exv10w33






Exhibit 10.33











      




$352,000,000




FIRST AMENDED AND RESTATED CREDIT AGREEMENT




among




ARBOR REALTY FUNDING, LLC,

ARSR TAHOE, LLC,

ARBOR REALTY LIMITED PARTNERSHIP,

ART 450 LLC,

ARBOR REALTY SR, INC., and

ARBOR ESH II LLC

as Borrowers,




ARBOR REALTY TRUST, INC.

ARBOR REALTY LIMITED PARTNERSHIP, and

ARBOR REALTY SR, INC.,

as Guarantors,




THE LENDERS PARTY HERETO,




and




WACHOVIA BANK, NATIONAL ASSOCIATION,

as Administrative Agent




Dated as of July 23, 2009




WELLS FARGO SECURITIES, LLC

(formerly known as Wachovia Capital Markets, LLC),

as Sole Lead Arranger and Sole Bookrunner




      




Prepared by:









 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	Section 1.1 Defined Terms
	 	 	1	 
	Section 1.2 Other Definitional Provisions
	 	 	40	 
	Section 1.3 Accounting Terms
	 	 	40	 
	Section 1.4 Time References
	 	 	40	 
	Section 1.5 Execution of Documents
	 	 	41	 
	Section 1.6 UCC Terms
	 	 	41	 
	Section 1.7 References to Discretion
	 	 	41	 
	Section 1.8 References to Payment
	 	 	41	 
	 
	 	 	 	 
	ARTICLE II THE LOANS; AMOUNT AND TERMS
	 	 	41	 
	Section 2.1 Future Funding Loans
	 	 	41	 
	Section 2.2 Term Loan
	 	 	46	 
	Section 2.3 Fees
	 	 	47	 
	Section 2.4 Commitment Reductions
	 	 	47	 
	Section 2.5 Prepayments
	 	 	48	 
	Section 2.6 Default Rate and Payment Dates
	 	 	50	 
	Section 2.7 Conversion Options
	 	 	51	 
	Section 2.8 Computation of Interest and Fees; Usury
	 	 	51	 
	Section 2.9 Pro Rata Treatment and Payments
	 	 	52	 
	Section 2.10 Non-Receipt of Funds by the Administrative Agent
	 	 	55	 
	Section 2.11 Inability to Determine Interest Rate
	 	 	57	 
	Section 2.12 Yield Protection
	 	 	57	 
	Section 2.13 Indemnity; Eurocurrency Liabilities
	 	 	58	 
	Section 2.14 Taxes
	 	 	59	 
	Section 2.15 Illegality
	 	 	60	 
	Section 2.16 Obligations Absolute
	 	 	61	 
	Section 2.17 Additional Collateral
	 	 	61	 
	 
	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES
	 	 	62	 
	Section 3.1 Financial Condition
	 	 	62	 
	Section 3.2 No Material Adverse Effect; Internal Control Event
	 	 	63	 
	Section 3.3 Corporate Existence; Compliance with Law
	 	 	63	 
	Section 3.4 Corporate Power; Authorization; Enforceable Obligations
	 	 	63	 
	Section 3.5 No Legal Bar; No Default
	 	 	63	 
	Section 3.6 No Material Litigation
	 	 	64	 
	     Section 3.7 Investment Company Act; Federal Power Act;
Interstate Commerce Act; and Federal and State Statutes and Regulations
	 	 	64	 
	Section 3.8 Margin Regulations
	 	 	64	 
	Section 3.9 ERISA
	 	 	64	 
	Section 3.10 Environmental Matters
	 	 	65	 
	Section 3.11 Use of Proceeds
	 	 	65	 
	Section 3.12 Subsidiaries; Joint Ventures; Partnerships
	 	 	65	 
	Section 3.13 Ownership
	 	 	66	 
	Section 3.14 Indebtedness
	 	 	66	 






i









 






	 	 	 	 	 
	 	 	Page	 
	Section 3.15 Taxes
	 	 	66	 
	Section 3.16 Solvency
	 	 	66	 
	Section 3.17 Repurchase of Debt
	 	 	66	 
	Section 3.18 Location
	 	 	66	 
	Section 3.19 No Burdensome Restrictions
	 	 	67	 
	Section 3.20 Brokers’ Fees
	 	 	67	 
	Section 3.21 Labor Matters
	 	 	67	 
	Section 3.22 Accuracy and Completeness of Information
	 	 	67	 
	Section 3.23 Material Contracts
	 	 	67	 
	Section 3.24 Insurance
	 	 	68	 
	Section 3.25 Security Documents
	 	 	68	 
	Section 3.26 Anti-Terrorism Laws
	 	 	68	 
	Section 3.27 Compliance with OFAC Rules and Regulations
	 	 	68	 
	Section 3.28 Compliance with FCPA
	 	 	69	 
	Section 3.29 Consent; Governmental Authorizations
	 	 	69	 
	Section 3.30 Bulk Sales
	 	 	69	 
	Section 3.31 Income and Required Payments
	 	 	69	 
	Section 3.32 Full Payment
	 	 	69	 
	Section 3.33 Irrevocable Instructions
	 	 	69	 
	Section 3.34 Compliance with Covenants
	 	 	70	 
	Section 3.35 Collateral Agreements
	 	 	70	 
	Section 3.36 No Reliance
	 	 	70	 
	Section 3.37 Collateral
	 	 	70	 
	Section 3.38 REIT Status
	 	 	70	 
	Section 3.39 Insider
	 	 	70	 
	Section 3.40 No Defenses
	 	 	71	 
	Section 3.41 Eligible Subordinated Debt
	 	 	71	 
	Section 3.42 Selection Procedures
	 	 	71	 
	Section 3.43 Value Given
	 	 	71	 
	Section 3.44 Separateness
	 	 	71	 
	Section 3.45 Qualified Transferees
	 	 	71	 
	Section 3.46 Eligibility of Mortgage Assets
	 	 	72	 
	Section 3.47 Ability to Perform
	 	 	72	 
	Section 3.48 Certain Tax Matters
	 	 	72	 
	Section 3.49 Set-Off, etc.
	 	 	72	 
	Section 3.50 Warrant Agreements, Etc.
	 	 	72	 
	Section 3.51 Representations and Warranties
	 	 	73	 
	 
	 	 	 	 
	ARTICLE IV CONDITIONS PRECEDENT
	 	 	73	 
	Section 4.1 Conditions to Restatement Date
	 	 	73	 
	Section 4.2 Conditions to All Extensions of Credit
	 	 	76	 
	 
	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS
	 	 	80	 
	Section 5.1 Financial Statements
	 	 	80	 
	Section 5.2 Certificates; Other Information
	 	 	82	 
	Section 5.3 Payment of Taxes and Other Obligations
	 	 	84	 
	Section 5.4 Conduct of Business and Maintenance of Existence
	 	 	84	 
	Section 5.5 Maintenance of Property; Insurance
	 	 	84	 






ii









 






