Guarantor
within three (3) Business Days of the receipt or availability thereof;




     (vi) any and all information, documents and reports regarding the Collateral
(including, without limitation, information regarding the CDO Issuances relating to the
Collateral, including information relating to any ratings downgrade, any Credit Risk
Security, any Defaulted Security or other material events, actions or conditions affecting
such CDO Issuance), any future Collateral and the Required Payments as the Administrative
Agent may require in its discretion;




     (vii) to the extent not prohibited by Applicable Law, the Borrowers shall promptly
provide the Administrative Agent with copies of all documents that the Borrowers, the
Guarantors or any Consolidated Subsidiary thereof are required to file with any regulatory
body in accordance with its regulations;




     (viii) upon request, an update to the organizational chart attached hereto as
Schedule 4.1(ll);




     (ix) promptly upon entering into an engagement letter or commitment or otherwise
documenting any proposed Debt Issuance or Equity Issuance, a notice containing information
regarding any proposed Debt Issuance or Equity Issuance, including, without limitation, the
parties involved, the expected closing date, the amount to be received in connection
therewith and such other information as the Administrative Agent may request in its
discretion;




     (x) to the extent not previously delivered hereunder, within five (5) Business Days of
the end of each calendar quarter, an Officer’s Certificate regarding the Projected
Collateral Cash Flow for each of the next four (4) calendar quarters;




     (xi) at such time as the Administrative Agent shall request and, in any event, within
five (5) Business Days of the end of each calendar month, an Officer’s Certificate regarding
compliance with the Availability and the calculation thereof and/or any update that the
Administrative Agent may request with respect to the Officer’s Certificate regarding the
Projected Collateral Cash Flow;



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     (xii) promptly upon their becoming available, copies of (i) all press releases and
other statements made available generally by any Borrower to the public concerning material
developments in the business of any Borrower or any Consolidated Subsidiary of a Borrower
and (ii) any non-routine correspondence or official notices received by any Borrower or any
Consolidated Subsidiary of a Borrower from any Governmental Authority which regulates the
operations of any Borrower or any Consolidated Subsidiary of a Borrower which is likely to
have a Material Adverse Effect;




     (xiii) notice of the passage of any bill by the United States Senate or United States
House of Representatives that any Borrower, Guarantor or any Affiliate of the foregoing
becomes aware of that would result in any Tax Law Change;




     (xiv) upon request, any and all information, documents and reports regarding any
proposed Permitted Credit Facility as the Administrative Agent may require in its reasonable
discretion;




     (xv) as soon as possible and in any event within thirty (30) days after the closing of
any Permitted Credit Facility, fully executed copies of all loan documentation for any such
Permitted Credit Facility; and




     (xvi) promptly, such additional financial and other information (including, without
limitation, any watch lists, impairment reporting, concentration lists or investor reports)
as the Administrative Agent may from time to time reasonably request.



     (q) Existence, etc. Each Borrower shall:




     (i) continue to engage in business of the same general type as now conducted by it and
maintain and preserve its legal existence and all of its material rights, privileges,
licenses and franchises necessary for the operation of its business; provided,
however, that nothing in this Subsection 5.1(q) shall prohibit any
transaction expressly permitted under Subsection 5.1(r);




     (ii) pay and discharge all taxes, assessments and governmental charges or levies
imposed on it or on its income or profits or on any of its Property prior to the date on
which penalties attach thereto, except for any such tax, assessment, charge or levy the
payment of which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained in accordance with GAAP; and




     (iii) permit representatives of the Administrative Agent, upon reasonable notice
(unless a Default or Event of Default shall have occurred and is continuing, in which case,
no prior notice shall be required) during normal business hours and at the expense of the
Borrowers, to examine, copy and make extracts from any Borrower, the Guarantor’s or any of
their Subsidiary’s books and records, to inspect any of their Properties, and to discuss its
business and affairs with their officers, employees and independent accountants, all to the
extent reasonably requested by the Administrative Agent.



     (r) Prohibition of Fundamental Changes. No Borrower nor any Guarantor shall enter
into any transaction of merger or consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation, winding up or dissolution) or sell all or substantially all of
its assets (other than in connection with a CDO Issuance); provided, however, that
any Borrower and any Guarantor may merge or consolidate with (i) any wholly owned Subsidiary of
such Borrower or such Guarantor, respectively, or



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(ii) any other Person if the Borrower or the Guarantor, as applicable, is the surviving
entity; and provided, further, that, if after giving effect thereto, no Default or
Event of Default would exist hereunder.




     (s) Loans with Affiliates. Each Borrower and Guarantor may enter into any transaction
with an Affiliate; provided, that such transaction is upon fair and reasonable terms no
less favorable to the Borrowers or the Guarantors than it would obtain in a comparable arm’s length
transaction with a Person that is not an Affiliate.



     (t) Limitations on Guarantees. The Borrowers shall not create, incur, assume or
suffer to exist any Guarantee Obligation in excess of $5,000,000 in the aggregate or $500,000 per
incurrence, except in connection with the Wachovia Indebtedness, other Existing Financing
Facilities, Permitted Credit Facilities, Trust Preferred Debt and such other Guarantee Obligations
approved by the Administrative Agent in its discretion.



     (u) Limitation on Indebtedness. The Borrowers shall not create, incur, assume or
suffer to exist any Indebtedness, in each case, in excess of $5,000,000 in the aggregate or
$500,000 per incurrence, of the Borrowers, except Indebtedness of the Borrowers permitted under
this Agreement, the Wachovia Indebtedness, other Existing Financing Facilities, Permitted Credit
Facilities, Trust Preferred Debt and such other Indebtedness approved by the Administrative Agent
in its discretion.



     (v) Limitation on Distributions. Except as otherwise required or permitted by the
Loan Documents, no Borrower nor any Guarantor shall declare or make any payment on account of, or
set apart assets for, a sinking or other analogous fund for the purchase, redemption, defeasance,
retirement or other acquisition of any Equity Interest of any Borrower or any Guarantor whether now
or hereafter outstanding, or make any other distribution in respect thereof, either directly or
indirectly, whether in cash or property or in obligations of any Borrower or any Guarantor, except
that a Borrower or Guarantor (i) may declare and pay dividends in an amount necessary to maintain
its status as a REIT and, (ii) so long as no Default or Event of Default shall have occurred,
(a) in the case of ART, may declare and pay dividends in the amounts permitted by, but subject to
the terms and conditions of, Subsection 5.1(w)(iv), and (b) may distribute funds among the
Borrowers and their Consolidated Subsidiaries.



     (w) Financial Covenants. ART shall comply with the following Financial Covenants:




     (i) Maintenance of Liquidity. ART shall not permit, for any Test Period,
Liquidity for such Test Period to be less than $7,500,000, all of which shall consist of
cash or Cash Equivalents; provided, however, that such $7,500,000 shall be reduced for each
dollar of cash collateral in excess of $25,000,000 posted as collateral for a Wachovia
Derivatives Contract (as defined in the Arbor Credit Agreement).




     (ii) Maintenance of Tangible Net Worth. ART shall not permit, for any Test
Period, Tangible Net Worth to be less than $150,000,000.




     (iii) Maintenance of Ratio of Net Total Liabilities to Adjusted Tangible Net
Worth. ART shall not permit, for any Test Period, the ratio of its Net Total
Liabilities to Adjusted Tangible Net Worth to be greater than 4:5 to 1:0.




     (iv) Payout Restrictions. For any calendar year, ART shall not make dividend
or distribution payments in excess of 100% of taxable income; provided, that, except as set
forth in clause (h) of the Fee Letter with respect to any New Stock Class, for so long as
(x) the Obligations outstanding under the Arbor Credit Facility exceed $210,000,000, (y) the
obligations outstanding under this Agreement exceed $30,000,000 and (y) the Liquidity of ART
is less than



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$35,000,000, all dividend or distribution payments shall be paid as Equity Interests up
to the highest percentage permitted by the Code to be paid in Equity Interests; provided,
however, nothing in this Section 5.1(w)(iv) shall prohibit ART from declaring and
paying dividends in an amount necessary to maintain its status as a REIT. Notwithstanding
the foregoing, in the event that ART mistakenly makes distributions in excess of 100% of
taxable income during any calendar year, then, so long as such distributions did not exceed
110% of taxable income, such excess distributions shall not constitute a Default or Event of
Default hereunder but shall be deemed distributions related to the following calendar year.



     (x) Extension or Amendment of Collateral. The Borrowers will not, except as otherwise
permitted in by the last sentence of this Subsection 5.1(x), extend, amend, waive or
otherwise modify, or permit any Servicer to extend, amend, waive or otherwise modify, the material
terms of any Collateral, provided that the foregoing shall not prohibit the Borrower, a Servicer or
a PSA Servicer from permitting, prior to a default thereunder, any Obligor to exercise an extension
option contained in any Mortgage Loan Documents. Unless otherwise agreed to by the Administrative
Agent in its reasonable discretion, the Borrower and the Servicers shall have no right to waive,
amend, modify or alter the material terms of any Additional Collateral and the Borrowers shall have
no obligation or right to repossess any such Additional Collateral or substitute other Additional
Collateral, in each case except as provided in the Custodial Agreement.



     (y) Collateral Documents. On and after the Restatement Date, the Borrowers shall,
within five (5) Business Days of receipt, provide to the Administrative Agent all documents and
agreements relating to the Collateral created, generated or received after the Restatement Date,
including, without limitation, each Collateral Management Agreement entered into after the
Restatement Date, including documents and agreements relating to or governing the payment or the
right to receive payment of any of the CDO Management Fees, all documents relating to or governing
the right to receive payments, dividends and distributions from ARCM, all documents relating to or
governing any CDO Issuance or proposed CDO Issuance after the Restatement Date, all documents
related to any CDO Equity Distributions, all documents and agreements related to or governing the
right of any CDO Subsidiary to receive payments, dividends or distributions from a CDO Issuer in a
CDO Issuance and all other documents requested by the Administrative Agent.



     (z) Account Control Agreement. The Borrowers shall maintain the Account Control
Agreement in full force and effect and shall not amend or modify the Account Control Agreement or
waive compliance with any provisions thereunder without the prior written consent of the
Administrative Agent.



     (aa) Inconsistent Agreements. No Borrower and no Guarantor shall, and neither shall
permit any of its Consolidated Subsidiaries to, directly or indirectly, enter into any agreement
containing any provision that would be violated or breached by any Loan hereunder or by the
performance by the Borrowers or the Guarantors of their obligations under any Loan Document.



     (bb) Maintenance of Property; Insurance. Each Borrower shall keep all Property useful
and necessary in its business in good working order and condition, shall maintain with financially
sound and reputable insurance companies insurance on all its Property in at least such amounts and
against at least such risks as are usually insured against in the same general area by companies
engaged in the same or a similar business, and furnish to the Administrative Agent, upon written
request, full information as to the insurance carried.



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     (cc) Interest Rate Protection Agreements. Each Borrower shall perform its duties and
obligations under and shall otherwise maintain any existing Interest Rate Protection Agreements to
which it is a party.



     (dd) Payment of Obligations. Each Borrower and Guarantor shall pay, discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all
material obligations of whatever nature, except where the amount or validity thereof is currently
being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with
respect thereto have been provided on the books of the Borrowers, Guarantors or any of their
Affiliates or Subsidiaries, as the case may be.



     (ee) Distributions in Respect of Collateral. If the Borrowers or the Guarantors shall
receive any rights, whether in addition to, in substitution of, as a conversion of, or in exchange
for any Collateral, or otherwise in respect thereof, the Borrowers and the Guarantors shall accept
the same as the Administrative Agent’s agent, hold the same in trust for the Administrative Agent
and deliver the same forthwith to the Administrative Agent (or its designee) in the exact form
received, together with duly executed instruments of transfer, assignments in blank, executed and
undated stock powers in blank and such other documentation as the Administrative Agent shall
reasonably request. If any sums of money or property are paid or distributed in respect of the
Collateral and received by any Borrower, any Guarantor or any Consolidated Subsidiary of a Borrower
or a Guarantor, the Borrowers and the Guarantors shall promptly pay or deliver, or caused to be
paid or delivered, such money or property to the Administrative Agent and, until such money or
property is so paid or delivered to the Administrative Agent, hold such money or property in trust
for the Administrative Agent, segregated from other funds of the Borrowers and the Guarantors.



     (ff) Unrelated Activities. The Borrowers shall not engage in any activity other than
activities specifically permitted by this Section 5.1, including, but not limited to,
investment in mortgage loans, mezzanine loans, participations, preferred equity and other real
estate related assets and the purchasing, financing and holding of commercial mortgage-backed
securities and activities incident thereto.



     (gg) Authority Documents. The Borrowers shall not amend their Authority Documents in
a manner which would impact, impair or affect the Collateral or any Required Payment without the
prior written consent of the Administrative Agent. Without the Administrative Agent’s prior
written consent in its discretion, no Borrower shall amend or modify the Authority Documents for
any Pledged CDO Subsidiary, and no Borrower shall amend or modify any document governing a related
CDO Issuance, in any manner that would alter the provisions governing transfers of the Equity
Interests in such entities or would otherwise impair or limit the Administrative Agent’s ability to
foreclose on and transfer or to otherwise exercise rights or remedies with respect to the Pledged
Collateral.



     (hh) [Reserved].



     (ii) REIT Status. (i) ART shall at all times continue to be (A) qualified as a REIT
as defined in Section 856 of the Code without giving any effect to any cure or corrective periods
or allowances, (B) entitled to a dividends paid deduction under Section 857 of the Code with
respect to dividends paid by it with respect to each taxable year for which it claims a deduction
on its Form 1120-REIT filed with the United States Internal Revenue Service for such year, or the
entering into by it of any material “prohibited transactions” as defined in Sections 857(b) and
856(c) of the Code, and (C) a publicly traded company listed, quoted or traded on and in good
standing in respect of any Stock Exchange, (ii) ARSR shall at all times continue to be qualified as
a REIT and (iii) the Borrowers shall cause each CDO Issuer owned by a CDO Subsidiary to remain
qualified as a QRS, in each case without giving any effect to any cure or corrective periods or
allowances.



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     (jj) Pledged Interests. Except as set forth in the Fee Letter, no Borrower nor any
Guarantor shall repurchase any outstanding common stock or operating partnership units of any
Borrower or any Guarantor prior to the later of (i) the Facility Maturity Date and (ii) the payment
in full of the Aggregate Unpaids.



     (kk) Borrower Subsidiaries. The Borrowers shall give notice of any new Subsidiary
that, upon the formation thereof, would be a Consolidated Subsidiary.



     (ll) Independence of Covenants. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the limitations of,
another covenant shall not avoid the occurrence of an Default or Event of Default if such action is
taken or condition exists.



     (mm) Negative Pledge. ART shall not grant or permit, or suffer to be granted or
permitted, any Lien on, or any Encumbrances upon, any of the assets or Properties of ART, which
shall include, without limitation, any Collateral and any Required Payment, in favor of any Person,
other than Liens in favor of the Administrative Agent and the Lenders.



     (nn) No Other Negative Pledge. None of the Borrowers or any of their Consolidated
Subsidiaries shall grant, allow or enter into any agreement or arrangement with any Person that
prohibits or restricts, or purports to prohibit or restrict, the granting of any Lien or other
Encumbrance on any of the assets or Properties of the Borrowers or their Consolidated Subsidiaries;
provided, however, that the foregoing shall not apply to (i) the negative pledge
contained in Subsection 5.1(mm), (ii) Existing Financing Facilities or (iii) any other
negative pledge or grant of any Lien or other Encumbrance approved by the Administrative Agent in
its discretion.