	 	 	 	 	 
	 	 	Page	 
	Section 5.6 Inspection of Property; Books and Records; Discussions
	 	 	84	 
	Section 5.7 Notices
	 	 	85	 
	Section 5.8 Environmental Laws
	 	 	87	 
	Section 5.9 Financial Covenants
	 	 	87	 
	Section 5.10 Additional Credit Parties
	 	 	88	 
	Section 5.11 Compliance with Law
	 	 	88	 
	Section 5.12 Pledged Assets
	 	 	88	 
	Section 5.13 Interest Rate Protection Agreements
	 	 	89	 
	Section 5.14 Account Control Agreement
	 	 	89	 
	Section 5.15 Further Assurances
	 	 	89	 
	Section 5.16 Performance and Compliance with Collateral
	 	 	89	 
	Section 5.17 Delivery of Income and Required Payments
	 	 	90	 
	Section 5.18 Exceptions
	 	 	90	 
	Section 5.19 Distributions in Respect of Collateral
	 	 	90	 
	Section 5.20 REIT Status
	 	 	90	 
	Section 5.21 Equity Issuances
	 	 	91	 
	Section 5.22 Remittance of Prepayments
	 	 	91	 
	Section 5.23 Escrow Imbalance
	 	 	91	 
	Section 5.24 Separateness
	 	 	91	 
	Section 5.25 Preferred Equity Interests and Equity Assets
	 	 	92	 
	Section 5.26 Pledge of Repurchased Debt
	 	 	92	 
	Section 5.27 REO Property
	 	 	92	 
	Section 5.28 Warrant Opinion
	 	 	93	 
	Section 5.29 Independence of Covenants
	 	 	93	 
	 
	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	93	 
	Section 6.1 Indebtedness
	 	 	93	 
	Section 6.2 Liens
	 	 	93	 
	Section 6.3 Nature of Business
	 	 	94	 
	Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.
	 	 	94	 
	Section 6.5 Repurchase of Debt
	 	 	94	 
	Section 6.6 Transactions with Affiliates
	 	 	94	 
	Section 6.7 Ownership of Subsidiaries; Restrictions
	 	 	95	 
	Section 6.8 Corporate Changes; Material Contracts
	 	 	95	 
	Section 6.9 Limitation on Restricted Actions
	 	 	95	 
	Section 6.10 Restricted Payments
	 	 	95	 
	Section 6.11 [Reserved]
	 	 	96	 
	Section 6.12 No Further Negative Pledges
	 	 	96	 
	Section 6.13 Collateral Not to be Evidenced by Instruments
	 	 	96	 
	Section 6.14 Deposits
	 	 	96	 
	Section 6.15 Servicing Agreements
	 	 	96	 
	Section 6.16 Extension or Amendment of Collateral
	 	 	96	 
	Section 6.17 Stock Repurchase
	 	 	97	 
	Section 6.18 No Future Liens
	 	 	97	 
	Section 6.19 Eligible Subordinated Debt
	 	 	97	 
	Section 6.20 Senior and Pari Passu Interests
	 	 	97	 
	Section 6.21 [Reserved]
	 	 	97	 






iii









 






	 	 	 	 	 
	 	 	Page	 
	Section 6.22 Inconsistent Agreements
	 	 	97	 
	Section 6.23 Margin Regulations
	 	 	98	 
	 
	 	 	 	 
	ARTICLE VII EVENTS OF DEFAULT
	 	 	98	 
	Section 7.1 Events of Default
	 	 	98	 
	Section 7.2 Acceleration; Remedies
	 	 	102	 
	 
	 	 	 	 
	ARTICLE VIII THE ADMINISTRATIVE AGENT
	 	 	103	 
	Section 8.1 Appointment and Authority
	 	 	103	 
	Section 8.2 Nature of Duties
	 	 	103	 
	Section 8.3 Exculpatory Provisions
	 	 	103	 
	Section 8.4 Reliance by Administrative Agent
	 	 	104	 
	Section 8.5 Notice of Default
	 	 	104	 
	Section 8.6 Non-Reliance on Administrative Agent and Other Lenders
	 	 	105	 
	Section 8.7 Indemnification
	 	 	105	 
	Section 8.8 Administrative Agent in Its Individual Capacity
	 	 	105	 
	Section 8.9 Successor Administrative Agent
	 	 	106	 
	Section 8.10 Collateral and Guaranty Matters
	 	 	106	 
	 
	 	 	 	 
	ARTICLE IX ADMINISTRATION AND SERVICING
	 	 	107	 
	Section 9.1 Servicing
	 	 	107	 
	Section 9.2 Borrowers as Servicer
	 	 	107	 
	Section 9.3 Third Party Servicer
	 	 	108	 
	Section 9.4 Duties of the Borrowers
	 	 	108	 
	Section 9.5 Authorization of the Borrowers
	 	 	108	 
	Section 9.6 Event of Default
	 	 	109	 
	Section 9.7 Modification
	 	 	109	 
	Section 9.8 Inspection
	 	 	110	 
	Section 9.9 Servicing Compensation
	 	 	110	 
	Section 9.10 Payment of Certain Expenses by Servicer
	 	 	110	 
	Section 9.11 Pooling and Servicing Agreements
	 	 	110	 
	Section 9.12 Servicer Default
	 	 	111	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	111	 
	Section 10.1 Amendments, Waivers and Release of Collateral
	 	 	111	 
	Section 10.2 Notices
	 	 	113	 
	Section 10.3 No Waiver; Cumulative Remedies
	 	 	114	 
	Section 10.4 Survival of Representations and Warranties
	 	 	115	 
	Section 10.5 Payment of Expenses and Taxes; Indemnity
	 	 	115	 
	Section 10.6 Successors and Assigns; Participations
	 	 	118	 
	Section 10.7 Right of Set-off; Sharing of Payments
	 	 	121	 
	Section 10.8 Table of Contents and Section Headings
	 	 	122	 
	Section 10.9 Counterparts; Integration; Effectiveness; Electronic Execution
	 	 	.        122	 
	Section 10.10 Severability
	 	 	122	 
	Section 10.11 Integration
	 	 	123	 
	Section 10.12 Governing Law
	 	 	123	 
	Section 10.13 Consent to Jurisdiction; Service of Process and Venue
	 	 	123	 
	Section 10.14 Confidentiality
	 	 	124	 
	Section 10.15 Acknowledgments
	 	 	124	 






iv









 






	 	 	 	 	 
	 	 	Page	 
	Section 10.16 Waivers of Jury Trial
	 	 	125	 
	Section 10.17 Patriot Act Notice
	 	 	125	 
	Section 10.18 Resolution of Drafting Ambiguities
	 	 	125	 
	Section 10.19 Continuing Agreement
	 	 	125	 
	Section 10.20 Lender Consent
	 	 	126	 
	Section 10.21 Appointment of the Administrative Borrower
	 	 	126	 
	Section 10.22 Counterclaims
	 	 	126	 
	Section 10.23 Legal Matters
	 	 	126	 
	Section 10.24 Recourse Against Certain Parties
	 	 	126	 
	Section 10.25 Protection of Right, Title and Interest in the Collateral;
Further Action Evidencing Loans
	 	 	127	 
	Section 10.26 Credit Parties’ Waiver of Setoff
	 	 	128	 
	Section 10.27 Periodic Due Diligence Review
	 	 	128	 
	Section 10.28 Character of Loans for Income Tax Purposes
	 	 	129	 
	Section 10.29 Joint and Several Liability; Full Recourse Obligations
	 	 	129	 
	Section 10.30 Amendment and Restatement
	 	 	130	 
	Section 10.31 Modification of Other Credit Documents
	 	 	131	 






v









 






	 	 	 
	Schedules	 	 
	Schedule 1.1(b)

	 	Collection Account
	Schedule 1.1(c)

	 	Asset Representations
	Schedule 1.1(d)

	 	Mixed Collateral
	Schedule 1.1(f)

	 	Construction Draw Deliveries
	Schedule 2.1(a)

	 	Mixed Collateral with Future Funding Obligation
	Schedule 3.3

	 	Jurisdictions of Organization and Qualification
	Schedule 3.12

	 	Subsidiaries
	Schedule 3.18

	 	Location
	Schedule 3.21

	 	Labor Matters
	Schedule 3.23

	 	Material Contracts
	Schedule 3.50

	 	Outstanding Warrants, Etc.
	Schedule 6.1(b)

	 	Indebtedness
	Schedule 9.3

	 	Servicers






	 	 	 
	Exhibits	 	 
	Exhibit 1.1(a)

	 	Form of Account Designation Notice
	Exhibit 1.1(b)

	 	Form of Assignment and Assumption
	Exhibit 1.1(c)

	 	Form of Account Control Agreement
	Exhibit 1.1(d)(i)

	 	Form of Borrower Joinder Agreement
	Exhibit 1.1(d)(ii)

	 	Form of Guarantor Joinder Agreement
	Exhibit 1.1(e)

	 	Form of Notice of Borrowing
	Exhibit 1.1(f)

	 	Form of Notice of Conversion/Extension
	Exhibit 1.1(g)

	 	Form of Assignment
	Exhibit 1.1(h)

	 	Form of Borrower Release Letter
	Exhibit 1.1(i)

	 	Form of Compliance Certificate
	Exhibit 1.1(j)

	 	Form of Irrevocable Instruction
	Exhibit 1.1(k)

	 	Form of Servicer Redirection Notice
	Exhibit 1.1(l)

	 	Form of Warehouse Lender’s Release Letter
	Exhibit 1.1(m)

	 	Form of Homewood Account Control Agreement
	Exhibit 2.1(a)

	 	Form of Funding Indemnity Letter
	Exhibit 2.1(b)

	 	Form of Confirmation
	Exhibit 2.1(f)

	 	Form of Revolving Note
	Exhibit 2.2(d)

	 	Form of Term Loan Note
	Exhibit 4.1(a)

	 	Form of Lender Consent
	Exhibit 4.1(n)

	 	Form of Closing Officer’s Certificate
	Exhibit 4.1(o)

	 	Form of Patriot Act Certificate
	Exhibit 4.1(q)(i)

	 	Form of Power of Attorney for Borrower
	Exhibit 4.1(q)(ii)

	 	Form of Power of Attorney for Pledgor
	Exhibit 5.2(h)

	 	Form of Mortgage Asset Data Summary







vi









 








     THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 23, 2009, among ARBOR
REALTY FUNDING, LLC, a Delaware limited liability company (together with its successors and
permitted assigns, “Arbor Realty Funding”), as a Borrower, ARSR TAHOE, LLC, a Delaware
limited liability company (together with its successors and permitted assigns, “ARSR
Tahoe”), as a Borrower, ARBOR ESH II LLC, a Delaware limited liability company (together with
its successors and permitted assigns, “Arbor ESH”), as a Borrower, ARBOR REALTY LIMITED
PARTNERSHIP, a Delaware limited partnership (together with its successors and permitted assigns,
“Arbor Realty”), as a Borrower and a Guarantor, ART 450 LLC, a Delaware limited liability
company (together with its successors and assigns, “ART 450”), as a Borrower, ARBOR REALTY
TRUST, INC., a Maryland corporation (together with its successors and permitted assigns,
“ART”), as a Guarantor, ARBOR REALTY SR, INC., a Maryland corporation (together with its
successors and permitted assigns, “ARSR”), as a Borrower and a Guarantor, the other
entities from time to time party hereto pursuant to Section 5.10, the several banks and other
financial institutions as are, or may from time to time become parties to this Agreement (each,
together with its successors and assigns, a “Lender” and, collectively, the
“Lenders”), and WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association, as
administrative agent for the Lenders hereunder (in such capacity, the “Administrative
Agent”).



W I T N E S S E T H:




     WHEREAS, the Credit Parties (as hereinafter defined), the Lenders and the Administrative Agent
are parties to that certain Credit Agreement, dated as of November 6, 2007, as amended by the First
Amendment to Credit Agreement, dated as of February 15, 2008, the Second Amendment to Credit
Agreement, dated as of April 23, 2008, the Third Amendment to Credit Agreement, dated as of June
26, 2008, the Fourth Amendment to Credit Agreement, dated as of September 30, 2008, the Fifth
Amendment to Credit Agreement, dated as of December 31, 2008, the Sixth Amendment to Credit
Agreement, dated as of December 31, 2008, and the Seventh Amendment to Credit Agreement, dated as
of April 16, 2009 (the “Original Agreement”);



     WHEREAS, the Credit Parties, 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 Defined Terms.



     As used in this Agreement, terms defined in the preamble to this Agreement have the meanings
therein indicated, and the following terms have the following meanings:



     “40 Act” shall mean the Investment Company Act of 1940, as amended, restated or
modified from time to time.



 









 





     “450 Income” shall mean cash income received by ART and/or one or more of its
Consolidated Subsidiaries with respect to the 450 Transaction, which is not recognized per GAAP,
net of related expenses.



     “450 Transaction” shall mean 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.



     “ABR Default Rate” shall have the meaning set forth in Section 2.6.