     (oo) ARSR. ARSR (i) shall be the direct owner of 100% of the Equity Interests in all
Pledged CDO Subsidiaries and ARCM, (ii) shall not transfer or grant any Lien or Encumbrance on any
such Equity Interests in a Pledged CDO Subsidiary (other than pursuant to the Pledge and Security
Agreement) or ARCM, (iii) shall not transfer or grant any Lien or Encumbrance on any Required
Payment, (iv) shall not permit any CDO Subsidiary or ARCM to transfer or grant any Lien or
Encumbrance on any assets of the CDO Subsidiary or ARCM (including, without limitation, any Equity
Interests in a CDO Issuer), (v) shall execute and comply and shall cause each CDO Subsidiary and
ARCM to execute and comply with an Irrevocable Instruction and shall cause each CDO Subsidiary and
ARCM to make all dividends, distributions and payments of the CDO Equity Distributions and the CDO
Collateral Manager Distributions, as applicable, to the Collection Account or the CDO Management
Fee Account, as applicable, as required in such Irrevocable Instructions, (vi) shall not amend or
modify any Authority Documents for any CDO Subsidiary or ARCM without the Administrative Agent’s
consent in its discretion, (vii) shall enforce its right to dividends, distributions and other
payments from each CDO Subsidiary and ARCM as the 100% owner for each said entity and (viii) shall
immediately inform the Administrative Agent in writing if any provision of this covenant is not
satisfied or is breached in any respect.



     (pp) ARCM. ARCM (i) shall be the Collateral Manager under the Collateral Management
Agreements for each existing and future CDO Issuance and shall be the Person entitled to receive
the CDO Management Fees thereunder, (ii) shall not transfer or grant any Lien or Encumbrance on any
rights to the Collateral Management Agreements or the CDO Management Fees (other than Permitted
Liens), (iii) shall execute and comply and shall cause all other applicable Persons to execute and
comply with an Irrevocable Instruction, (iv) shall enforce all payments due to ARCM as Collateral
Manager, and cause same to be remitted by the payor thereof directly to the CDO Management Fee
Account (v) shall provide



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the Administrative Agent with all Collateral Management Agreements in effect from time to
time, (vi) shall not amend any such Collateral Management Agreements or other related agreements in
any manner that would reduce or adversely affect the payments due thereunder to the Collateral
Manager without the Administrative Agent’s consent in its discretion, (vii) shall pay all
dividends, distributions and other amounts payable on or with respect to the Equity Interests in
ARCM to the Collection Account instead of to ARSR or any other Person that may hold the Equity
Interests in ARCM, (viii) shall not amend its Authority Documents without the Administrative
Agent’s consent, in its discretion, and (ix) shall immediately inform the Administrative Agent in
writing if any provision of this covenant is not satisfied or is breached in any respect.



     (qq) CDO Issuances. With respect to each CDO Issuance engaged in by a Borrower, the
Guarantors or any Consolidated Subsidiaries, the Borrowers shall (i) not transfer or grant any Lien
or Encumbrance on its rights to the Net Proceeds (other than Permitted Liens), (ii) execute and
comply and cause all other Persons to execute and comply with Irrevocable Instructions to require
the Net Proceeds to be paid directly to the Collection Account and not to any Borrower, any
Guarantor or any other Person, (iii) provide the Administrative Agent with all documents related to
such CDO Issuance, (iv) enforce its rights to the Net Proceeds and (v) immediately notify the
Administrative Agent in writing of any provision of this covenant is not satisfied or is breached
in any respect. With respect to any CDO Issuance engaged in by a Consolidated Subsidiary of a
Borrower, the Borrowers shall (i) not transfer or grant any Lien or Encumbrance on any rights to
the dividends, distributions and payments from the Consolidated Subsidiary (other than Permitted
Liens), (ii) execute and comply and cause the Consolidated Subsidiary to execute and comply with
Irrevocable Instructions to cause the dividends, distributions and other payments from such
Consolidated Subsidiary to be paid directly to the Collection Account and not to the Borrowers, the
Guarantors or any other Person, (iii) provide the Administrative Agent with all documents related
to such CDO Issuance, (iv) enforce its rights to dividends, distributions and other payments from
the Consolidated Subsidiary, (v) not amend the Authority Documents for such Consolidated Subsidiary
without the Administrative Agent’s consent in its discretion and (vi) immediately notify the
Administrative Agent in writing if any provision of this covenant is not satisfied or is breached
in any respect.



     (rr) Additional Collateral. The Borrowers shall perform each and every covenant, duty
and agreement set forth in the Arbor Credit Documents that are applicable to the Additional
Collateral by virtue of Subsection 2.1(f) of this Agreement, including, without limitation,
those set forth in the Security Agreement and Articles V, VI and IX of the
Arbor Credit Agreement.



     (ss) Eligible Subordinated Debt. The Borrowers shall not, nor shall it permit any
Consolidated Subsidiary to, issue any Trust Preferred Debt that (i) does not have subordination
provisions substantially the same as those in the indentures for the transactions listed in clause
(i) of the definition of “Eligible Subordinated Debt,” (ii) does not have enforceable subordination
provisions, or (iii) has a maturity date earlier than the date that is six (6) months following the
Facility Maturity Date. The applicable Borrowers shall deliver an Opinion of Counsel from the
counsel to the applicable Borrower or the applicable Consolidated Subsidiary of a Borrower in
connection with the creation of such Eligible Subordinated Debt as to the enforceability of the
subordination provisions contained in all Eligible Subordinated Debt, each in form and substance
satisfactory to the Administrative Agent in its discretion.



     (tt) Intercreditor Agreement. The Borrower and the Guarantor shall acknowledge and
agree to the Intercreditor Agreement to the extent the Administrative Agent deems that such
Intercreditor Agreement is necessary.



     (uu) Repurchase of Debt. For any given calendar quarter, no Credit Party and no
Affiliate of a Credit Party shall use any Liquidity, cash, Cash Equivalents or other funds to
repurchase any outstanding



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debt securities of any Credit Party or any Affiliate of a Credit Party (other than proceeds of
an Equity Issuance) in an amount greater than the lesser of (a) $7,500,000 in the aggregate for
such calendar quarter and (b) 50% of the CDO Equity Distributions received by the Credit Parties or
their Affiliates in connection with any CDO Issuance for the previous calendar quarter. The
Administrative Agent and the Lenders acknowledge that ARSR intends to modify (or replace) the
Original Kodiak Indentures and, in connection therewith, exchange the debt securities issued
thereunder for new debt securities of ARSR. The Administrative Agent and the Lenders agree that
such exchange shall not constitute a repurchase of debt securities by ARSR.



ARTICLE VI




[RESERVED]




ARTICLE VII




JOINT AND SEVERAL LIABILITY




     Section 7.1 Joint and Several Liability; Full Recourse Obligations.



     (a) At all times during which there is more than one (1) Borrower under this Agreement, each
Borrower hereby acknowledges and agrees that (i) such Borrower shall be jointly and severally
liable to the Administrative Agent, the Lenders and the Affected Parties to the maximum extent
permitted by Applicable Law for all representations, warranties, covenants, duties and indemnities
of the Borrowers, arising under this Agreement and the other Loan Documents, as applicable, and the
Aggregate Unpaids, (ii) such Borrower has consented to ARSR delivering all Notices of Borrowing on
behalf of all Borrowers and any such Notice of Borrowing delivered by ARSR on behalf of the
Borrowers is binding upon and enforceable against each Borrower, (iii) the liability of each
Borrower (A) shall be absolute and unconditional and shall remain in full force and effect (or be
reinstated) until all the Aggregate Unpaids shall have been paid in full and the expiration of any
applicable preference or similar period pursuant to any bankruptcy, insolvency, reorganization,
moratorium or similar law, or at law or in equity, without any claim having been made before the
expiration of such period asserting an interest in all or any part of any payment(s) received by
the Administrative Agent, and (B) until such payment has been made, shall not be discharged,
affected, modified or impaired on the happening from time to time of any event, including, without
limitation, any of the following, whether or not with notice to or the consent of the Borrowers or
the Guarantors or any other Person, (1) the waiver, compromise, settlement, release, termination or
amendment (including, without limitation, any extension or postponement of the time for payment or
performance or renewal or refinancing) of any or all of the obligations or agreements of any
Borrower or the Guarantors under this Agreement or any Loan Document, (2) the failure to give
notice to the Borrowers or the Guarantors of the occurrence of an Event of Default under any of the
Loan Documents, (3) the release, substitution or exchange by the Administrative Agent of any or all
of the Collateral (whether with or without consideration) or the acceptance by the Administrative
Agent of any additional collateral or the availability or claimed availability of any other
collateral or source of repayment or any nonperfection or other impairment of collateral, (4) the
release of any Person primarily or secondarily liable for all or any part of the Obligations,
whether by the Administrative Agent or in connection with any voluntary or involuntary liquidation,
dissolution, receivership, insolvency, bankruptcy, assignment for the benefit of creditors or
similar event or proceeding affecting any or all of the Borrowers, the Guarantors or any other
Person who, or any of whose Property, shall at the time in question be obligated in respect of the
Obligations or any part thereof, or (5) to the extent permitted by Applicable Law, any other event,
occurrence, action or circumstance that would, in the absence of this Section 7.1, result
in the release or discharge of any or all of the Borrowers from the performance or observance of
any obligation,



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covenant or agreement contained in this Agreement or the Loan Documents, (iv) the
Administrative Agent shall not be required first to initiate any suit or to exhaust its remedies
against the Borrowers, the Guarantors or any other Person to become liable, or against any of the
Collateral, in order to enforce this Agreement or the Loan Documents and the Borrowers, and the
Guarantors expressly agree that, notwithstanding the occurrence of any of the foregoing, each
Borrower shall be and remain directly and primarily liable for all sums due under this Agreement or
any of the other Loan Documents, (v) when making any demand hereunder against any Borrower, the
Administrative Agent or the Lenders may, but shall be under no obligation to, make a similar demand
on the other Borrowers, and any failure by the Administrative Agent or Lenders to make any such
demand or to collect any payments from the other Borrowers, or any release of such other Borrowers,
shall not relieve any Borrower in respect of which a demand or collection is not made or the
Borrowers not so released of their obligations or liabilities hereunder, and shall not impair or
affect the rights and remedies, express or implied, or as a matter of law, of the Administrative
Agent or the Lenders against the Borrowers and (vi) on disposition by the Administrative Agent of
any Property encumbered by any Collateral, each Borrower shall be and shall remain jointly and
severally liable for any deficiency.



     (b) Each Borrower hereby agrees that, to the extent another Borrower shall have paid more than
its proportionate share of any payment made hereunder, the Borrowers shall be entitled to seek and
receive contribution from and against any other Borrowers which have not paid their proportionate
share of such payment; provided however, that the provisions of this
Subsection 7.1(b) shall in no respect limit the obligations and liabilities of each
Borrower to the Administrative Agent, the Lenders and the Affected Parties, and, notwithstanding
any payment or payments made by a Borrower (the “paying Borrower”) hereunder or any set-off
or application of funds of the paying Borrower by the Administrative Agent, the Lenders or the
Affected Parties, the paying Borrower shall not be entitled to be subrogated to any of the rights
of the Administrative Agent, the Lenders or the Affected Parties against any other Borrowers or any
collateral security or guarantee or right of offset held by the Administrative Agent, the Lenders
or the Affected Parties, nor shall the paying Borrower seek or be entitled to seek any contribution
or reimbursement from the other Borrowers in respect of payments made by the paying Borrower
hereunder, until all amounts owing to the Administrative Agent, the Lenders and the Affected
Parties by the Borrowers under the Loan Documents and the Aggregate Unpaids and the Obligations
(but only to the extent that an event of default, an event that, with the notice or the lapse of
time, would become an event of default, or any acceleration has occurred with respect to such other
Obligations) are paid in full. If any amount shall be paid to the paying Borrower on account of
such subrogation rights at any time when all such amounts shall not have been paid in full, such
amount shall be held by the paying Borrower in trust for the Administrative Agent, segregated from
other funds of the paying Borrower, and shall, forthwith upon receipt by the paying Borrower, be
turned over to the Administrative Agent in the exact form received by the paying Borrower (duly
indorsed by the paying Borrower to the Administrative Agent, if required), to be applied against
amounts owing to the Administrative Agent and the Lenders by the Borrowers under the Loan
Documents, the Aggregate Unpaids and the other Obligations (but only to the extent that an event of
default, an event that, with the notice or the lapse of time, would become an event of default, or
any acceleration has occurred with respect to such other Obligations) in such order as the
Administrative Agent may determine in its discretion.



     (c) The obligations of the Borrower under the Loan Documents are full recourse obligations to
each Borrower and the Borrowers hereby forever waive, demise, acquit and discharge any and all
defenses, and shall at no time assert or allege any defense, to the contrary.



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ARTICLE VIII




SECURITY INTEREST




     Section 8.1 Security Interest.



     (a) Each of the following items or types of property, whether now owned or hereafter acquired,
now existing or hereafter created and wherever located, is hereinafter referred to as the
Collateral (the “Collateral”): (i) all Collateral Cash Flow, (ii) all rights to the CDO
Collateral Manager Distributions, (iii) all Additional Collateral, (iv) all Income with respect to
the Additional Collateral, (v) with respect to the Additional Collateral, all files, documents,
instruments, agreements, certificates, correspondence, appraisals, computer programs, computer
storage media, accounting records and other books and records relating to, governing or
constituting any of the foregoing, (vi) the Collection Account, the CDO Management Fee Account and
all monies, cash, deposits, securities or investment property from time to time on deposit in the
Collection Account and the CDO Management Fee Account, (vii) all Mortgage Loan Documents, all
Mortgage Asset Files, including, without limitation, all promissory notes, all Security Agreements
relating to the Additional Collateral and any other collateral pledged or otherwise, notes,
certificates, instruments, negotiable documents, chattel mortgages and all other loan, security or
other documents relating to such Additional Collateral and/or any collateral pledged or otherwise,
together with all files, documents, instruments, surveys, certificates, correspondence, appraisals,
licenses, contracts, computer programs, computer storage media, accounting records and other books
and records relating thereto, (viii) all collateral, security interests, rights and other interests
under or with respect to the Additional Collateral, (ix) all purchase agreements and the
collateral, security interests, rights and other interests thereunder, (x) all mortgage guaranties
and insurance (issued by governmental agencies or otherwise) and any mortgage insurance
certificate, policy or other document evidencing such mortgage guaranties or insurance relating to
any Additional Collateral and all claims, payments and proceeds thereunder, (xi) all servicing fees
to which a Borrower (or any Subsidiary of such Borrower) is entitled and servicing and other rights
relating to the Additional Collateral, (xii) all Servicing Agreements, Servicing Records, Servicing
Files and Servicer Accounts, to the extent related to the Additional Collateral, established
pursuant to any Servicing Agreement, Pooling and Servicing Agreement or otherwise and all amounts
on deposit therein, from time to time, (xiii) all rights of the Borrower under any Pooling and
Servicing Agreements relating to the Additional Collateral, (xiv) all other agreements or contracts
relating to, constituting, or otherwise governing, any or all of the foregoing to the extent they
relate to the Additional Collateral, including the right to receive principal and interest payments
and any related fees, breakage fees, late fees and penalties with respect to the Additional
Collateral and the right to enforce such payments, insurance policies, certificates of insurance,
insurance proceeds and the rights to any insurance proceeds, (xv) rights to any collection account,
escrow account, reserve account, collateral account or lock-box account related to the Additional
Collateral, including all monies, cash, deposits, securities or investment property from time to
time on deposit therein, (xvi) rights of any Borrower under any letter of credit, guarantee, or
other credit support or enhancement related to the Additional Collateral, (xvii) the rights of any
Borrower under any Interest Rate Protection Agreements relating to the foregoing, (xviii) the
Pledged Collateral and the Pledged Preferred Equity Collateral, (xix) all purchase or take-out
commitments relating to or constituting any of the Additional Collateral, (xx) all “general
intangibles”, “accounts”, “chattel paper”, “deposit accounts”, “security accounts”, “instruments”,
“securities”, “financial assets”, “uncertified securities”, “securities entitlements” and
“investment property” as defined in the Uniform Commercial Code as in effect from time to time
relating to the Additional Collateral or constituting any and all of the foregoing as they relate
to the Additional Collateral, and (xxi) any and all replacements, substitutions, conversions,
distributions on or proceeds of any and all of the foregoing; provided, however,
none of the foregoing Collateral shall include any obligations. Notwithstanding the foregoing
grant of a security interest, Collateral shall not include (i) any account, instrument, chattel
paper or other obligation or Property of any kind due from, owed by, or belonging to, a Person
described in the



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definition of Prohibited Person or (ii) any lease in which the lessee is a Person described in
the definition of Prohibited Person.