     “Accepted Servicing Practices” shall mean, with respect to each item of Collateral,
those mortgage, mezzanine loan and/or secured lending servicing practices, as applicable, of
prudent lending institutions that service Collateral of the same type, size and structure as such
Collateral in the jurisdiction where the related Underlying Mortgaged Property is located, as
applicable, but in any event, (a) in accordance with the terms of the Credit Documents and
Requirements of Law, (b) without prejudice to the interests of the Administrative Agent or any
Lender, (c) with a view to the maximization of the recovery on such Collateral on a net present
value basis and (d) without regard to (i) any relationship that any Credit Party or any Affiliate
or any Subsidiary of the foregoing may have with the related Obligor, mortgagor, any Servicer, any
PSA Servicer, any Credit Party or any Affiliate or any Subsidiary of any of the foregoing; (ii) the
right of any Credit Party or any Subsidiary or Affiliate of the foregoing to receive compensation
or other fees for its services rendered pursuant to this Agreement, the other Credit Documents, the
Mortgage Loan Documents or any other document or agreement; (iii) the ownership, servicing or
management by any Credit Party or any Affiliate or any Subsidiary of the foregoing for others of
any other mortgage loans, assets or mortgaged property; (iv) any obligation of any Credit Party or
any Affiliate or any Subsidiary of the foregoing to repurchase, repay or substitute any item of
Collateral; (v) any obligation of any Credit Party or any Affiliate or any Subsidiary of the
foregoing to cure a breach of a representation and warranty with respect to any Collateral and
(vi) any debt any Credit Party or any Affiliate or any Subsidiary of the foregoing has extended to
any Obligor, mortgagor or any Affiliate of such Obligor or mortgagor.



     “Account Control Agreement” shall mean that certain first 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 1.1(c) attached hereto, as amended, restated,
modified or supplemented from time to time.



     “Account Designation Notice” shall mean the Account Designation Notice, dated as of
the Closing Date, from the Borrowers to the Administrative Agent in substantially the form attached
hereto as Exhibit 1.1(a), as amended, restated, modified or supplemented from time to time.



     “Additional Credit Party” shall mean each Person that becomes a Borrower or Guarantor
by execution of a Joinder Agreement in accordance with Section 5.10.



     “Additional Term Loan Collateral” shall mean the Alpine Asset and the Pledged Mortgage
Assets referred to as Woodgate at Jordan and Homewood/Lake Tahoe 4th mortgage loan, each
as more specifically described in the related Confirmations.



     “Additional Term Loan Collateral Release Amount” shall mean, (i) for each item of
Additional Term Loan Collateral other than the Alpine Asset, the Additional Term Loan Collateral
Release Amount set forth on Schedule 3 to the Fee Letter, as increased from time to time or
reduced from time to time by the amount of any principal payments, prepayments or reductions
applied against such Additional Term Loan Collateral pursuant to the terms of this Agreement or the
Fee Letter, and (ii) for the Alpine Asset, the sum of (a) the Alpine ESH Release Amount and (b) the
Additional Term Loan Collateral Release



2









 







Amount for the Alpine Asset, as set forth on Schedule 3 to the Fee Letter, as such amounts may
be increased or reduced from time to time by the amount of any principal payments, prepayments or
reductions applied against the Alpine Asset pursuant to the terms of this Agreement or the Fee
Letter.



     “Adjusted Tangible Net Worth” shall mean 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” or “Agent” shall have the meaning set forth in the
first paragraph of this Agreement and shall include any successors in such capacity.



     “Administrative Borrower” shall mean Arbor Realty Funding.



     “Administrative Questionnaire” shall mean an Administrative Questionnaire in a form
supplied by the Administrative Agent, as amended, restated, modified or supplemented from time to
time.



     “Affiliate” shall mean, with respect to a specified Person, another Person that
directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is
under common Control with the Person specified.



     “Agreement” or “Credit Agreement” shall mean this Agreement, as amended,
modified, extended, restated, replaced, or supplemented from time to time in accordance with its
terms.



     “Allocated Revolving Loan Amount” shall mean, for each item of Revolving Loan
Collateral, the outstanding principal amount of the Revolving Loans allocated by the Administrative
Agent, in its discretion, to the related Revolving Loan Collateral, which Allocated Revolving Loan
Amount shall be set forth in the related Confirmation, as increased from time to time by additional
Revolving Loans or reduced from time to time by the amount of any principal payments, prepayments
or reductions applied against such Revolving Loans pursuant to the terms of this Agreement or the
Fee Letter.



     “Allocated Term Loan Amount” shall mean, for each item of Term Loan Collateral, the
outstanding principal amount of the Term Loan allocated by the Administrative Agent, in its
discretion, to the related Term Loan Collateral, which Allocated Term Loan Amount shall be set
forth in the related Confirmation and which amount shall include, for ESH Allocated Assets, the ESH
Release Amount allocated to such Pledged Mortgage Asset, in each case, as increased from time to
time (if at all) or reduced from time to time by the amount of any principal payments, prepayments
or reductions applied against such Term Loans pursuant to the terms of this Agreement or the Fee
Letter.



     “Alpine Asset” shall mean the Pledged Mortgage Asset referred to Alpine Meadows Ski
Resort (including the equity investment of $13,219,802), as more specifically described in the
related Confirmation.



     “Alpine ESH Release Amount” shall mean the amount specified as the “ESH Release
Amount” for the Alpine Asset on Schedule 1-B to the Fee Letter.



     “Alternate Base Rate” shall mean, for any day, a rate per annum equal to the greater
of (a) the Prime Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. For purposes hereof: “Prime Rate” shall mean, at any
time, the rate of interest per annum publicly announced or otherwise identified from time to time
by Wachovia at its principal office in Charlotte, North Carolina as its prime rate. Each change in
the Prime Rate shall be effective as of the opening of business on the day such change in the Prime
Rate occurs. The parties hereto acknowledge



3









 







that the rate announced publicly by Wachovia as its Prime Rate is an index or base rate and
shall not necessarily be its lowest or best rate charged to its customers or other banks; and
“Federal Funds Effective Rate” shall mean, for any day, the weighted average of the rates
on overnight federal funds transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published on the next succeeding Business Day, the average
of the quotations for the day of such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by it. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive in the absence of manifest
error) that it is unable to ascertain the Federal Funds Effective Rate, for any reason, including
the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance
with the terms above, the Alternate Base Rate shall be determined without regard to clause (b) of
the first sentence of this definition, as appropriate, until the circumstances giving rise to such
inability no longer exist. Any change in the Alternate Base Rate due to a change in the Prime Rate
or the Federal Funds Effective Rate shall be effective on the opening of business on the date of
such change.



     “Alternate Base Rate Loans” shall mean Loans that bear interest at an interest rate
based on the Alternate Base Rate.



     “Applicable Advance Rate” shall mean, with respect to each Mortgage Asset, (a) with
respect to Term Loan Collateral under the Term Loans, the Applicable Advance Rate set forth on
Schedule 1-A to the Fee Letter and (b) in the case of Revolving Loan Collateral (including
Mixed Collateral) under the Revolving Loans, the Applicable Advance Rate determined by the
Administrative Agent in its discretion and set forth in the related Confirmation, which shall be no
greater than the Applicable Advance Rate set forth in Schedule 1-B to the Fee Letter (as
applicable).



     “Applicable Percentage” shall have the meaning set forth in the Fee Letter.



     “Approved Bank” shall have the meaning set forth in the definition of “Cash
Equivalents.”



     “Approved Fund” shall mean any Fund that is administered, managed or underwritten by
(a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.



     “Arbor ESH” shall have the meaning set forth in the first paragraph of this Agreement.



     “Arbor Realty” shall have the meaning set forth in the first paragraph of this
Agreement.



     “Arbor Realty Funding” shall have the meaning set forth in the first paragraph of this
Agreement.



     “Arranger” shall mean Wells Fargo Securities, LLC (formerly known as Wachovia Capital
Markets, LLC), together with its successors and assigns.



     “ARSR” shall have the meaning set forth in the first paragraph of this Agreement.



     “ARSR Tahoe” shall have the meaning set forth in the first paragraph of this
Agreement.



     “ART” shall have the meaning set forth in the first paragraph of this Agreement.



     “ART 450” shall have the meaning set forth in the first paragraph of this Agreement.



4









 





     “Asset Schedule and Exception Report” shall have the meaning set forth in the
Custodial Agreement.



     “Asset Valuation Period” shall have the meaning set forth in the Fee Letter.



     “Asset Value” shall have the meaning set forth in the Fee Letter.



     “Assignment and Assumption” shall mean an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by the
definition of Eligible Assignee and Section 10.6), and accepted by the Administrative Agent, in
substantially the form of Exhibit 1.1(b) or any other form approved by the Administrative
Agent.



     “Assignment of Leases” shall mean, with respect to any Mortgage, an assignment of
leases thereunder, notice of transfer or equivalent instrument in recordable form, sufficient under
the laws of the jurisdiction wherein the Underlying Mortgaged Property is located to reflect the
assignment of leases to the holder of the Mortgage or any secured party, as applicable, as any such
Assignment of Leases may be amended, restated, modified or supplemented from time to time.



     “Assignment of Mortgage” shall mean, with respect to any Mortgage, an assignment of
the Mortgage, notice of transfer or equivalent instrument in recordable form, sufficient under the
laws of the jurisdiction wherein the related Mortgaged Property is located to reflect the
assignment of the Mortgage to the holder of the Mortgage or any secured party, as applicable, as
any such Assignment of Mortgage may be amended, restated, modified or supplemented from time to
time.



     “Assignments” shall mean the transfer of all of the Borrowers’ rights and interests
under an Eligible Asset pursuant to an assignment executed by the Borrowers in blank, which
assignment shall be in the form of Exhibit 1.1(g) and shall be otherwise satisfactory to
the Administrative Agent in its discretion, as any such Assignments may be amended, restated,
modified or supplemented from time to time.



     “Authority Documents” shall mean, 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” shall mean at any time, an amount equal to the positive excess (if any)
of (a) the lesser of (i) the Revolving Committed Amount, and (ii) the Asset Value of all Revolving
Loan Collateral, minus (b) the aggregate outstanding principal amount for all Revolving
Loans on such day made on or after the Restatement Date; provided, however, for so
long as and to the extent that the Administrative Agent does not have a first priority perfected
security interest in any item of Collateral, then such Collateral shall be disregarded for the
purposes of calculating Availability; provided, further, however, on and
after the occurrence of the Maturity Date or an Event of Default, the Availability shall be
zero (0).



     “Availability Correction Deadline” shall have the meaning set forth in Section 2.5.



     “Bailee” shall mean, with respect to each Table Funded Mortgage Asset, the related
title company or other settlement agent, in each case, approved in writing by the Administrative
Agent in its discretion.



     “Bailee Agreement” shall mean, the Bailee Agreement among the applicable Borrower, the
Administrative Agent and the Bailee in the form of Annex 13 to the Custodial Agreement.



5









 





     “Bailee’s Trust Receipt” shall have the meaning set forth in the Custodial Agreement.



     “Bankruptcy Code” shall mean the Bankruptcy Code in Title 11 of the United States
Code, as amended, modified, succeeded or replaced from time to time.



     “Bankruptcy Event” shall mean any of the events described in Section 7.1(f).



     “Bankruptcy Event of Default” shall mean an Event of Default specified in
Section 7.1(f).



     “Basic Mortgage Asset Documents” shall have the meaning set forth in the Custodial
Agreement.



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



     “Borrower” or “Borrowers” shall mean, individually and/or collectively, Arbor
Realty Funding, ARSR Tahoe, Arbor Realty, ART 450, ARSR, Arbor ESH and any other entity that
becomes a party to this Agreement pursuant to Section 5.10 from time to time, in each case together
with their successors and permitted assigns.



     “Borrower Joinder Agreement” shall mean a Borrower Joinder Agreement in substantially
the form of Exhibit 1.1(d)(i), executed and delivered by an Additional Credit Party in
accordance with the provisions of Section 5.10, as amended, restated, supplemented or modified from
time to time.



     “Borrower Asset Schedule” shall have the meaning set forth in the Custodial Agreement.



     “Borrower Release Letter” shall mean a letter in the form of Exhibit 1.1(h),
duly executed by the applicable Borrower.



     “Borrowing Date” shall mean, the date any Loan is made or any item of Collateral is
pledged to the Administrative Agent pursuant to the terms hereof and the other Credit Documents.



     “Bridge Loan” shall mean, a Whole Loan, Junior Interest or Mezzanine Loan that is
otherwise an Eligible Asset except that the Underlying Mortgaged Property is not stabilized, or is
otherwise considered to be in a transitional state, which exceptions shall be disclosed to and be
acceptable to the Administrative Agent in its discretion. A Bridge Loan may not include an
interest in a Preferred Equity Interest. Unless waived in writing by the Administrative Agent in
its discretion, a Bridge Loan must satisfy all of the terms and conditions contained in this
Agreement (other than those eligibility criteria waived in accordance with the first sentence of
this definition) that are applicable to Whole Loans, Junior Interests and Mezzanine Loans, as
applicable.



     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
commercial banks in North Carolina, New York or Minnesota are authorized or required by
Requirements of Law to close; provided, however, that when used in connection with
a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the term “Business Day”
shall also exclude any day on which banks in London, England are not open for dealings in Dollar
deposits in the London interbank market.



6









 





     “Capital Lease” shall mean any lease of (or other agreement conveying the right to
use) Property, real or personal, the obligations with respect to which are required to be
capitalized on a balance sheet of the lessee in accordance with GAAP.



     “Capital Lease Obligations” shall mean, for any Person and its Consolidated
Subsidiaries, all obligations of such Person to pay rent or other amounts under a Capital Lease,
and, for purposes of this Agreement, the amount of such obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.



     “Cash Collateral” shall mean the cash or payments received by the Administrative Agent
pursuant to Section 2.5 of this Agreement or as Income on any Collateral.



     “Cash Equivalents” shall mean any of the following: (a) 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, (b) 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, (c) repurchase obligations with a term of not more
than seven (7) days for underlying securities of the types described in clauses (a) and (b) above
entered into with any Approved Bank, (d) 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 (e) 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 (a) through (e) above. All such Cash Equivalents must be denominated
solely for payment in Dollars.