     (b) The Borrowers hereby assign, pledge and grant a security interest in all of their right,
title and interest in, to and under the Collateral to the Administrative Agent (for the benefit of
the Lenders) to secure the Obligations. The assignment, pledge and grant of security interest
contained herein shall be, and the Borrowers hereby represent and warrant to the Administrative
Agent that it is, a first priority perfected security interest. The Borrowers agree to mark their
computer records and tapes to evidence the interests granted to the Administrative Agent hereunder.



     (c) The assignment, pledge and grant of a security interest under this Section 8.1
does not constitute and is not intended to result in a creation or an assumption by the
Administrative Agent or any Lender of any obligation of the Borrowers or any other Person in
connection with any or all of the Collateral or under any agreement or instrument relating thereto.
Anything herein to the contrary notwithstanding, (i) the Borrowers shall remain liable under the
Collateral to the extent set forth therein to perform all of their duties and obligations
thereunder to the same extent as if this Agreement or the other Loan Documents had not been
executed, (ii) the exercise by the Administrative Agent or any Lender of any of its rights in the
Collateral shall not release the Borrowers from any of their duties or obligations under the
Collateral, and (iii) the Administrative Agent and the Lenders shall not have any obligations or
liability under the Collateral by reason of this Agreement or the other Loan Documents, nor shall
the Administrative Agent or any Lender be obligated to perform any of the obligations or duties of
the Borrowers thereunder or to take any action to collect or enforce any claim for payment assigned
hereunder.



     Section 8.2 Release of Lien on Collateral.



     (a) (i) Notwithstanding anything provided in any other Loan Document, the Borrowers may
request that the Administrative Agent release its interest in the Collateral at such time as (A)
all Revolving Commitments have been terminated, (B) all Loans have been repaid in full and all
other Aggregate Unpaids have been paid in full, (C) either (x) no other Obligations are outstanding
or (y) no event of default, or an event that, with the notice or the lapse of time, would become an
event of default, or acceleration has occurred and is continuing with respect to the other
Obligations, and (D) the Total ESH Release Amount has been received by the Administrative Agent and
applied to the Arbor Credit Facility. Subject to the proviso to this sentence, the Administrative
Agent’s interest in the Collateral shall be released ten (10) Business Days after the delivery by
the Borrowers of an Officer’s Certificate, which certificate may be delivered not more than twenty
(20) Business Days nor less than ten (10) Business Days in advance of payment in full of the
Aggregate Unpaids so long as the Borrowers re-deliver such Officer’s Certificate in connection with
payment in full of the Aggregate Unpaids, certifying that (A) the Total ESH Release Amount has been
received by the Administrative Agent and applied to the Arbor Credit Facility and (B) either (1) no
other Obligations are outstanding or (2) no event of default, or an event that, with the notice or
the lapse of time, would become an event of default, or acceleration has occurred and is continuing
with respect to the other Obligations; provided that such release shall have no effect if the
Administrative Agent gives notice to the Borrowers, prior to the later of (x) expiration of the ten
(10) Business Day period and (y) the payment in full of the Aggregate Unpaids, of its knowledge of,
or belief that, an event of default, or an event that, with the notice or the lapse of time, would
become an event of default, or acceleration has occurred and is continuing with respect to the
other Obligations. In connection with the release of its interest in the Collateral, the
Administrative Agent will make no representation or warranty, express or implied, with respect to
any such Collateral in connection with such release, except that the Administrative Agent shall
represent and warrant that it has not assigned, conveyed, pledged or otherwise transferred such
Collateral to any other Person.



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     (ii) The discovery by the Administrative Agent of a breach of any representation made in any
Officer’s Certificate delivered pursuant to Section 8.2(a)(i) shall result in an automatic
event of default under the Arbor Credit Facility.



     (b) The Administrative Agent shall consent to the release of its interest in any item of
Additional Collateral and any related Collateral so long as the related obligor has repaid such
Mortgage Asset in full and the Borrowers have delivered to the Administrative Agent all amounts the
Administrative Agent is entitled to with respect thereto, including, without limitation, all
amounts required in order to maintain the Availability hereunder; provided, that,
the Administrative Agent will make no representation or warranty, express or implied, with respect
to any such Additional Collateral or any related Collateral in connection with such release, except
that the Administrative Agent shall represent and warrant that it has not assigned, conveyed,
pledged or otherwise transferred such Additional Collateral or the related Collateral to any other
Person.



     (c) Except as otherwise provided in any Loan Document, the Administrative Agent may, in its
discretion, consent to the release of its interest in any item of Additional Collateral and any
related Collateral (i) so long as no Default or Event of Default has occurred and is continuing
hereunder, and (ii) so long as any such release will not result in a mandatory prepayment pursuant
to Subsection 2.2(a) hereof; provided, that, the Administrative Agent will
make no representation or warranty, express or implied, with respect to any such Additional
Collateral or any related Collateral in connection with such release, except that the
Administrative Agent shall represent and warrant that it has not assigned, conveyed, pledged or
otherwise transferred such Additional Collateral or the related Collateral to any other Person.



     (d) The Administrative Agent and the Lenders acknowledge that any releases of Additional Term
Loan Collateral, the ESH Allocated Assets and/or the ESH Pledged Mortgage Assets shall be governed
by the Arbor Credit Facility.



     Section 8.3 Further Assurances.



     The provisions of Section 13.12 shall apply to the security interest granted under
Section 8.1. To the extent that any Person owns or otherwise has an interest in any
Collateral that is not a party to this Agreement, the Borrowers shall provide immediate written
notice of same to the Administrative Agent, and the Borrowers shall cooperate with the
Administrative Agent in causing such Person to execute and permit the Administrative Agent to file
such documents, agreements and instruments as the Administrative Agent may require in its
discretion to obtain or maintain a perfected first priority security interest in the Collateral.



     Section 8.4 Remedies.



     Upon the occurrence and during the continuance of an Event of Default, the Administrative
Agent shall have, with respect to the security interest in the Collateral granted pursuant to
Section 8.1, and in addition to all other rights and remedies available to the
Administrative Agent under this Agreement or other Applicable Law, all rights and remedies of a
secured party upon default under the UCC.



     Section 8.5 Waiver of Certain Laws.



     Each Borrower agrees, to the full extent that it may lawfully so agree, that neither it nor
anyone claiming through or under it will set up, claim or seek to take advantage of any
appraisement, valuation, stay, extension or redemption law now or hereafter in force in any
locality where any Collateral may be situated in order to prevent, hinder or delay the enforcement
or foreclosure of this Agreement or the other



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Loan Documents, or the absolute sale of any of the Collateral or any part thereof, or the
final and absolute putting into possession thereof, immediately after such sale, of the purchasers
thereof, and each Borrower, for itself and all who may at any time claim through or under it,
hereby waives, to the full extent that it may be lawful so to do, the benefit of all such laws and
any and all right to have any of the Properties or assets constituting the Collateral marshaled
upon any such sale, and agrees that the Administrative Agent, the Lenders or any court having
jurisdiction to foreclose the security interests granted in this Agreement or the other Loan
Documents may sell the Collateral as an entirety or in such parcels as the Administrative Agent,
the Lenders or such court may determine.



     Section 8.6 Administrative Agent’s Duty of Care.



     Except as provided in the Loan Documents, the Administrative Agent’s sole duty with respect to
the Collateral shall be to use reasonable care in the custody, use, operation and preservation of
the Collateral in its possession or control. Neither the Administrative Agent nor any Lender shall
incur any liability to any Borrower or any other Person for any act of government, act of God or
other such destruction in whole or in part or negligence or wrongful act of custodians or agents
selected by and supervised by the Administrative Agent or any Lender with reasonable care, or the
Administrative Agent’s or any Lender’s failure to provide adequate protection or insurance for the
Collateral. Neither the Administrative Agent nor any Lender shall have any obligation to take any
action to preserve any rights of any Borrower in any of the Collateral against prior parties, and
the Borrowers hereby agree to take such action. The Borrowers shall defend the Collateral against
all such claims and demands of all Persons (other than claims and demands resulting from interests
created by the Administrative Agent), at all times, as are adverse to the Administrative Agent and
the Lenders. The Administrative Agent and the Lenders shall not have any obligation to realize
upon any Collateral, except through proper application of any distributions with respect to the
Collateral made directly to the Administrative Agent or its agent(s). So long as the
Administrative Agent or any Lender shall act in good faith in its handling of the Collateral, each
Borrower waives or is deemed to have waived the defense of impairment of the Collateral by the
Administrative Agent or any Lender.



ARTICLE IX




POWER OF ATTORNEY




     Section 9.1 Administrative Agent’s Appointment as Attorney-in-Fact.



     (a) Following the occurrence and during the continuance of an Event of Default, each of the
Borrowers and the Guarantors hereby irrevocably constitutes and appoints the Administrative Agent
and any officer or agent thereof, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and stead of the Borrowers
and the Guarantors and in the name of any of the Borrowers or any of the Guarantors or in its own
name, from time to time in the Administrative Agent’s discretion, for the purpose of carrying out
the terms of this Agreement and the other Loan Documents, to take any and all appropriate action
and to execute any and all documents and instruments that may be reasonably necessary or desirable
to accomplish the purposes of this Agreement and the other Loan Documents, and, without limiting
the generality of the foregoing, the Borrowers and the Guarantors hereby give the Administrative
Agent the power and right, on behalf of the Borrowers and the Guarantors, without assent by, but
with notice to, the Borrowers and the Guarantors, to do the following (in each case to the extent
the Borrowers and the Guarantors are not prohibited by Applicable Law or any applicable Contractual
Obligation):



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     (i) in the name of any Borrower or any Guarantor, or in its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under or with respect to any Collateral and to
file any claim or to take any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for the purpose of collecting any
and all such moneys due under or with respect to any Collateral whenever payable;




     (ii) to pay or discharge taxes and Liens levied or placed on or threatened against the
Collateral;




     (iii) (A) to direct any party liable for any payment under any Collateral to make
payment of any and all moneys due or to become due thereunder directly to the Administrative
Agent or as the Administrative Agent shall direct; (B) to ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, assignments, verifications, notices and other documents in connection
with any Collateral; (D) to commence and prosecute any suits, actions or proceedings at law
or in equity in any court of competent jurisdiction to collect the Collateral or any
proceeds thereof and to enforce any other right in respect of any Collateral; (E) to defend
any suit, action or proceeding brought against any of the Borrowers or the Guarantors with
respect to any Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to give such
discharges or releases as the Administrative Agent may deem appropriate, provided that same
does not impose any civil or criminal liability on the Borrowers or the Guarantors or any of
their Subsidiaries; and (G) generally, to sell, transfer, pledge, exercise rights and make
any agreement with respect to or otherwise deal with any Collateral as fully and completely
as though the Administrative Agent were the absolute owner thereof for all purposes, and to
do, at the Administrative Agent’s option and the Borrowers’ expense, at any time, and from
time to time, all acts and things that the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent’s Liens thereon and to
effect the intent of this Agreement, all as fully and effectively as such Borrowers or the
Guarantors might do; and




     (iv) to execute, from time to time, in connection with any sale provided for in
Section 10.2, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.



     The Borrowers and the Guarantors hereby ratify all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and
shall be irrevocable until the occurrence of a Final Termination.



     (b) The powers conferred on the Administrative Agent hereunder are solely to protect the
Administrative Agent’s and Lenders’ interests in the Collateral and shall not impose any duty upon
the Administrative Agent to exercise any such powers. The Administrative Agent shall be
accountable only for amounts that it actually receives as a result of the exercise of such powers,
and neither the Administrative Agent, the Lenders nor any of their officers, directors, employees
or agents shall be responsible to the Borrowers or the Guarantors for any act or failure to act
hereunder.



ARTICLE X




EVENTS OF DEFAULT




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     Section 10.1 Events of Default.



     The following events shall be Events of Default (each, an “Event of Default” and,
collectively, “Events of Default”) hereunder:



     (a) the Borrowers shall have failed to timely make a mandatory prepayment or pledge Additional
Collateral as required by Subsection 2.2(a) of this Agreement; or



     (b) the Borrowers shall fail to pay any principal or Interest on any Loan or Revolving Note
when due (whether at maturity, by reason of acceleration, at optional or mandatory prepayment or
otherwise) in accordance with the terms thereof or the other Loan Documents, or the Borrowers or
any Guarantor shall fail to pay any fee, Late Payment Fee or Interest at the Post-Default Rate when
due (whether at maturity, by reason of acceleration, at optional or mandatory prepayment or
otherwise) in accordance with the terms of the Loan Documents; or



     (c) the Borrowers or Guarantors shall default in the payment of any other Aggregate Unpaids or
other amount payable by it hereunder or under any other Loan Document after notification by the
Administrative Agent of such default, and such default shall have continued unremedied for two (2)
Business Days; or



     (d) an Insolvency Event relating to any Borrower, any Guarantor or any Affiliate or
Consolidated Subsidiary of any Borrower or any Guarantor shall have occurred; or



     (e) any Borrower or any Guarantor shall become required to register as an “investment company”
within the meaning of the 40 Act or the arrangements contemplated by the Loan Documents shall
require registration as an “investment company” within the meaning of the 40 Act; or



     (f) a regulatory, tax or accounting body has ordered that the activities of any Borrower or
any Guarantor contemplated in the Loan Documents be terminated or, as a result of any other event
or circumstance, the activities of any Borrower or any Guarantor contemplated in the Loan Documents
may reasonably be expected to cause any Borrower or any Guarantor to suffer materially adverse
regulatory, accounting or tax consequences; or



     (g) there shall exist any event or occurrence that has caused a Material Adverse Effect; or



     (h) the Internal Revenue Service shall file notice of a Lien pursuant to Section 6323 of the
Code with regard to any assets or Property of any Borrower or any Guarantor, and such Lien shall
not have been released within five (5) Business Days; or



     (i) any event of default which has not been cured within any applicable grace period occurs
under any Wachovia Indebtedness; or




(j) (i) any Loan Document, or any Lien or security interest granted thereunder, shall
(except in accordance with its terms), in whole or in part, terminate, cease to be
effective, cease to be in full force and effect or cease to be the legally valid, binding
and/or enforceable obligation of the Borrowers or the Guarantors, as applicable, or




     (ii) any Borrower or any Guarantor or any other Person shall, directly or indirectly,
contest in any manner the effectiveness, validity, binding nature or enforceability of any
Loan Document or any Lien or security interest thereunder or deny or disaffirm such Person’s
obligations under any Loan Document, or