     “CDO Issuance” shall mean any securitization transaction involving the issuance of
collateralized debt obligations.



     “CDO Issuer” shall mean the issuer of securities in a CDO Issuance.



     “Change in Law” shall mean the occurrence, after the date of this Agreement, of any of
the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any
change in any law, rule, regulation or treaty or in the administration, interpretation or
application thereof by any Governmental Authority or (c) the making or issuance of any request,
guideline or directive (whether or not having the force of law) by any Governmental Authority.



     “Change of Control” shall mean, unless approved by the Administrative Agent in
advance, with respect to any Borrower or any 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



7









 







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.



     “Class” shall mean with respect to a Mortgage Asset, such Mortgage Asset’s
classification as a Whole Loan, a Junior Interest, a Mezzanine Loan, a Preferred Equity Interest, a
Bridge Loan, an Equity Asset, a Condominium Loan or a Land Loan (and, with respect to each Bridge
Loan, Condominium Loan or Land Loan, its sub–classification as a Whole Loan, Junior Interest Loan
or Mezzanine Loan, as applicable).



     “Closing Date” shall mean November 6, 2007.



     “Closing Officer’s Certificate” shall mean a certificate substantially in the form of
Exhibit 4.1(n), duly executed by each of the Credit Parties.



     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time.



     “Collateral” shall mean the collective reference to the collateral described in the
Security Documents that secures all Obligations (including, without limitation, the Term Loan and
the Revolving Loan).



     “Collateral Default” shall mean any Mortgage Asset included or proposed to be included
in the Collateral (a) that is thirty (30) or more days delinquent under the terms of the related
Mortgage Loan Documents (including any Preferred Equity Interest or Equity Asset that has not been
paid during such period), (b) for which there is a non-monetary default (beyond any applicable
notice and cure period) under the terms of the related Mortgage Loan Documents, (c) for which there
is any breach or a representation or warranty under Schedule 1.1(c) or (d) with respect to
which the related Obligor is the subject of an Insolvency Proceeding or Insolvency Event.



     “Collection Account” shall mean the account set forth on Schedule 1.1(b),
which is established in the name of one or more Borrowers and subject to the Account Control
Agreement and into which all Income and Cash Collateral shall be deposited. Funds in the
Collection Account may be invested at the direction of the Administrative Agent in Cash
Equivalents.



     “Commercial Real Estate” shall mean any real estate included in the definition of
Property Type.



     “Commercial Real Estate Loan” shall mean any loan secured directly or indirectly by
Commercial Real Estate or, as applicable, Equity Interests in an entity that owns directly or
indirectly Commercial Real Estate.



     “Commitment” shall mean the Revolving Commitments and the Term Loan Commitments,
individually or collectively, as appropriate.



     “Commitment Fee” shall mean the “Commitment Fee” payable under the Fee Letter.



8









 





     “Commitment Percentage” shall mean the Revolving Commitment Percentage and/or the Term
Loan Commitment Percentage, as appropriate.



     “Commitment Period” shall mean the period from and including the Restatement Date to
but excluding the Maturity Date.



     “Commonly Controlled Entity” shall mean an entity, whether or not incorporated, which
is under common control with a Borrower or any other Credit Party within the meaning of
Section 4001(b)(1) of ERISA or is part of a group which includes any Borrower or any other Credit
Party and which is treated as a single employer under Section 414(b) or 414(c) of the Code or,
solely for purposes of Section 412 of the Code to the extent required by such section,
Section 414(m) or 414(o) of the Code.



     “Compliance Certificate” shall mean a certificate in the form of Exhibit
1.1(i) attached hereto, duly executed by the Credit Parties.



     “Condominium Loan” shall mean Mortgage Asset (other than a Bridge Loan, a Preferred
Equity Interest or an Equity Asset) the Underlying Mortgaged Property for which is owned, is in the
process of being converted to be owned or is otherwise expected to be owned, in whole or in part,
by a condominium form of ownership. Condominium Loans are not Eligible Assets unless deemed so by
the Administrative Agent on a case–by–case basis.



     “Confirmation” shall have the meaning set forth in Section 2.1.



     “Consolidated” shall mean, when used with reference to financial statements or
financial statement items of the Borrowers, the Guarantors and their Subsidiaries or any other
Person, such statements or items on a consolidated basis in accordance with the consolidation
principles of GAAP.



     “Construction Costs” shall mean with respect to a Mortgage Asset that is a Bridge
Loan, as of any date of determination, the reasonable hard and soft costs of proposed construction
of the improvements on the Underlying Mortgaged Property, which reasonable costs shall be disclosed
to and approved by the Administrative in its discretion, plus the market value of the
related Underlying Mortgaged Property at such time, as determined by the Administrative Agent in
its discretion based on such sources of information as the Administrative Agent may determine to
rely on in its discretion.



     “Construction Draw Deliveries” shall mean the deliveries required under Schedule
1.1(f) to this Agreement.



     “Contingent Liabilities” shall mean, with respect to any Person and its Consolidated
Subsidiaries (without duplication): (a) 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), (b) any
obligation, including, without limitation, any Guarantee Obligation, whether or not required to be
disclosed in the footnotes to such Person’s and its Consolidated Subsidiaries’ financial
statements, guaranteeing partially or in whole any Non-Recourse Indebtedness, lease, dividend or
other obligation, exclusive of (i) contractual indemnities (including, without limitation, any
indemnity or price-adjustment provision relating to the purchase or sale of securities or other
assets) and (ii) 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 (c) 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



9









 







described in clause (b) shall be deemed to be, (i) 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, 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 (ii) with respect to all
guarantees not covered by the preceding clause (i), 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” shall mean (a) an individual who is a member of any Person’s
board of directors (or the equivalent thereof) on the date hereof or (b) 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” shall mean, as to any Person, any provision of any security
issued by such Person or of any contract, agreement, instrument or undertaking to which such Person
is a party or by which it or any of its Property is bound.



     “Control” shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through the ability to
exercise voting power, by contract or otherwise. “Controlling” and “Controlled”
have meanings correlative thereto.



     “Correction Amount” shall have the meaning set forth in Section 2.5.



     “Credit Documents” shall mean this Agreement, each of the Notes, any Joinder
Agreement, the Fee Letter, the Guaranty, each Notice of Borrowing, each Confirmation, the Warrant
Agreements, the Registration Rights Agreement, the Custodial Fee Letter and the Security Documents
and all other agreements, documents, certificates and instruments delivered to the Administrative
Agent or any Lender by any Credit Party in connection therewith (other than any agreement,
document, certificate or instrument relating to any Derivatives Contract), as each such agreement,
document, certificate or instrument is amended, restated, modified or supplemented from time to
time.



     “Credit Party” shall mean any of the Borrowers, the Guarantors, the Pledgor, any
Additional Credit Party or any pledgor or obligor under the Security Documents.



     “Credit Party–Related Obligations” shall mean any obligations, liabilities and/or
Indebtedness of the Credit Parties under each Credit Document and under any other arrangement
between any Credit Party or any Affiliate or Subsidiary of any Credit Party, on the one hand, and
the Administrative Agent, any Affiliate or Subsidiary of the Administrative Agent and/or any
commercial paper conduit for which Wachovia or an Affiliate or Subsidiary of Wachovia acts as a
liquidity provider, administrator or agent, on the other hand, including, without limitation, such
obligations, liabilities and/or Indebtedness under the Working Capital Facility, as any such Credit
Party-Related Obligations are amended, restated or modified from time to time.



10









 





     “Custodial Agreement” shall mean that certain 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” shall mean that certain 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.



     “Custodial Identification Certificate” shall have the meaning set forth in the
Custodial Agreement.



     “Custodian” shall mean 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.



     “DSCR” shall mean with respect to any Mortgage Asset, as of any date of determination,
for the period of time to be determined in the Administrative Agent’s discretion (it being
understood that it is the Administrative Agent’s intent to make the determination based on the
period of twelve (12) consecutive complete calendar months preceding such date (or, if such
Mortgage Asset was originated less than twelve (12) months from the date of determination, the
number of months from the date of origination)), the ratio of (a) the aggregate Net Cash Flow in
respect of the Underlying Mortgaged Properties relating to such Mortgage Asset for such period
(including, in the case of Bridge Loans and, as applicable, Condominium Loans and Land Loans,
interest reserves held by a Borrower or a Servicer with respect to such asset, to (b) the
sum of (i) the aggregate of all amounts due for such period in respect of all Indebtedness that was
outstanding from time to time during such period that is secured, directly or indirectly, by such
Underlying Mortgaged Properties (including, without limitation, by way of a pledge of the equity of
the owner(s) of such Underlying Mortgaged Properties) or that is otherwise owing by the owner(s) of
such Underlying Mortgaged Properties, including, without limitation, all scheduled principal and/or
interest payments due for such period in respect of each Mortgage Asset that is secured or
supported by such Underlying Mortgaged Properties plus (ii) the amount of all Ground Lease
payments to be made in respect of such Underlying Mortgaged Properties during such period, as any
of the foregoing elements of DSCR may be adjusted by the Administrative Agent as determined by the
Administrative Agent in its discretion; provided, however, that all such
calculations shall be made taking into account any senior or pari passu debt or other senior or
pari passu obligations, including senior or pari passu debt or other senior or pari passu
obligations secured directly or indirectly by the applicable Underlying Mortgaged Property.



     “Default” shall mean any of the events specified in Section 7.1, whether or not any
requirement for the giving of notice or the lapse of time, or both, or any other condition, has
been satisfied.



     “Defaulting Lender” shall mean, at any time, any Lender that, at such time (a) has
failed to make a Loan required pursuant to the terms of this Agreement, (b) has failed to pay to
the Administrative Agent or any Lender an amount owed by such Lender pursuant to the terms of this
Agreement and such default remains uncured, or (c) has been deemed insolvent or has become subject
to an Insolvency Proceeding, Insolvency Event or to a receiver, trustee or similar official.



     “Deficit” shall have the meaning set forth in Section 2.5(b)(iv).



     “Derivatives Contract” shall mean any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps, commodity options,
forward



11









 







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 Contract Provider” shall mean Wachovia, together with its successors
and assigns.



     “Derivatives Termination Value” shall mean, 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 “$” shall mean dollars in lawful currency of the United States
of America.



     “Domestic Lending Office” shall mean, initially, the office of each Lender designated
as such Lender’s Domestic Lending Office shown in such Lender’s Administrative Questionnaire; and
thereafter, such other office of such Lender as such Lender may from time to time specify to the
Administrative Agent and the Borrowers as the office of such Lender at which Alternate Base Rate
Loans of such Lender are to be made.



     “Domestic Subsidiary” shall mean any Subsidiary that is organized and existing under
the laws of the United States or any state or commonwealth thereof or under the laws of the
District of Columbia.



     “Due Diligence Costs” shall have the meaning set forth in Section 10.27.



     “Due Diligence Review” shall mean the performance by the Administrative Agent of any
or all of the reviews permitted under Section 10.27 with respect to any or all of the Collateral,
as desired by the Administrative Agent from time to time.



     “Electronic Transmission” shall mean the delivery of information and executed
documents in an electronic format acceptable to the applicable recipient thereof.



     “Eligible Asset” shall mean a Mortgage Asset that as of any date of determination:



     (a) is not subject to a Collateral Default;



     (b) with respect to the portion of such Mortgage Asset to be pledged to the Administrative
Agent, the funding obligations have been satisfied in full and there is no unfunded commitment with
respect thereto;



12









 





     (c) has been approved in writing by the Administrative Agent in its discretion;



     (d) has an LTV not in excess of the Maximum LTV, and, with respect to Bridge Loans, an LTC not
in excess of the Maximum LTC;



     (e) has a DSCR equal to or greater than the Minimum DSCR;



     (f) is not a construction loan; provided, however, the Administrative Agent
may, in its discretion, waive this restriction on a case–by–case basis and permit the pledge of one
(1) or more Condominium Loans or Land Loans that are construction loans provided each such Mortgage
Asset otherwise satisfies the definition of Eligible Asset and the other requirements of the Credit
Documents, such assets shall be treated like Bridge Loans for the purpose of determining Asset
Value and LTC and such Mortgage Asset and the applicable Borrower satisfies such other terms,
conditions or requirements as the Administrative Agent may require in its discretion, such
requirements to be set forth in the related Confirmation;



     (g) is not a loan to an operating business (other than a hotel);



     (h) [reserved];



     (i) satisfies each of the applicable representations and warranties set forth in Article III
of this Agreement and the Security Documents (to the extent any such representations or warranties
relate to the Mortgage Assets or the Administrative Agent’s rights or remedies with respect
thereto), in Schedule 1.1(c) hereto, the Mortgage Loan Documents and in any statement, affirmation
or certification made or information, document, agreement, notice or report provided to
the Administrative Agent with respect to such Mortgage Asset;



     (j) in the case a Ground Lease, the Ground Lease has a remaining term of no less than
twenty (20) years from the maturity date of the Mortgage Asset;



     (k) the Underlying Mortgaged Property is located, and the Obligor is domiciled, in the United
States of America;



     (l) such Mortgage Asset is denominated and payable in Dollars;



     (m) the Obligor is not a Sanctioned Person or Sanctioned Entity; and



     (n) does not involve an equity or similar interest by any Credit Party that would result in
(i) a conflict of interest or a potential conflict of interest or (ii) an affiliation with
an Obligor under the terms of the Mortgage Loan Documents which results or could result in the loss
or impairment of any material rights of the holder of the Mortgage Asset; provided,
however, the Borrowers must disclose to the Administrative Agent prior to the related
Borrowing Date all equity or similar interests held or to be held by any Credit Party regardless of
whether it satisfies any of the foregoing clauses (i) or (ii).



     provided, however, notwithstanding a Mortgage Asset’s failure to conform to the
criteria set forth above, the Administrative Agent may, in its discretion, designate in writing any
such non–compliant Mortgage Asset as an Eligible Asset, which may include a temporary or permanent
waiver of one (1) or more Eligible Asset requirements.