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     (iii) the Collateral shall not have been pledged to the Administrative Agent, or the
Liens contemplated under the Loan Documents shall cease or fail to be first priority
perfected Liens on any Collateral in favor of the Administrative Agent or shall be Liens in
favor of any Person other than the Administrative Agent, or




     (iv) any Borrower shall grant, or permit or suffer to exist, any Lien on any Collateral
except Permitted Liens, or




     (v) any Borrower shall grant, or permit or suffer to exist, any Lien on any Required
Payment; or



     (k) the Borrowers fail to pledge Collateral required to be pledged under this Agreement or the
other Loan Documents or fail to cooperate with the Administrative Agent as required by this
Agreement or the other Loan Documents to ensure that the Administrative Agent has or obtains a
perfected first priority security interest in all existing and future Collateral, or the Borrowers
fail to deposit, or to cause to be deposited, any Required Payment or Income into the Collection
Account or ARCM fails to cause the CDO Management Fees to be deposited directly into the CDO
Management Fee Account; or



     (l) any Borrower or any Guarantor shall have failed to observe or perform in any material
respect any of the covenants, duties or agreements of the Borrowers or the Guarantors set forth in
this Agreement or the other Loan Documents to which the Borrowers or the Guarantors are a party and
the same continues unremedied for a period of twenty (20) days after the earlier to occur of
(i) the date on which written notice of such failure requiring the same to be remedied shall have
been given to the Borrowers or the Guarantors by the Administrative Agent, and (ii) the date on
which a Borrower or a Guarantor becomes aware thereof (provided, however, in the
case of a failure which is capable of cure but cannot reasonably be cured within such twenty (20)
day period (other than the payment of money), and provided the Borrowers or the Guarantors shall
have timely commenced to cure such failure within such twenty (20) day period (with evidence of
same delivered to the Administrative Agent) and thereafter diligently and expeditiously proceeds to
cure the same, such twenty (20) day period shall be extended for an additional twenty (20) day
period); or



     (m) any representation, warranty, certification or affirmation made by the Borrowers or the
Guarantors in this Agreement or any Loan Document or in any certificate or document delivered
pursuant to this Agreement or any Loan Document shall prove to have been incorrect in any material
respect when made or deemed made and that continues to be unremedied for a period of twenty (20)
Business Days after the earlier to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to the Borrowers or the
Guarantors by the Administrative Agent, and (ii) the date on which a Borrower or a Guarantor
becomes aware thereof; or



     (n) the Borrowers or the Guarantors shall have failed to give instructions (including, without
limitation, Irrevocable Instructions required by Sections 3.1, 3.2 or 5.1)
or any notice to the Administrative Agent or any Lender as required by this Agreement, or to
deliver any required reports hereunder, on or before the date such instruction, notice or report is
required to be made or given, as the case may be, under the terms of this Agreement and any such
failure continues unremedied for a period of two (2) Business Days after the earlier to occur of
(i) the date on which written notice of such failure requiring the same to be remedied shall have
been given to the Borrowers or the Guarantors by the Administrative Agent and (ii) the date on
which any Borrower or any Guarantor becomes aware thereof; or



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     (o) any Person’s attempt to disavow, revoke or act contrary to, the failure of any Person to
abide by or perform, or any Borrower’s or any Guarantor’s failure to enforce, the terms of any
Irrevocable Instruction; or



     (p) any Borrower or any Guarantor shall have failed to make any payment due with respect to
recourse debt, non-recourse debt or other obligations in excess of $1,500,000 or any default or any
event or condition shall have occurred that would permit acceleration of such recourse debt,
non-recourse debt or other obligations whether or not such event or condition has been waived; or



     (q) Ivan Kaufman resigns, is removed or otherwise no longer serves as an officer or director
of ART; or



     (r) a final judgment or judgments for the payment of money in excess of $1,500,000 in the
aggregate shall be rendered against any Borrower, any Guarantor or any of their Affiliates or
Consolidated Subsidiaries by one (1) or more courts, administrative tribunals or other bodies
having jurisdiction, and the same shall not be satisfied, discharged (or provision shall not be
made for such discharge) or bonded, or a stay of execution thereof shall not be procured, within
thirty (30) days from the date of entry thereof; or



     (s) any Borrower, any Guarantor or any of their Affiliates or Consolidated Subsidiaries shall
be in default (and shall not have cured such default within any applicable grace period) under
(i) any Indebtedness (including recourse Indebtedness and Non-Recourse Indebtedness) or Guarantee
Obligation of any Borrower, any Guarantor or of their Affiliates or Consolidated Subsidiaries,
which default (A) involves the failure to pay a matured obligation in excess of $1,500,000, or
(B) permits the acceleration of the maturity of obligations by any other party to or beneficiary
with respect to such Indebtedness or Guarantee Obligation in excess of $1,500,000, (ii) any other
material Contractual Obligation to which any Borrower, any Guarantor or any of their Affiliates or
Consolidated Subsidiaries is a party, which default (A) involves the failure to pay a matured
obligation, or (B) permits the acceleration of the maturity of obligations by any other party to or
beneficiary of such contract, or (iii) any Borrower-Related Obligation; or



     (t) ART fails to comply with any Financial Covenant; or



     (u) ART grants any pledge or Lien prohibited by Subsection 5.1(mm) of this Agreement;
or



     (v) (i) any Borrower, any Guarantor or an ERISA Affiliate shall engage in any “prohibited
transaction” (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Benefit
Plan, (ii) any material “accumulated funding deficiency” (as defined in Section 302 of ERISA),
whether or not waived, shall exist with respect to any Plan, or any Lien in favor of the PBGC or a
Plan shall arise on the assets of any Borrower, any Guarantor or any ERISA Affiliate, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate, any Plan, which
Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable
opinion of the Administrative Agent, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Plan shall terminate for purposes of Title IV of ERISA, (v) any
Borrower, any Guarantor or any ERISA Affiliate shall, or in the reasonable opinion of the
Administrative Agent is likely to, incur any liability in connection with a withdrawal from, or the
insolvency or reorganization of, a Multiemployer Plan, or (vi) any other event or condition shall
occur or exist with respect to a Plan; and in each case in clauses (i) through (vi)
above, such event or condition, together with all other such events or conditions, if any, could
reasonably be expected to have a Material Adverse Effect; or



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     (w) a Change of Control shall have occurred with respect to any Borrower or Guarantor; or



     (x) the Borrowers fail to comply with the provisions of Subsections 5.1(e),
5.1(oo), 5.1(pp), 5.1(qq) or 5.1(rr) in any material respect; or



     (y) ARSR shall cease to own directly 100% of the issued and outstanding Equity Interests of
the CDO Subsidiaries, ARCM, any Collateral Manager or any Consolidated Subsidiary that is the
“issuer” in a Debt Issuance; or



     (z) any Borrower or any Guarantor is not Solvent or shall admit its inability to, or its
intentions not to, perform its obligations, covenants, duties or agreements under any Loan Document
or any Obligation; or



     (aa) any event of default under any other Loan Document;



     (bb) any “Event of Default” (as defined in the Arbor Credit Agreement), or any breach, default
or failure to comply or satisfy any term, provision, representation, warranty, covenant, duty,
liability or agreement contained in the Arbor Credit Documents, that applies to the Additional
Collateral and the related Collateral by virtue of Subsection 2.1(f) of this Agreement,
after any notice or opportunity to cure applicable thereto, if any, set forth in such Arbor Credit
Documents; or



     (cc) ART ceases to qualify as a REIT (without giving any effect to any cure or corrective
periods or allowances), is subject to a ratings downgrade by any Rating Agency or ceases to be a
publicly traded company listed, quoted or traded on or in good standing in respect of any Stock
Exchange, or ARSR fails to qualify as a REIT (without giving any effect to any cure or corrective
periods or allowances); or



     (dd) the Borrowers shall fail to deliver any documentation or information required to be
delivered pursuant to the terms of this Agreement or the other Loan Documents and the same
continues unremedied for a period of twenty (20) days after the earlier to occur of (i) the date on
which written notice of such failure requiring the same to be remedied shall have been given to the
Borrowers or the Guarantors by the Administrative Agent, and (ii) the date on which a Borrower or a
Guarantor becomes aware thereof.



     For the purposes of Subsections 10.1(d), (r) and (s) and
10.2(a)(i) and the next sentence and not with respect to any other provision of this
Agreement or any other Loan Document, the percentage used in the term Affiliate shall be 50%
instead of 20%. Subject to the preceding sentence, upon the occurrence of any event described in
Subsections 10.1(d), (r) and (s) with respect to any Affiliate, including
any Person that becomes an Affiliate of any Borrower or any Guarantor as a result of an exercise by
any Borrower or any Guarantor of its remedies in connection with a pledge to a Borrower or a
Guarantor of interests in such Person, the Borrowers shall promptly notify the Administrative Agent
of same in writing and the Administrative Agent will make a determination in its reasonable
discretion and within a reasonable period of time as to whether such event shall constitute an
Event of Default.



     Section 10.2 Remedies.



     (a) If an Event of Default occurs, the following rights and remedies are available to the
Administrative Agent; provided, that an Event of Default shall be deemed to be continuing
unless expressly waived by the Administrative Agent in writing.



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     (i) At the option of the Administrative Agent (which option the Administrative Agent
shall exercise at the written request of the Requisite Lenders), exercised by written notice
to the Borrowers (which option shall be deemed to have been automatically exercised, even if
no notice is given, immediately upon the occurrence of an Insolvency Event of any Borrower,
any Guarantor or any of their Affiliates or Consolidated Subsidiaries), the Revolving
Commitments shall be immediately terminated, the Facility Maturity Date and the maturity of
each Loan shall be deemed to have occurred (if it has not already occurred) (except that, in
the event that the Borrowing Date for any Loan has not yet occurred as of the date of such
exercise or deemed exercise, such Loan shall be deemed immediately cancelled) and the Loans
(together with accrued Interest), the Aggregate Unpaids shall be immediately due and
payable. The Administrative Agent shall (except upon the occurrence of an Insolvency Event
of any Borrower, any Guarantor or any of their Affiliates and Consolidated Subsidiaries)
give notice to the Borrowers of the exercise of such option as promptly as practicable.




     (ii) If the Administrative Agent exercises or is deemed to have exercised the option
referred to in Subsection 10.2(a)(i),




     (A) the Borrowers and the Guarantors shall immediately deliver to the
Administrative Agent any Collateral then in any Borrower’s or Guarantor’s possession
or control; and




     (B) all Income and other amounts actually received by the Administrative Agent
or on deposit in the Collection Account shall be applied to the Aggregate Unpaids
and any other Obligations in accordance with the priorities set forth in
Section 2.7.




     (iii) Upon the occurrence of one or more Events of Default, the Administrative Agent
shall have the right to obtain physical possession of all files of the Borrowers and the
Guarantors relating to the Collateral and all documents relating to the Collateral which are
then or may thereafter come into the possession of the Borrowers, the Guarantors or any
third party acting for the Borrowers or the Guarantors, and the Borrowers shall deliver to
the Administrative Agent such assignments as the Administrative Agent shall request, and the
Administrative Agent shall have the right to appoint any Person to act as the servicer for
the Collateral.




     (iv) At any time after the second (2nd) Business Day following notice to the Borrowers
(which notice may be the notice given under Subsection 10.2(a)(i)), in the event the
Borrowers have not paid all Aggregate Unpaids and other Obligations (but only to the extent
that an event of default, an event that, with the notice or the lapse of time, would become
an event of default, or any acceleration has occurred with respect to such other
Obligations), the Administrative Agent may (A) immediately sell, without demand or further
notice of any kind, at a public or private sale and at such price or prices as the
Administrative Agent may deem reasonably satisfactory any or all Collateral and apply the
proceeds thereof to the Aggregate Unpaids and the other Obligations (but only to the extent
that an event of default, an event that, with the notice or the lapse of time, would become
an event of default, or any acceleration has occurred with respect to such other
Obligations) in accordance with the priorities set forth in Section 2.7, or (B) in
its discretion, elect, in lieu of selling all or a portion of such Collateral, to give the
Borrowers credit for such Collateral in an amount equal to the market value of the
Collateral against the Aggregate Unpaids and any other Obligations (but only to the extent
that an event of default, an event that, with the notice or the lapse of time, would become
an event of default, or any acceleration has occurred with respect to such other
Obligations). The proceeds of any disposition of Collateral shall be applied first to the
costs and expenses incurred by the Administrative Agent in connection with the default;
second to the costs of related covering



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and/or related hedging transactions; third to the Aggregate Unpaids and other
Obligations (but only to the extent that an event of default, an event that, with the notice
or the lapse of time, would become an event of default, or any acceleration has occurred
with respect to such other Obligations) in accordance with the priorities set forth in
Section 2.7; and fourth to the Borrowers.




     (v) The Borrowers and the Guarantors agree that the Administrative Agent may obtain an
injunction or an order of specific performance to compel the Borrowers and the Guarantors to
fulfill any of their obligations as set forth in this Agreement or the other Loan Documents
if the Borrowers or Guarantors fail or refuse to perform their obligations as set forth
herein or therein.




     (vi) The Borrowers shall be liable to the Administrative Agent, payable as and when
incurred by the Administrative Agent, for (A) the amount of all reasonable actual
out-of-pocket expenses, including legal or other expenses, incurred by the Administrative
Agent in connection with or as a consequence of an Event of Default, and (B) all reasonable
costs incurred in connection with hedging or covering transactions.



     (b) The Administrative Agent may exercise one or more of the remedies available to the
Administrative Agent immediately upon the occurrence of an Event of Default and, except to the
extent provided in Subsections 10.2(a)(i) and 10.2(a)(iv), at any time thereafter
without notice to the Borrowers or the Guarantors. All rights and remedies arising under this
Agreement, the other Loan Documents or any other agreement relating to the Borrower-Related
Obligations, as any of the foregoing are amended from time to time, are cumulative and not
exclusive of any other rights or remedies that the Administrative Agent may have.



     (c) The Administrative Agent may enforce its rights and remedies hereunder without prior
judicial process or hearing, and the Borrowers and Guarantors hereby expressly waive any defenses
the Borrowers and Guarantors might otherwise have to require the Administrative Agent to enforce
its rights by judicial process. The Borrowers and the Guarantors also waive any defense (other
than a defense of payment or performance) any Borrower and/or any Guarantor might otherwise have
arising from the use of nonjudicial process, enforcement and sale of all or any portion of the
Collateral, or from any other election of remedies. The Borrowers and the Guarantors recognize
that nonjudicial remedies are consistent with the usages of the trade, are responsive to commercial
necessity and are the result of a bargain at arm’s-length.



     (d) To the extent permitted by Applicable Law, the Borrowers shall be liable to the
Administrative Agent for interest on any amounts owing by the Borrowers hereunder, under the other
Loan Documents or otherwise, from the date the Borrowers become liable for such amounts hereunder
until such amounts are (i) paid in full by the Borrowers or (ii) satisfied in full by the exercise
of the Administrative Agent’s rights hereunder. Interest on any sum payable by the Borrowers to
the Administrative Agent under this Subsection 10.2(d) shall accrue interest from and after
the date of the Event of Default (but only during the continuance of that Event of Default) at a
rate equal to the Post-Default Rate.



     (e) In addition to the rights under this Section 10.2, the Administrative Agent shall
have the following additional rights if an Event of Default occurs:




     The Administrative Agent, the Borrowers and the Guarantors agree and acknowledge that
the Collateral includes collateral that may decline rapidly in value. Accordingly,
notwithstanding anything to the contrary in this Agreement, the other Loan Documents or
otherwise, the



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Administrative Agent shall not be required to give notice to the Borrowers or the
Guarantors prior to exercising any remedy in respect of an Event of Default. If no prior
notice is given, the Administrative Agent shall give notice to the Borrowers and the
Guarantors of the remedies effected by the Administrative Agent promptly thereafter. The
Administrative Agent shall act in good faith in exercising its rights pursuant to this
Section 10.2.



     (f) The Administrative Agent shall have, in addition to its rights hereunder, any rights
otherwise available to it under any other agreement or Applicable Law (including, without
limitation, the UCC).



     (g) Notwithstanding anything to the contrary in this Agreement or the other Loan Documents,
the Administrative Agent shall not foreclose on any Pledged Collateral or otherwise cause ownership
of any Equity Interests in any Pledged CDO Subsidiary to be transferred from the applicable
Borrower unless the Administrative Agent obtains an Opinion of Counsel opining (x) that a transfer
of the Pledged Collateral in connection with such foreclosure or other transfer will not cause the
CDO Issuer owned by the related CDO Subsidiary to cease to be treated as a QRS or (y) that, after
such transfer, the CDO Issuer will be treated as a foreign corporation that is not engaged in a
trade or business in the United States for United State federal income tax purposes.



     Section 10.3 Waiver.



     Except as expressly set forth in Section 10.2, presentment, demand, protest and all
other notices of any kind are hereby expressly waived by the Borrowers and the Guarantors.



     Section 10.4 Determination of Events of Default.



     In making a determination as to whether an Event of Default has occurred, the Administrative
Agent shall be entitled to rely on reports published or broadcast by media sources believed by the
Administrative Agent to be generally reliable and on information provided to it by any other
sources believed by it to be generally reliable; provided, that the Administrative Agent
reasonably and in good faith believes such information to be accurate and has taken such steps as
may be reasonable in the circumstances (including consulting with the Borrowers and the Guarantors)
to attempt to verify such information.



ARTICLE XI




INDEMNIFICATION




     Section 11.1 Indemnities by the Borrowers.



     (a) Each Borrower agrees to hold the Administrative Agent, the Lenders, the other Affected
Parties and each of their Affiliates and the Administrative Agent, the Lenders, the other Affected
Parties and their Affiliates’ officers, directors, shareholders, members, managers, partners,
owners, attorneys, employees, agents, Affiliates and advisors (each an “Indemnified Party”
and collectively the “Indemnified Parties”) harmless from and indemnify any Indemnified
Party against all liabilities, losses, damages, judgments, costs, expenses, penalties and fines of
any kind or nature whatsoever that may be imposed on, incurred by or asserted against such
Indemnified Party, including, without limitation, fees and expenses of counsel (collectively, the
“Indemnified Amounts”), relating to or arising out of (i) this Agreement, the other Loan
Documents, any Loan, any Collateral or any transaction contemplated hereby or thereby, or (ii) any
amendment, supplement or modification of, or any waiver or consent under or in respect of, this



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Agreement, the other Loan Documents, any Loan, any Collateral or any transaction contemplated
hereby or thereby, or (iii) any violation of Applicable Law related to any of the foregoing
(including, without limitation, violation of securities laws) and any civil penalties or fees
assessed by OFAC against, and the reasonable costs and expenses (including fees and expenses of
counsel) incurred in connection with the defense thereof by any Indemnified Party as a result of
the conduct of any Borrower, any Guarantor or any Consolidated Subsidiary thereof that violates any
sanctions enforced by the OFAC, or (iv) any and all Indemnified Amounts arising out of,
attributable or relating to, accruing out of, or resulting from (1) a past, present or future
violation or alleged violation of any Environmental Laws in connection with any Property or
Underlying Mortgaged Property by any Person or other source, whether related or unrelated to any
Borrower, any Guarantor or any obligor under a Mortgage Asset, (2) any presence of any Materials of
Environmental Concern in, on, within, above, under, near, affecting or emanating from any Property
or Underlying Mortgaged Property, (3) the failure to timely perform any Remedial Work, (4) any
past, present or future activity by any Person or other source, whether related or unrelated to any
Borrower, any Guarantor or any obligor under a Mortgage Asset in connection with any actual,
proposed or threatened use, treatment, storage, holding, existence, disposition or other release,
generation, production, manufacturing, processing, refining, control, management, abatement,
removal, handling, transfer or transportation to or from any Property or Underlying Mortgaged
Property of any Materials of Environmental Concern at any time located in, under, on, above or
affecting any Property or Underlying Mortgaged Property, (5) any past, present or future actual
Release (whether intentional or unintentional, direct or indirect, foreseeable or unforeseeable)
to, from, on, within, in, under, near or affecting any Property or Underlying Mortgaged Property by
any Person or other source, whether related or unrelated to any Borrower, any Guarantor or any
obligor under a Mortgage Asset, (6) the imposition, recording or filing or the threatened
imposition, recording or filing of any Lien on any Property or Underlying Mortgaged Property with
regard to, or as a result of, any Materials of Environmental Concern or pursuant to any
Environmental Law, or (7) any misrepresentation or inaccuracy in any representation or warranty in
any material respect or material breach or failure to perform any covenants or other obligations
pursuant to this Agreement, the other Loan Documents or any of the Mortgage Loan Documents or
relating to environmental matters in any way including, without limitation, under any of the
Mortgage Loan Documents, or (v) any matter or item covered by the indemnification provision
contained in Subsection 10.5(b) of the Arbor Credit Agreement, mutatis
mutandis, or (vi) any Borrower’s, any Guarantor’s, or any Affiliate’s conduct, duties,
actions and/or inactions in connections with, related to or arising out of the foregoing clauses of
this Subsection 11.1(a), that, in each case, results from anything other than any
Indemnified Party’s gross negligence or willful misconduct. Without limiting the generality of the
foregoing, the Borrowers agree to hold any Indemnified Party harmless from and indemnify such
Indemnified Party against all Indemnified Amounts relating to or arising out of any violation or
alleged violation of, noncompliance with or liability under any Applicable Law, rule or regulation
(including, without limitation, Environmental Laws) with respect to any Property of a Borrower or
Guarantor or any Collateral that, in each case, results from anything other than such Indemnified
Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or
other proceeding to which the indemnity in this Section 11.1 applies, such indemnity shall
be effective whether or not such investigation, litigation or proceeding is brought by any
Borrower, any Guarantor or any of their directors, shareholders, owners, partners, members,
officers, managers, agents, Affiliates or creditors or an Indemnified Party or any other Person or
any Indemnified Party is otherwise a party thereto and whether any transaction contemplated hereby
is consummated. In any suit, proceeding or action brought by an Indemnified Party in connection
with any Collateral for any sum owing thereunder, or to enforce any provisions of any Collateral,
the Borrowers will save, indemnify and hold such Indemnified Party harmless from and against all
expense, loss or damage suffered by reason of any defense, set-off, counterclaim, recoupment or
reduction of liability whatsoever of the account debtor or obligor thereunder arising out of a
breach by any Borrower or any Guarantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such account debtor or
obligor or its successors from any Borrower or any Guarantor. The Borrowers also



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agree to reimburse an Indemnified Party as and when billed by such Indemnified Party for all
such Indemnified Party’s costs, expenses and fees incurred in connection with the enforcement or
the preservation of such Indemnified Party’s rights under this Agreement, the other Loan Documents,
the Loan, the Collateral and any transaction contemplated hereby or thereby, including, without
limitation, the reasonable fees and disbursements of its counsel.



     (b) Any amounts subject to the indemnification provisions of this Section 11.1 shall
be paid by the Borrowers to the Indemnified Party within five (5) Business Days following such
Person’s demand therefor.



     (c) The obligations of the Borrowers under this Section 11.1 shall survive the
resignation or removal of the Administrative Agent and the survive termination of this Agreement
and the payment in full of the Obligations.



     Section 11.2 After-Tax Basis.



     Indemnification under Section 11.1 shall be in an amount necessary to make the
Indemnified Party whole after taking into account any tax consequences to the Indemnified Party of
the receipt of the indemnity provided hereunder, including the effect of such tax or refund on the
amount of tax measured by net income or profits that is or was payable by the Indemnified Party.



ARTICLE XII




THE ADMINISTRATIVE AGENT




     Section 12.1 Appointment.



     Each Lender hereby irrevocably designates and appoints Initial Lender as the Administrative
Agent of such Lender under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes Initial Lender, as the Administrative Agent for such Lender, to take such
action on its behalf under the provisions of this Agreement and the other Loan Documents and to
exercise such powers and perform such duties as are expressly delegated to the Administrative Agent
by the terms of this Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this
Agreement, the Administrative Agent shall not have any duties or responsibilities except those
expressly set forth herein or in the other Loan Documents, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or the other Loan Documents or otherwise exist against the
Administrative Agent.



     Section 12.2 Delegation of Duties.



     The Administrative Agent may execute any of its duties under this Agreement by or through
agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters
pertaining to such duties. The Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by it with reasonable care. Without
limiting the foregoing, the Administrative Agent may appoint one of its Affiliates as its agent to
perform the functions of the Administrative Agent hereunder relating to the advancing of funds to
the Borrowers and distribution of funds to the Lenders and to perform such other related functions
of the Administrative Agent hereunder and under the other Loan Documents as are reasonably
incidental to such functions.



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     Section 12.3 Exculpatory Provisions.



     Neither the Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact, Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this Agreement or the other
Loan Documents (except for its or such Person’s own gross negligence or willful misconduct) or
(b) responsible in any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Borrowers, the Guarantors or any of their respective Affiliates or
Subsidiaries or any officer thereof contained in this Agreement or in any certificate, report,
statement or other document referred to or provided for in, or received by the Administrative Agent
under or in connection with, this Agreement or the other Loan Documents or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of any of the Loan Documents or for any
failure of the Borrowers, the Guarantors or any of their respective Affiliates or Subsidiaries to
perform any of their obligations hereunder or under the other Loan Documents. The Administrative
Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the
observance or performance by the Borrowers, the Guarantors or any of their respective Affiliates or
Subsidiaries of any of the agreements contained in, or conditions of, this Agreement or the other
Loan Documents, or to inspect the Properties, books or records of the Borrowers, the Guarantors or
any of their respective Affiliates or Subsidiaries.



     Section 12.4 Reliance by Administrative Agent.



     (a) The Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or other document or
conversation believed by it in good faith to be genuine and correct and to have been signed, sent
or made by the proper Person or Persons and upon advice and statements of legal counsel (including,
without limitation, counsel to the Borrowers and/or the Guarantors), independent accountants and
other experts selected by the Administrative Agent. The Administrative Agent may deem and treat
the payee of any Revolving Note as the owner thereof for all purposes unless an executed Commitment
Transfer Supplement has been filed with the Administrative Agent pursuant to Section 13.16
with respect to the Loans evidenced by such Revolving Note. The Administrative Agent shall be
fully justified in failing or refusing to take any action under this Agreement or the other Loan
Documents unless it shall first receive such advice or concurrence of the Requisite Lenders as it
deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any
and all liability and expense which may be incurred by it by reason of taking or continuing to take
any such action. The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under any of the Loan Documents in accordance with a request of the
Requisite Lenders or all of the Lenders, as may be required under this Agreement, and such request
and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and
all future holders of the Revolving Notes.



     (b) For purposes of determining compliance with the conditions specified in
Section 3.1 of this Agreement, each Lender that has signed this Agreement shall be deemed
to have consented to, approved or accepted or to be satisfied with, each document or other matter
required thereunder to be consented to or approved by or acceptable or satisfactory to a Lender.



     Section 12.5 Notice of Default.



     The Administrative Agent shall not be deemed to have knowledge or notice of the occurrence of
any Default or Event of Default unless the Administrative Agent has received notice from a Lender,
the Borrowers or the Guarantors referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a “notice of default.” In the event that the
Administrative Agent receives such a



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notice, the Administrative Agent shall give prompt notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or Event of Default as
shall be reasonably directed by the Requisite Lenders; provided, however, that
unless and until the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in the best interests
of the Lenders except to the extent that this Agreement expressly requires that such action be
taken, or not taken, only with the consent or upon the authorization of the Requisite Lenders, or
all of the Lenders, as the case may be.



     Section 12.6 Non-Reliance on Administrative Agent and Other Lenders.



     Each Lender expressly acknowledges that neither the Administrative Agent nor any of its
Affiliates has made any representation or warranty to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of the Borrowers or the Guarantors,
shall be deemed to constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and investigation into the
business, operations, Property, financial and other condition and creditworthiness of the Borrowers
and Guarantors and made its own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation as it deems
necessary to inform itself as to the business, operations, Property, financial and other condition
and creditworthiness of the Borrowers and the Guarantors. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the Administrative Agent hereunder,
the Administrative Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the business, operations, Property, condition (financial or
otherwise), prospects or creditworthiness of the Borrowers or the Guarantors which may come into
the possession of the Administrative Agent or any of its Affiliates.



     Section 12.7 Indemnification.



     The Lenders agree to indemnify the Administrative Agent in its capacity hereunder (to the
extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do
so), ratably according to their respective Revolving Commitment Percentages in effect on the date
on which indemnification is sought under this Section 12.7, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Revolving Notes) be imposed on, incurred by or asserted against
the Administrative Agent in any way relating to or arising out of any Loan Document or any
documents contemplated by or referred to herein or therein or the transactions contemplated hereby
or thereby or any action taken or omitted by the Administrative Agent under or in connection with
any of the foregoing; provided, however, that no Lender shall be liable for the
payment of any portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements to the extent resulting from the Administrative
Agent’s gross negligence or willful misconduct, as determined by a court of competent jurisdiction.
The agreements in this Section 12.7 shall survive the termination of this Agreement and
the payment in full of the Obligations.



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     Section 12.8 The Administrative Agent in Its Individual Capacity.



     The Administrative Agent and its Affiliates may make loans to, accept deposits from and
generally engage in any kind of business with the Borrowers and Guarantors as though the
Administrative Agent were not the Administrative Agent hereunder. With respect to the Loans made
or renewed by it and any Revolving Note issued to it, the Administrative Agent shall have the same
rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and the terms “Lender” and “Lenders” shall
include the Administrative Agent in its individual capacity.



     Section 12.9 Successor Administrative Agent.



     The Administrative Agent may resign as Administrative Agent upon thirty (30) days’ prior
written notice to the Borrowers and the Lenders provided there exists at such time Lenders other
than the Initial Lender. If the Administrative Agent shall resign as Administrative Agent under
this Agreement and the other Loan Documents, then the Requisite Lenders shall appoint from among
the Lenders a successor administrative agent for the Lenders, whereupon such successor
administrative agent shall succeed to the rights, powers and duties of the Administrative Agent,
and the term “Administrative Agent” shall mean such successor administrative agent effective upon
such appointment and approval, and the former Administrative Agent’s rights, powers and duties as
Administrative Agent shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent or any of the parties to this Agreement or any holders of the
Revolving Notes. If no successor Administrative Agent has accepted appointment as Administrative
Agent within thirty (30) days after the retiring Administrative Agent’s giving notice of
resignation, the retiring Administrative Agent shall have the right, on behalf of the Lenders, to
appoint a successor administrative agent; provided, that such successor administrative
agent has minimum capital and surplus of at least $50,000,000. If no successor administrative
agent has accepted appointment as Administrative Agent within sixty (60) days after the retiring
Administrative Agent’s giving notice of resignation, the retiring Administrative Agent’s
resignation shall nevertheless become effective and the Lenders shall perform all duties of the
Administrative Agent hereunder and under the other Loan Documents until such time, if any, as the
Requisite Lenders appoint a successor administrative agent as provided for above. After any
retiring Administrative Agent’s resignation as Administrative Agent, the indemnification provisions
of this Agreement and the other Loan Documents and the provisions of this Article XII shall
inure to its benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement.



     Section 12.10 Other Administrative Agents.



     None of the Lenders or other Persons identified on the facing page or signature pages of this
Agreement as a “syndication agent”, “documentation agent”, “co-agent”, “book manager”, “book
runner”, “lead manager”, “arranger”, “lead arranger” or “co-arranger”, if applicable, shall have
any right (except as expressly set forth herein), power, obligation, liability, responsibility or
duty under this Agreement or the other Loan Documents other than, in the case of such Lenders,
those applicable to all Lenders as such. Without limiting the foregoing, none of the Lenders or
other Persons so identified shall have or be deemed to have any fiduciary relationship with any
Lender. Each Lender acknowledges that it has not relied, and will not rely, on any of the Lenders
or other Persons so identified in deciding to enter into this Agreement or the other Loan Documents
or in taking or not taking action hereunder.



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ARTICLE XIII




MISCELLANEOUS




     Section 13.1 Amendments, Waivers and Release of Collateral.



     (a) Neither this Agreement, nor any of the Revolving Notes, nor any of the other Loan
Documents, nor any terms hereof or thereof, may be amended, supplemented, waived or modified except
in accordance with the provisions of this Section 13.1 nor may any Borrower or any
Guarantor be released except in accordance with the provisions of this Section 13.1. The
Requisite Lenders may, or, with the written consent of the Requisite Lenders, the Administrative
Agent may, from time to time, (a) enter into with the Borrowers and Guarantors written amendments,
supplements or modifications hereto and to the other Loan Documents for the purpose of adding any
provisions to this Agreement or the other Loan Documents or changing in any manner the rights of
the Lenders or of the Borrowers and Guarantors hereunder or thereunder or (b) waive, on such terms
and conditions as the Requisite Lenders may specify in such instrument, any of the requirements of
this Agreement or the other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, waiver, supplement,
modification or release shall:




     (i) extend the Facility Maturity Date, reduce the amount or extend the scheduled date
of maturity of any Loan or Revolving Note or any installment thereon, or reduce the stated
rate of any interest or fee payable hereunder (except in connection with a waiver of
interest at the increased Post-Default Rate which shall be determined by a vote of the
Requisite Lenders) or extend the scheduled date of any payment thereof or increase the
amount or extend the expiration date of any Lender’s Revolving Commitment, in each case
without the written consent of each Lender directly affected thereby; or




     (ii) amend, modify, supplement or waive any provision of this Section 13.1 or
reduce the percentage specified in the definition of Requisite Lenders, without the written
consent of all the Lenders; or




     (iii) amend, modify, supplement or waive any provision of Articles VII and
XII without the written consent of the Administrative Agent; or




     (iv) release any Borrower or any Guarantor from its obligations hereunder or under the
other Loan Documents, without the written consent of all of the Lenders and, if applicable,
any counterparty to any Interest Rate Protection Agreement; or




     (v) release all or substantially all of the Collateral without the written consent of
all of the Lenders and, if applicable, any counterparty to any Interest Rate Protection
Agreement; or




     (vi) subordinate the Loans to any other Indebtedness without the written consent of all
of the Lenders; or




     (vii) permit the Borrowers or Guarantors to assign or transfer any of their rights or
obligations under this Agreement or other Loan Documents without the written consent of all
of the Lenders; or




     (viii) amend, modify, supplement or waive any provision of the Loan Documents requiring
consent, approval or request of the Requisite Lenders or all Lenders without the written
consent of the Requisite Lenders or all Lenders, as appropriate; or



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     (ix) amend, modify, supplement or waive the order in which Obligations are paid in
Section 2.7 without the written consent of each Lender directly affected thereby; or




     (x) without the consent of Lenders having Revolving Commitment Percentages in the
aggregate more than 50% amend, modify or waive Section 3.2 or any other provision of
this Agreement if the effect of such amendment or waiver is to require Lenders to make Loans
when such Lenders would not otherwise be required to do so; or




     (xi) amend, modify or supplement the definition of Obligations to delete or exclude any
obligation or liability described therein without the written consent of each Lender and, if
applicable, each counterparty to any Interest Rate Protection Agreement directly affected
thereby;



     provided, however, that no amendment, modification, supplement, waiver or
consent affecting the rights or duties of the Administrative Agent under any Loan Document shall in
any event be effective unless the same is in writing and signed by the Administrative Agent, in
addition to the Lenders required hereinabove to take such action.



     (b) Any such waiver, any such amendment, supplement or modification and any such release shall
apply equally to each of the Lenders and shall be binding upon the Borrowers, the Guarantors, the
Lenders, the Administrative Agent and all future holders of the Revolving Notes. In the case of
any waiver, the Borrowers, the Guarantors, the Lenders and the Administrative Agent shall be
restored to their former position and rights hereunder and under the outstanding Loans and
Revolving Notes and other Loan Documents, and any Default or Event of Default waived shall be
deemed to be cured and not continuing, but no such waiver shall extend to any subsequent or other
Default or Event of Default, or impair any right consequent thereon.



     (c) Notwithstanding any of the foregoing to the contrary, the consent of the Borrowers or the
Guarantors shall not be required for any amendment, modification, supplement or waiver of the
provisions of Article XII except to the extent that any of the Borrowers or Guarantors
would be materially adversely affected thereby; provided, however, that the Administrative Agent
will provide written notice to the Borrowers of any such amendment, modification or waiver. In
addition, the Borrowers and the Lenders hereby authorize the Administrative Agent to modify this
Agreement by unilaterally amending or supplementing Schedule 2, which should contain a
listing of all Lenders and their respective Revolving Commitments from time to time in the manner
requested by the Borrowers, the Administrative Agent or any Lender in order to reflect any
assignments or transfers of the Loans as provided for hereunder; provided, however,
that the Administrative Agent shall promptly deliver a copy of any such modification to the
Borrowers and each Lender.



     (d) Notwithstanding the fact that the consent of all the Lenders is required in certain
circumstances as set forth above, (x) each Lender is entitled to vote as such Lender sees fit on
any bankruptcy reorganization plan that affects the Loans, and each Lender acknowledges that the
provisions of Section 1126(c) of the Bankruptcy Code supersede the unanimous consent provisions set
forth herein and (y) the Requisite Lenders may consent to allow the Borrowers to use cash
collateral in the context of a bankruptcy or insolvency proceeding.



     (e) Any waiver or consent shall be effective only if it is in writing and only in the specific
instance and for the specific purpose for which given.



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     Section 13.2 Notices, Etc.



     All notices and other communications provided for hereunder shall, unless otherwise stated
herein, be in writing (including communication by facsimile copy) and mailed, telexed, transmitted
or delivered, as to each party hereto, at its address set forth on Schedule 3 or at such
other address as shall be designated by such party in a written notice to the other parties hereto.
All such notices and communications shall be effective, upon receipt, or in the case of (a) notice
by mail, five (5) days after being deposited in the United States mail, first class postage
prepaid, or (b) notice by facsimile copy, when verbal communication of receipt is obtained.



     Section 13.3 Set-offs.



     (a) In addition to any rights now or hereafter granted under Applicable Law or otherwise, and
not by way of limitation of such rights, each Borrower and each Guarantor hereby grants to the
Administrative Agent and the Lenders a right of set-off, to secure repayment of all amounts owing
to the Administrative Agent and the Lenders by the Borrowers and the Guarantors under the Loan
Documents and the Obligations, upon any and all (regardless of any currency thereof) monies,
securities, collateral or other Property of any Borrower or any Guarantor (but specifically
excluding any Excluded Account) and any proceeds from the foregoing, now or hereafter held or
received by the Administrative Agent, the Lenders or any entity under the control of the
Administrative Agent or the Lenders and their respective successors and assigns (including, without
limitation, branches and agencies of the Administrative Agent or Lenders wherever located), for the
account of any Borrower or any Guarantor, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general, specified, special, time,
demand, provisional or final) and credits, claims or Indebtedness of any Borrower or any Guarantor
at any time existing, in each case whether direct or indirect, absolute or contingent, matured or
unmatured, and in each case at any time held or owing by the Administrative Agent, any Lender or
any Affiliate of the foregoing to or for the credit of any Borrower or any Guarantor. The
Administrative Agent and each Lender is hereby authorized at any time and from time to time upon
any amount becoming due and payable by any Borrower to the Administrative Agent or the Lenders
under the Loan Documents, the Aggregate Unpaids, the Obligations (but only to the extent that an
event of default, an event that, with the notice or the lapse of time, would become an event of
default, or any acceleration has occurred with respect to such other Obligations) or otherwise
(whether at stated maturity, by acceleration, by mandatory or optional prepayment or otherwise) or
upon the occurrence of an Event of Default, without notice to any Borrower or any Guarantor, any
such notice being expressly waived by the Borrowers to the extent permitted by Applicable Law, to
set-off, appropriate, apply and enforce such right of set-off against any and all items hereinabove
referred to against any amounts owing to the Administrative Agent or Lenders by the Borrowers and
the Guarantors under the Loan Documents, the Aggregate Unpaids and the Obligations (but only to the
extent that an event of default, an event that, with the notice or the lapse of time, would become
an event of default, or any acceleration has occurred with respect to such other Obligations),
irrespective of whether the Administrative Agent or Lenders shall have made any demand hereunder
and regardless of any other collateral securing such amounts. Each Borrower and each Guarantor
shall be deemed directly indebted to the Administrative Agent and each Lender in the full amount of
all amounts owing to the Administrative Agent and the Lenders by the Borrowers and the Guarantors
under this Agreement, the Revolving Notes, the other Loan Documents and the Obligations, and the
Administrative Agent and Lenders shall be entitled to exercise the rights of set-off provided for
above. ANY AND ALL RIGHTS TO REQUIRE THE ADMINISTRATIVE AGENT OR LENDERS TO EXERCISE THEIR RIGHTS
OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE AMOUNTS OWING TO THE
ADMINISTRATIVE AGENT OR LENDERS BY THE BORROWERS AND THE GUARANTORS UNDER THE LOAN DOCUMENTS, PRIOR
TO EXERCISING ITS RIGHT OF SET-OFF WITH RESPECT TO SUCH MONIES, SECURITIES, COLLATERAL, DEPOSITS,
CREDITS OR



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OTHER PROPERTY OF THE BORROWERS, ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED BY
EACH BORROWER.



     (b) The Administrative Agent agrees promptly to notify the affected Borrower or Guarantor
after any such set-off and application made by the Administrative Agent; provided, that the
failure to give such notice shall not affect the validity of such set-off and application.



     Section 13.4 No Waiver; Remedies.



     No failure on the part of the Administrative Agent or any Lender to exercise, and no delay in
exercising, any right or remedy hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right or remedy hereunder preclude any further exercise thereof or the
exercise of any other right. The rights and remedies herein provided are cumulative and not
exclusive of any rights and remedies provided by Applicable Law.



     Section 13.5 Binding Effect.



     This Agreement shall be binding upon and inure to the benefit of the Borrowers, the
Guarantors, the Administrative Agent, the Lenders and their respective successors and permitted
assigns.



     Section 13.6 Term of this Agreement.



     (a) This Agreement, including, without limitation, the Borrowers’ and the Guarantors’
representations, warranties, covenants and duties set herein, create and constitute the continuing
obligation of the parties hereto in accordance with its terms and shall remain in full force and
effect until such time as (i) all Revolving Commitments have been terminated, (ii) all Loans have
been repaid in full and all other Aggregate Unpaids have been paid in full, and (iii) either (A) no
other Obligations are outstanding or (B) no event of default, or an event that, with the notice or
the lapse of time, would become an event of default, or acceleration has occurred and is continuing
with respect to the other Obligations; provided, however, that any provision that,
by its terms, expressly survives termination shall be continuing and shall survive any termination
of this Agreement and the payment in full of the Obligations.



     (b) Subject to Subsection 13.6(a), this Agreement may be terminated by the Lenders or
the Borrowers upon giving thirty (30) days prior written notice to the other parties.




Section 13.7 Governing Law.



     This Agreement shall be governed by, and construed in accordance with, the law of the State of
New York.



     Section 13.8 Waivers.



     (a) THE BORROWERS AND THE GUARANTORS EACH HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES ANY RIGHT TO ASSERT A COUNTERCLAIM, OTHER THAN A COMPULSORY COUNTERCLAIM, IN ANY ACTION OR
PROCEEDING BROUGHT AGAINST IT BY THE ADMINISTRATIVE AGENT, THE LENDERS, THE AFFECTED PARTIES OR ANY
OF THE AFFILIATES OR AGENTS OF THE FOREGOING.



     (b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO AND THE GUARANTORS
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY



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HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE PARTIES HERETO AND/OR THE GUARANTOR ARISING OUT OF,
CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP BETWEEN ANY OF THEM IN CONNECTION
WITH THIS AGREEMENT, THE LOAN DOCUMENTS, THE TRANSACTIONS CONTEMPLATED HEREBY, THE OBLIGATIONS OR
ANY DEALINGS, COURSE OF DEALINGS, COURSE OF CONDUCT AMONG THEM OR ANY STATEMENTS (WRITTEN OR ORAL)
OR OTHER ACTIONS OF ANY PARTY, AND NONE OF THE PARTIES OR THE GUARANTOR WILL SEEK TO CONSOLIDATE
ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL CANNOT BE OR HAS NOT BEEN WAIVED.
INSTEAD, ANY SUCH DISPUTE RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.



     (c) ANY LEGAL ACTION OR PROCEEDING AGAINST THE BORROWERS OR THE GUARANTORS WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH THE BORROWERS AND/OR THE GUARANTORS ARE A PARTY
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE BORROWERS AND
THE GUARANTORS HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH OF THE BORROWERS AND THE
GUARANTORS IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS
IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO THE BORROWERS OR THE GUARANTORS, AS APPLICABLE, AT THEIR ADDRESS SET FORTH ON
SCHEDULE 3, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH MAILING. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE ADMINISTRATIVE AGENT OR LENDERS TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY BORROWER
OR ANY GUARANTORS IN ANY OTHER JURISDICTION.



     (d) EACH OF THE BORROWERS AND THE GUARANTORS HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT BROUGHT IN THE
COURTS REFERRED TO IN CLAUSE (c) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT
TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.



     (e) EXCEPT AS PROHIBITED BY LAW, EACH OF THE BORROWERS AND THE GUARANTORS HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION WHATSOEVER INVOLVING THE ADMINISTRATIVE
AGENT, THE LENDERS, ANY AFFECTED PARTY OR ANY AFFILIATE OF THE FOREGOING ANY SPECIAL, EXEMPLARY,
PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE WHATSOEVER OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. EACH OF THE BORROWERS AND THE GUARANTORS
CERTIFY THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE ADMINISTRATIVE AGENT OR THE INITIAL LENDER
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE ADMINISTRATIVE AGENT OR INITIAL LENDER WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE



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FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING,
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS.



     (f) EACH PARTY HERETO ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A
BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS AGREEMENT,
AND THAT EACH WILL CONTINUE TO RELY ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY
HERETO AND THE GUARANTOR FURTHER WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL AND THAT IT KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL AND OTHER RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL.



     (g) THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO ANY TRANSACTION ENTERED INTO HEREUNDER. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.



     (h) EACH BORROWER COVENANTS AND AGREES THAT, UPON THE COMMENCEMENT OF A VOLUNTARY OR
INVOLUNTARY BANKRUPTCY PROCEEDING BY OR AGAINST A BORROWER, THE OTHER BORROWERS SHALL NOT SEEK A
SUPPLEMENTAL STAY OR OTHERWISE SEEK, PURSUANT TO 11 U.S.C. § 105 OR ANY OTHER PROVISION OF THE
BANKRUPTCY CODE OR ANY OTHER DEBTOR RELIEF LAW (WHETHER STATUTORY, COMMON LAW, CASE LAW OR
OTHERWISE) OF ANY JURISDICTION WHATSOEVER, NOW OR HEREAFTER IN EFFECT, WHICH MAY BE OR BECOME
APPLICABLE, TO STAY, INTERDICT, CONDITION, REDUCE OR INHIBIT THE ABILITY OF AN INDEMNIFIED PARTY TO
ENFORCE ANY RIGHTS OF SUCH INDEMNIFIED PARTY AGAINST SUCH BORROWER BY VIRTUE OF THIS AGREEMENT OR
OTHERWISE.



     (i) IT IS EXPRESSLY AGREED AND UNDERSTOOD THAT THIS AGREEMENT INCLUDES INDEMNIFICATION
PROVISIONS WHICH, IN CERTAIN CIRCUMSTANCES, COULD INCLUDE AN INDEMNIFICATION BY A BORROWER OF AN
INDEMNIFIED PARTY FROM CLAIMS OR LOSSES ARISING AS A RESULT OF SUCH INDEMNIFIED PARTY’S OWN
NEGLIGENCE.



     Section 13.9 Costs, Expenses and Taxes.



     (a) The Borrowers agree to pay as and when billed by the Administrative Agent or the Lenders
all of the reasonable out-of-pocket costs and expenses incurred by the Administrative Agent and the
Lenders in connection with the development, preparation and execution of, and any amendment,
supplement or modification to, or waiver of, this Agreement, the Loan Documents or any other
documents and agreements prepared in connection herewith or therewith. The Borrowers agree to pay
as and when billed by the Administrative Agent and the Lenders all of the out-of-pocket costs and
expenses incurred in connection with the consummation and administration of the transactions
contemplated hereby and thereby including, without limitation, (i) all the reasonable fees,
disbursements and expenses of counsel to the Administrative Agent and the Lenders (provided,
however, prior to the occurrence of an Event of Default, the Borrowers shall only be responsible
for the fees, disbursements and expenses of one law firm) and (ii) all the due diligence,
inspection, testing and review costs and expenses incurred by the



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Administrative Agent and the Lenders with respect to the Collateral under this Agreement,
including, but not limited to, those costs and expenses incurred by the Administrative Agent and
the Lenders and reimbursable by the Borrowers pursuant to Subsection 11.1(a) of this
Agreement.



     (b) The Borrowers shall pay on demand any and all stamp, sales, excise and other taxes and
fees payable or determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement, the Loan Documents or the other documents to be delivered hereunder or
thereunder or the funding or maintenance of Loans hereunder.



     (c) The provision of this Section 13.9 shall survive the termination of this Agreement
and the payment in full of the Obligations.



     (d) The Borrowers shall pay on demand all other reasonable costs, expenses and Taxes (except
for Taxes on, or Taxes one or more of the alternative bases for which are, the overall net income
of the Administrative Agent, any Lender or any Affected Party, and except for franchise taxes
imposed in lieu thereof) incurred by the Administrative Agent, the Lenders and the Affected Parties
(“Other Costs”), including without limitation, all costs and expenses incurred by the
Administrative Agent, the Lenders and the Affected Parties in connection with periodic audits of
any Borrower’s, any Guarantor’s or any Servicer’s books and records.



     Section 13.10 Legal Matters.



     (a) In the event of any conflict between the terms of this Agreement, any other Loan Document
or any Confirmation with respect to any Additional Collateral, the documents shall control in the
following order of priority: first, the terms of the related Confirmation shall prevail,
then the terms of this Agreement shall prevail, and then the terms of the other Loan Documents
shall prevail.



     (b) Each Borrower and Guarantor hereby acknowledges that:




     (i) it has been advised by counsel in the negotiation, execution and delivery of the
Loan Documents;




     (ii) it has no fiduciary relationship with the Administrative Agent or the Initial
Lender; and




     (iii) no joint venture exists with the Administrative Agent or the Initial lender.



     Section 13.11 Recourse Against Certain Parties.



     No recourse under or with respect to any obligation, covenant or agreement (including, without
limitation, the payment of any fees or any other obligations) of the Administrative Agent, the
Lenders, the Borrowers or the Guarantors as contained in this Agreement, the Loan Documents or any
other agreement, instrument or document entered into by the Administrative Agent, the Lenders, the
Borrowers, the Guarantors or any such party pursuant hereto or thereto or in connection herewith or
therewith shall be had against any administrator of the Administrative Agent, the Lenders, the
Borrowers or the Guarantors or any incorporator, Affiliate (direct or indirect), owner, member,
partner, stockholder, officer, director, employee, agent or attorney of the Administrative Agent,
the Lenders, the Borrowers or the Guarantors or of any such administrator, as such, by the
enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that the agreements of the Administrative
Agent, the Lenders, the Borrowers or the Guarantors contained in this Agreement, the Loan Documents
and all of the other agreements,



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instruments and documents entered into by it pursuant hereto or thereto or in connection
herewith or therewith are, in each case, solely the corporate obligations of the Administrative
Agent, the Lenders, the Borrowers or the Guarantors, and that no personal liability whatsoever
shall attach to or be incurred by any administrator of the Administrative Agent, the Lenders, the
Borrowers or the Guarantors or any incorporator, owner, member, partner, stockholder, Affiliate
(direct or indirect), officer, director, employee, agent or attorney of the Administrative Agent,
the Lenders, the Borrowers or the Guarantors, or of any such administrator, as such, or any other
of them, under or by reason of any of the obligations, covenants or agreements of the
Administrative Agent, the Lenders, the Borrowers or the Guarantors contained in this Agreement, the
Loan Documents or in any other such instruments, documents or agreements, or that are implied
therefrom, and that any and all personal liability of every such administrator of the
Administrative Agent, the Lenders, the Borrowers or the Guarantors and each incorporator, owner,
member, partner, stockholder, Affiliate (direct or indirect), officer, director, employee, agent or
attorney of the Administrative Agent, the Lenders, the Borrowers or the Guarantors, or of any such
administrator, or any of them, for breaches by the Administrative Agent, the Lenders, the Borrowers
or the Guarantors of any such obligations, covenants or agreements, which liability may arise
either at common law or at equity, by statute or constitution, or otherwise, is hereby expressly
waived as a condition of and in consideration for the execution of this Agreement. The provisions
of this Section 13.11 shall survive the termination of this Agreement and the payment in
full of the Obligations.




			
	     Section 13.12	 	Protection of Right, Title and Interest in the Collateral; Further
Action Evidencing Loans.





     (a) The Borrowers and the Guarantors shall cause all financing statements and continuation
statements and any other necessary documents covering the right, title and interest of the
Administrative Agent to the Collateral to be promptly recorded, registered and filed, and at all
times to be kept recorded, registered and filed, all in such manner and in such places as may be
required by law fully to preserve and protect the right, title and interest of the Administrative
Agent (on behalf of the Lenders) hereunder to all property comprising the Collateral. The
Borrowers and the Guarantors shall deliver to the Administrative Agent file-stamped copies of, or
filing receipts for, any document recorded, registered or filed as provided above, as soon as
available following such recording, registration or filing. The Borrowers and the Guarantors shall
execute any and all documents reasonably required to fulfill the intent of this
Subsection 13.12(a).



     (b) The Borrowers and the Guarantors agree that from time to time, at their expense, they will
promptly execute and deliver all instruments and documents, and take all actions, that the
Administrative Agent or any Lender may reasonably request in order to perfect, protect or more
fully evidence the Loans hereunder and the security interest granted in the Collateral, or to
enable the Administrative Agent to exercise and enforce their rights and remedies hereunder or
under any Loan Document.



     (c) If the Borrowers or the Guarantors fail to perform any of their obligations hereunder, the
Administrative Agent may (but shall not be required to) perform, or cause performance of, such
obligation; and the Administrative Agent’s costs and expenses incurred in connection therewith
shall be payable by the Borrowers. The Borrowers and the Guarantors irrevocably appoint the
Administrative Agent as their attorney-in-fact and authorize the Administrative Agent to act on
behalf of the Borrowers and the Guarantors (i) to execute on behalf of the Borrowers and the
Guarantors as debtor and to file financing statements necessary or desirable in the Administrative
Agent’s discretion to perfect and to maintain the perfection and priority of the interest in the
Collateral, and (ii) to file a carbon, photographic or other reproduction of this Agreement or any
financing statement with respect to the Collateral as a financing statement in such offices as the
Administrative Agent in its discretion deems necessary or



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desirable to perfect and to maintain the perfection and priority of the interests in the
Collateral. This appointment is coupled with an interest and is irrevocable.



     (d) Without limiting the generality of the foregoing, the Borrowers and the Guarantors will
not earlier than six (6) months and not later than three (3) months prior to the fifth anniversary
of the date of filing of the financing statement referred to in Subsection 3.1(m)(ii) or
any other financing statement filed pursuant to this Agreement or in connection with any Loan
hereunder, unless this Agreement has terminated in accordance with Section 13.6:




     (i) execute and deliver and file or cause to be filed an appropriate continuation
statement with respect to such financing statement; and




     (ii) deliver or cause to be delivered to the Administrative Agent an opinion of the
counsel for the Borrowers and the Guarantors, in form and substance reasonably satisfactory
to the Administrative Agent, confirming and updating the opinion delivered pursuant to
Subsection 3.1(g) with respect to perfection and otherwise to the effect that the
security interest hereunder continues to be an enforceable and perfected security interest,
subject to no other Liens of record except as provided herein or otherwise permitted
hereunder, which opinion may contain usual and customary assumptions, limitations and
exceptions.



     Section 13.13 Confidentiality.



     (a) Each of the Administrative Agent, the Lenders, the Borrowers and the Guarantors shall
maintain and shall cause each of its employees and officers to maintain the confidentiality of this
Agreement and all information with respect to the other parties, including all information
regarding the Collateral and the Loans and each party’s business obtained by it or them in
connection with the structuring, negotiating and execution of the transactions contemplated herein,
except that each such party and its officers and employees may (i) disclose such information to its
external accountants, attorneys, investors, potential investors, Affiliates and the agents of such
Persons (“Excepted Persons”); provided, however, that each Excepted Person
shall, as a condition to any such disclosure, agree for the benefit of the Administrative Agent,
the Lenders, the Borrowers and the Guarantors that such information shall be used solely in
connection with such Excepted Person’s evaluation of, or relationship with, the Borrowers, the
Guarantors and their Affiliates or Subsidiaries, (ii) disclose the existence of the Agreement and
the Loan Documents, but not the financial terms thereof, (iii) disclose such information as is
required by Applicable Law, and (iv) disclose the Agreement, the Loan Documents and such other
information in any suit, action, proceeding or investigation (whether in law or in equity or
pursuant to arbitration) involving any of the Loan Documents for the purpose of defending itself,
reducing its liability, or protecting or exercising any of its claims, rights, remedies or
interests under or in connection with any of the Loan Documents and (v) disclose as set forth in
Section 13.22. It is understood that the financial terms that may not be disclosed except
in compliance with this Subsection 13.13(a) include, without limitation, all fees and other
pricing terms, all Events of Default and any priority of payment provisions.



     (b) Anything herein to the contrary notwithstanding, each Borrower and Guarantor hereby
consents to the disclosure of any nonpublic information with respect to it by the Administrative
Agent or the Lenders to any prospective or actual assignee, participant or pledgee provided each
such Person is informed of the confidential nature of such information and such Person agrees to be
bound by the confidentiality provisions set forth herein.



     (c) Notwithstanding anything herein to the contrary, the foregoing shall not be construed to
prohibit (i) disclosure of any and all information that is or becomes publicly known;
(ii) disclosure of any and all information (A) if required to do so by any Applicable Law, (B) to
any Governmental Authority



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having or claiming authority to regulate or oversee any respects of the Administrative
Agent’s, any Lender’s, any Borrower’s or any Guarantor’s business or that of their respective
Affiliates or Subsidiaries, (C) pursuant to any subpoena, civil investigative demand or similar
demand or request of any court, regulatory authority, arbitrator or arbitration to which the
Administrative Agent, any Lender, any Borrower or any Guarantor or an officer, director, employer,
shareholder, owner, member, partner, agent, employee, Affiliate or Subsidiary of any of the
foregoing is a party, or (D) in any preliminary or final offering circular, registration statement
or contract or other document approved in writing in advance by any Borrower or any Guarantor; or
(iii) any other disclosure authorized by the Administrative Agent, the Lenders, the Borrowers or
any Guarantor, as applicable.



     (d) Notwithstanding anything to the contrary contained herein or in any related document, all
Persons may disclose to any and all Persons, without limitation of any kind, the federal income tax
treatment of any of the transactions contemplated by this Agreement, the other Loan Documents or
any other related document, any fact relevant to understanding the federal tax treatment of such
transactions and all materials of any kind (including opinions or other tax analyses) relating to
such federal income tax treatment.



     Section 13.14 Execution in Counterparts; Severability; Integration.



     This Agreement may be executed in any number of counterparts and by different parties hereto
in separate counterparts (including by facsimile), each of which when so executed shall be deemed
to be an original and all of which when taken together shall constitute one and the same agreement.
In case any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby. This Agreement and the other Loan Documents executed
in connection herewith contain the final and complete integration of all prior expressions by the
parties hereto and thereto with respect to the subject matter hereof and thereof and shall
constitute the entire agreement among the parties hereto and thereto with respect to the subject
matter hereof and thereof, superseding all prior and contemporaneous oral or written
understandings.



     Section 13.15 Borrowers Waiver of Setoff.



     Each Borrower and Guarantor hereby waives any right of setoff it may have or to which it may
be entitled under this Agreement, the other Loan Documents or otherwise from time to time against
the Administrative Agent, any Lender, any Affected Parties, or any Property or assets, or any of
the foregoing.



     Section 13.16 Assignments and Participations.



     (a) No Borrower or Guarantor may assign, delegate or otherwise transfer in any way any of its
rights or obligations under this Agreement or the other Loan Documents without the prior written
consent of all of the Lenders and any attempt by any Borrower or any Guarantor to assign, delegate
or otherwise transfer in any way any of its rights or obligations under this Agreement or the other
Loan Documents without the prior written consent of the Administrative Agent shall be null and
void.



     (b) Each Lender may upon the consent of the Administrative Agent (other than in connection
with existing Lenders or Affiliates thereof) and notice to each Borrower, and (i) without the
consent of the Borrowers (A) in the case of a Pre-Approved Lender, (B) after an Event of Default,
or (C) any existing Lender or any Affiliate thereof, and (ii) with the prior written consent of
each Borrower (not to be unreasonably withheld, conditioned or delayed) in the case of a Person
that is not a Pre-Approved Lender



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or any existing Lender or Affiliate thereof, sell, transfer, assign, pledge or grant
participation interests to any Person (each, a “Transferee”), all or any part of its rights
and obligations under this Agreement, the Revolving Notes and its other rights and interests under
the Loan Documents in minimum amounts of $5,000,000 (or, if less, the entire amount of such
Lender’s obligations), pursuant to, in the case of assignments only, a Commitment Transfer
Supplement, executed by such Transferee and such transferor Lender (and, in the case of a
Transferee that is not then a Lender or an Affiliate thereof, the Administrative Agent) and
delivered to the Administrative Agent for its acceptance and recording in the Register;
provided, however, that any transfer to an existing Lender or an Affiliate of an
existing Lender shall not be subject to the minimum transfer amounts specified herein.



     (c) In the event of any such sale by a Lender of participating interests, such Lender’s
obligations under this Agreement to the other parties to this Agreement shall remain unchanged,
such Lender shall remain solely responsible for the performance thereof, such Lender shall remain
the holder of any such Revolving Note for all purposes under this Agreement, and the Borrowers and
the Administrative Agent shall continue to deal solely and directly with such Lender in connection
with such Lender’s rights and obligations under this Agreement. In the case of any such
participation, the participant shall not have any rights under this Agreement or any of the other
Loan Documents (the participant’s rights against such Lender in respect of such participation to be
those set forth in the agreement executed by such Lender in favor of the participant relating
thereto) and all amounts payable by the Borrowers hereunder shall be determined as if such Lender
had not sold such participation; provided, that each participant shall be entitled to the
benefits of Subsections 2.9(c), 2.11, 2.12 and 11.1 with respect to
its participation in the Revolving Commitments and the Loans outstanding from time to time;
provided, that no participant shall be entitled to receive any greater amount pursuant to
such Sections than the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such participant had no such
transfer occurred.



     (d) In the case of assignments, upon such execution, delivery, acceptance and recording, from
and after the Transfer Effective Date specified in such Commitment Transfer Supplement, (x) the
Transferee thereunder shall be a party hereto and, to the extent provided in such Commitment
Transfer Supplement, have the rights and obligations of a Lender hereunder with a Revolving
Commitment as set forth therein, and (y) the transferor Lender thereunder shall, to the extent
provided in such Commitment Transfer Supplement, be released from its obligations under this
Agreement (and, in the case of a Commitment Transfer Supplement covering all or the remaining
portion of a transferor Lender’s rights and obligations under this Agreement, such transferor
Lender shall cease to be a party hereto). Such Commitment Transfer Supplement shall be deemed to
amend this Agreement to the extent, and only to the extent, necessary to reflect the addition of
such Transferee and the resulting adjustment of Revolving Commitment Percentages arising from the
purchase by such Transferee of all or a portion of the rights and obligations of such transferor
Lender under this Agreement and the Revolving Notes. On or prior to the Transfer Effective Date
specified in such Commitment Transfer Supplement, the Borrowers, at their own expense, shall
execute and deliver to the Administrative Agent in exchange for the Revolving Notes delivered to
the Administrative Agent pursuant to such Commitment Transfer Supplement new Revolving Notes to the
order of such Transferee in an amount equal to the Revolving Commitment assumed by it pursuant to
such Commitment Transfer Supplement and, unless the transferor Lender has not retained a Revolving
Commitment hereunder, new Revolving Notes to the order of the transferor Lender in an amount equal
to the Revolving Commitment retained by it hereunder. Such new Revolving Notes shall be dated the
Restatement Date and shall otherwise be in the form of the Revolving Notes replaced thereby. The
Revolving Notes surrendered by the transferor Lender shall be returned by the Administrative Agent
to the Borrower marked “canceled.”



     (e) Each Borrower agrees to cooperate with the Administrative Agent and Lenders, at the
Borrowers’ expense, in connection with any such assignment, transfer, pledge, participation or
sale, and



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to enter into such restatements of, and amendments, supplements and other modifications to
this Agreement, in order to give effect to such assignment, transfer, pledge, participation or
sale.



     (f) The Administrative Agent shall maintain at its principal office a copy of each Commitment
Transfer Supplement delivered to it and a register (the “Register”) for the recordation of
the names and addresses of the Lenders and the Revolving Commitment of, and principal amount of the
Loans owing to, each Lender from time to time. The entries in the Register shall be conclusive, in
the absence of manifest error, and the Borrowers, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the Loan recorded therein
for all purposes of this Agreement. The Register shall be available for inspection by the
Borrowers or any Lender at any reasonable time and from time to time upon reasonable prior notice.



     (g) Upon its receipt of a duly executed Commitment Transfer Supplement, together with payment
to the Administrative Agent by the transferor Lender or the Transferee (except for any assignment
by a Lender to an existing Lender or an Affiliate of an existing Lender), as agreed between them,
of a registration and processing fee of $3,500 for each Transferee listed in such Commitment
Transfer Supplement and the Revolving Notes subject to such Commitment Transfer Supplement, the
Administrative Agent shall (i) accept such Commitment Transfer Supplement and (ii) record the
information contained therein in the Register.



     (h) Each Borrower and Guarantor authorizes each Lender to disclose to any Transferee and any
prospective Transferee any and all financial information in such Lender’s possession concerning the
Borrowers, the Guarantors and their Affiliates and Subsidiaries which has been delivered to such
Lender by or on behalf of the Borrowers or the Guarantors pursuant to this Agreement or the other
Loan Documents or which has been delivered to such Lender by or on behalf of the Borrowers or the
Guarantors in connection with such Lender’s credit evaluation of the Borrowers, the Guarantors and
their Affiliates and Subsidiaries prior to becoming a party to this Agreement, in each case subject
to Section 13.13.



     (i) At the time of each assignment pursuant to this Section 13.16 to a Person which is
not already a Lender hereunder and which is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) for federal income tax purposes, the respective assignee Lender
shall provide to the Borrowers and the Administrative Agent the appropriate Internal Revenue
Service Forms described in Section 2.12.



     (j) Nothing herein shall prohibit any Lender from pledging or assigning any of its rights
under this Agreement (including, without limitation, any right to payment of principal and interest
under any Revolving Note) to any Federal Reserve Bank in accordance with Applicable Laws.



     Section 13.17 Heading and Exhibits.



     The headings herein are for purposes of references only and shall not otherwise affect the
meaning or interpretation of any provision hereof. The schedules and exhibits attached hereto and
referred to herein shall constitute a part of this Agreement and are incorporated into this
Agreement for all purposes.



     Section 13.18 Single Agreements.



     The Administrative Agent, the Lenders and the Borrowers acknowledge that, and have entered
hereinto and will enter into each Loan hereunder in consideration of and in reliance upon the fact
that all Loans hereunder constitute a single business and contractual relationship and that each
has been entered



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into in consideration of the other Loans. Accordingly, each Borrower agrees to perform all of
its obligations in respect of each Loan hereunder, and that a default in the performance of any
such obligations shall constitute a default by it in respect of all Loans hereunder.



     Section 13.19 Periodic Due Diligence Review.



     Each Borrower and Guarantor acknowledges that the Administrative Agent and each Lender has the
right to perform continuing due diligence reviews with respect to the Collateral and the Borrowers,
the Guarantors and Consolidated Subsidiaries of the foregoing for purposes of verifying compliance
with the representations, warranties, covenants, agreements and specifications made hereunder, or
otherwise, and each Borrower and Guarantor agrees that upon reasonable (but no less than one (1)
Business Day) prior notice, unless an Event of Default shall have occurred, in which case no notice
is required, to the Borrowers and/or the Guarantors, as applicable, the Administrative Agent, the
Lenders or their authorized representatives shall be permitted during normal business hours to
examine, inspect, and make copies and extracts of, the Collateral and any and all documents,
records, agreements, instruments or information relating to such Collateral, the Borrowers, the
Guarantors and their Consolidated Subsidiaries in the possession or under the control of the any
Borrower and/or any Guarantor. Each Borrower and Guarantor also shall make available to the
Administrative Agent a knowledgeable financial or accounting officer for the purpose of answering
questions respecting the Collateral, the Borrowers, the Guarantors and their Consolidated
Subsidiaries. Each Borrower and Guarantor shall also make available to the Administrative Agent
and the Lenders any accountants or auditors of any Borrower or any Guarantor to answer any
questions or provide any documents as the Administrative Agent or the Lenders may require. The
Borrowers shall pay all out-of-pocket costs and expenses incurred by the Administrative Agent
and/or the Lenders in connection with the Administrative Agent’s and the Lenders’ activities
pursuant to this Section 13.19 (“Due Diligence Costs”).



     Section 13.20 Use of Employee Plan Assets.



     (a) If assets of an employee benefit plan subject to any provision ERISA are intended to be
used by any party hereto (the “Plan Party”) in a Loan, the Plan Party shall so notify the
other parties prior to the Loan. The Plan Party shall represent in writing to the other parties
that the Loan does not constitute a prohibited transaction under ERISA or is otherwise exempt
therefrom, and the other party may proceed in reliance thereon but shall not be required so to
proceed.



     (b) Subject to the last sentence of Subsection 13.20(a) above, any such Loan shall
proceed only if the Plan Party furnishes or has furnished to the other parties its most recent
available audited statement of its financial condition and its most recent subsequent unaudited
statement of its financial condition.



     (c) By entering into a Loan pursuant to this Section 13.20, the Borrowers shall be
deemed (i) to represent to the Administrative Agent and the Lenders that since the date of the
applicable Borrower’s latest such financial statements, there has been no material adverse change
in the Borrower’s financial condition which such Borrower has not disclosed to the Administrative
Agent, and (ii) to agree to provide the Administrative Agent with future audited and unaudited
statements of its financial condition as they are issued, so long as it is a Borrower in any
outstanding Loan involving a Plan Party.



     Section 13.21 Adjustments.



     Each Lender agrees that if any Lender (a “Benefited Lender”) shall at any time receive
any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect
thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the
nature referred to in



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Subsection 10.1(d), or otherwise) in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of such other Lender’s Loans, or
interest thereon, such Benefited Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender’s Loan, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral
or proceeds ratably with each of the Lenders in accordance with the respective Revolving Loan
Percentages; provided, however, that if all or any portion of such excess payment
or benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded,
and the purchase price and benefits returned, to the extent of such recovery, but without interest.
The Borrowers agree that each Lender so purchasing a portion of another Lender’s Loans may
exercise all rights of payment (including, without limitation, rights of set-off) with respect to
such portion as fully as if such Lender were the direct holder of such portion. The provisions of
this Section 13.21 shall survive the termination of this Agreement and the payment in full
of the Obligations.





Section 13.22 Filings, Recordation, etc.



     Each Borrower and Guarantor hereby authorizes and expressly permits the Administrative Agent
to file and record this Agreement with each filing office located in the organizational
jurisdictions of the Borrowers and the Guarantors and in such other filing offices as
Administrative Agent may deem necessary and appropriate to inform and give notice to prospective
parties as to the existence of this Agreement, the other Loan Documents and the restrictions herein
and therein contained. Each Borrower and Guarantor hereby expressly waives and discharges any
obligations of confidentiality that Administrative Agent may owe to the Borrowers or the
Guarantors, whether in connection with this Agreement, the other Loan Documents or otherwise, to
preserve any information herein contained and the Borrowers and the Guarantors agree not to allege
or assert any claims or defenses based on breach of confidentiality obligations or any other
similar defenses or legal theories with respect to the public filing, recordation and disclosure of
this Agreement from and after the effective time hereof.



     Section 13.23 Resolution of Drafting Ambiguities.



     Each Arbor Entity that is a party hereto acknowledges and agrees that it was represented by
counsel in connection with the execution and delivery of this Agreement and the other Loan
Documents to which it is a party, that it and its counsel reviewed and participated in the
preparation and negotiation hereof and thereof and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation hereof or thereof.



     Section 13.24 Character of Loans for Income Tax Purposes.



     The Lenders and the Borrowers shall treat all Loans hereunder as indebtedness of the Borrowers
for United States federal income tax purposes.



     Section 13.25 Amendment and Restatement.



     This Agreement amends, restates and supersedes in its entirety the Original Agreement.
Notwithstanding the amendment and restatement of the Original Agreement by this Agreement:
(a) unless modified by the express terms of this Agreement or the other Loan Documents, each Loan
outstanding on the date hereof under the Original Agreement shall continue in effect as a Loan
hereunder, without any transfer, conveyance, diminution, forbearance, forgiveness or other
modification thereto or effect thereon occurring or being deemed to occur by reason of the
amendment and restatement of the Original Agreement hereby and (b) the Existing Borrower shall
continue to be liable to the Lenders for (i) all “Obligations” (under and as defined in the
Original Agreement) accrued to the date hereof under



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the Original Agreement and (ii) all agreements on the part of the Existing Borrower under the
Original Agreement to indemnify the Lenders or the Administrative Agent in connection with events
or conditions arising or existing prior to the effective date of this Agreement, including, but not
limited to, those events and conditions set forth in Section 11.1 thereof. This Agreement
is given in substitution for the Original Agreement and not as payment of any of the obligations of
the Existing Borrower thereunder, and is in no way intended to constitute a novation of the
Original Agreement. Nothing contained herein is intended to amend, modify or otherwise affect any
obligation of the Existing Borrower, the Guarantor or the Pledgor existing prior to the date
hereof. Upon the effectiveness of this Agreement, each reference to the Original Agreement in any
other Loan Document, or document, instrument or agreement executed and/or delivered in connection
therewith, shall mean and be a reference to this Agreement unless the context otherwise requires.
Upon the effectiveness of this Agreement, the terms of this Agreement shall govern all aspects of
the facility represented by the Original Agreement, including, without limitation, the eligibility
of Collateral financed under the Original Agreement and any settlements to be made with respect
thereto.



     Section 13.26 Modification of Other Loan Documents.



     The amendments and modifications to this Agreement shall amend and modify the other Loan
Documents to the extent such other Loan Documents are not separately amended or modified on the
Restatement Date. The Credit Parties agree that all other Loan Documents that are not separately
amended or modified on the Restatement Date are binding and enforceable obligations and are in full
force and effect, as modified and amended by this Agreement.



[Remainder of Page Intentionally Left Blank.]




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     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.



	 	 	 	 	 
	THE BORROWERS: 	ARBOR REALTY TRUST, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ Paul Elenio, Chief Financial Officer
 	 
	 	 	Name:  	Paul Elenio 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	ARBOR REALTY GPOP, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Paul Elenio, Chief Financial Officer
 	 
	 	 	Name:  	Paul Elenio 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	ARBOR REALTY LPOP, INC.,

a Delaware corporation

 	 
	 	By:  	/s/ Paul Elenio, Chief Financial Officer
 	 
	 	 	Name:  	Paul Elenio 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



	 	 	 	 	 
	 	ARBOR REALTY LIMITED PARTNERSHIP,

a Delaware limited partnership

 	 
	 	By:  	Arbor Realty GPOP, Inc.,
 	 
	 	 	its General Partner 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	               /s/ Paul Elenio, Chief Financial Officer
 	 
	 	 	Name:  	Paul Elenio 	 
	 	 	Title:  	Chief Financial Officer 	 
	 



[Signatures Continued on the Following Page]




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	THE BORROWERS (cont.): 	ARBOR REALTY SR, INC.,

a Maryland corporation

 	 
	 	By:  	/s/ John Natalone, Executive Vice President
 	 
	 	 	Name:  	John Natalone 	 
	 	 	Title:  	Executive Vice President 	 
	 
	 	ARBOR REALTY COLLATERAL MANAGEMENT, LLC, a Delaware


limited liability company

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



[Signatures Continued on the Following Page]





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	THE INITIAL LENDER: 	WACHOVIA BANK, NATIONAL ASSOCIATION,

a national banking association

 	 
	 	By:  	/s/ John Nelson, Managing Director
 	 
	 	 	Name:  	John Nelson 	 
	 	 	Title:  	Managing Director 	 
	 
	THE ADMINISTRATIVE AGENT: 	WACHOVIA BANK, NATIONAL ASSOCIATION,

a national banking association

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




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