     “Eligible Assignee” shall mean (a) a Lender, (b) an Affiliate of a Lender, (c) an
Approved Fund, and (d) any other Person (other than a natural person) approved by the
Administrative Agent; provided



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that notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrowers,
Guarantors or any Borrower’s or Guarantor’s Affiliates or Subsidiaries.



     “Eligible Subordinated Debt” shall mean (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 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 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 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.



     “Environmental Laws” shall mean any and all applicable foreign, federal, state, local
or municipal laws, rules, orders, regulations, statutes, ordinances, codes, decrees, requirements
of any Governmental Authority or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning protection of human health or
the environment, as now or may at any time be in effect during the term of this Agreement.



     “Equity Asset” shall mean an equity investment in an amount as approved by the
Administrative Agent in its discretion represented by Equity Interests in an entity that owns
directly or indirectly Commercial Real Estate, including, but not limited to, all Equity Interests
representing a dividend on any of the Equity Interests of the Equity Asset Grantor or representing
a distribution or return of capital upon or in respect of the Equity Interests of the Equity Asset
Grantor, in each case as it relates to an Equity Asset; provided, however, (a) the
funding of the Equity Asset is subject to regulatory and compliance criteria applicable to banks
generally with respect to this type of asset, and (b) the Administrative Agent reserves the right
to require, as a condition to such financing, that each Equity Asset be acquired by and pledged to



14









 







the Administrative Agent by a bankruptcy remote, special purpose entity, which entity shall
join the Credit Documents as a co-Borrower pursuant to a Borrower Joinder Agreement as a condition
to the pledge of such Equity Asset and for the Equity Interests in such Borrower to be pledged to
the Administrative Agent as additional Collateral for the Obligations.



     “Equity Asset Documents” shall mean the related Authority Documents of the Equity
Asset Grantor, together with a certificate, instrument or other tangible evidence of the Equity
Interests in the Equity Asset Grantor.



     “Equity Asset Grantor” shall mean the entity in which an Equity Asset represents
an Investment.



     “Equity Interests” shall mean 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” shall mean any issuance by any Borrower, Guarantor or any
Consolidated Subsidiary or Affiliate of any Borrower or any Guarantor to any Person that is not a
Borrower, Guarantor or Consolidated Subsidiary or Affiliate 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
Credit Party), (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, Guarantor or any
Consolidated Subsidiary or Affiliate of any Borrower or any Guarantor for which no cash is paid to
the applicable Borrower, Guarantor or Consolidated Subsidiary or Affiliate of any Borrower or any
Guarantor or options or warrants issued to officers, directors or employees of a Borrower or any
Guarantor) 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 an issuance of shares (i) in ART to Arbor Commercial
Mortgage, LLC, a New York limited liability company, as compensation for acting as servicer or (ii)
in any Guarantor or Consolidated Subsidiary or Affiliate of any Guarantor (other than a Borrower)
in connection with the acquisition of a company.



     “Equity/Preferred Equity Pledge and Security Agreement” shall mean the First Amended
and Restated Equity/Preferred Equity Pledge and Security Agreement, dated as of the Restatement
Date, by the Borrowers for the benefit of the Administrative Agent and each Lender, as such
agreement may be amended, modified, waived, supplemented, extended, restated or replaced from time
to time.



     “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as amended
from time to time.



     “ESH Allocated Assets” shall mean the Pledged Mortgage Assets to which allocated loan
amounts relating to the ESH Pledged Mortgage Assets were allocated on the Restatement Date.



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     “ESH Pledged Mortgage Assets” shall mean the Equity Assets and Preferred Equity
Interests pledged to the Administrative Agent that relate to the Underlying Mortgaged Properties
involving the Extended Stay Hotel chain and more specifically described in the related Underwriting
Package and Confirmation.



     “ESH Release Amount” shall mean, with respect to each ESH Allocated Asset, the amount
specified as the “ESH Release Amount” on Schedule 1-B to the Fee Letter.



     “Event of Default” shall mean any of the events specified in Section 7.1;
provided, however, that any requirement for the giving of notice or the lapse of
time, or both, or any other condition, has been satisfied.



     “Exception Report” shall have the meaning set forth in the Custodial Agreement.



     “Exceptions” shall have the meaning set forth in the Custodial Agreement.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



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



     “Excluded Taxes” shall mean, with respect to the Administrative Agent, any Lender, or
any other recipient of any payment to be made by or on account of any obligation of the Borrowers
hereunder, (a) taxes imposed on or measured by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political
subdivision thereof) under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable lending office is located,
(b) any branch profits taxes imposed by the United States of America or any similar tax imposed by
any other jurisdiction in which a Borrower is located and (c) in the case of a Foreign Lender, any
withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign
Lender becomes a party hereto (or designates a new lending office) or is attributable to such
Foreign Lender’s failure or inability (other than as a result of a Change in Law) to comply with
Section 2.14, except to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive additional amounts
from the Borrowers with respect to such withholding tax pursuant to Section 2.14.



     “Existing Agreement” shall mean, collectively, the Original Agreement and that certain
Credit Agreement, dated as of November 6, 2007, as amended by the First Amendment to Credit
Agreement, dated as of April 23, 2008, the Second Amendment to Credit Agreement, dated as of June
26, 2008, the Third Amendment to Credit Agreement, dated as of September 30, 2008, the Fourth
Amendment to Credit Agreement, dated as of December 31, 2008 and the Fifth Amendment to Credit
Agreement, dated as of December 31, 2008, among ARSR, Arbor ESH, ART, Arbor Realty, each lender
party thereto, and Wachovia Bank, National Association, as the administrative agent.



     “Existing Borrower” shall mean, collectively, the Credit Parties who were Borrowers
under the Existing Agreement.



     “Extension of Credit” shall mean, as to any Lender, the making of a Loan by such
Lender, any conversion of a Loan from one Type to another Type, any extension of any Loan and any
pledge of a Mortgage Asset to the Administrative Agent.



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     “Extraordinary Receipt” shall mean any Income received by or paid to or for the
account of any Credit Party relating to any item of Collateral and not in the ordinary course of
business, including tax refunds, pension plan reversions, proceeds of insurance (other than
proceeds of business interruption insurance to the extent such proceeds constitute compensation for
lost earnings), condemnation awards (and payments in lieu thereof), indemnity payments and any
purchase price adjustments.



     “Fair Market Value” shall mean, 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 that 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 Effective Rate” shall have the meaning set forth in the definition of
“Alternate Base Rate”.



     “Fee Letter” shall mean the First Amended and Restated Fee Letter, dated as of the
Restatement Date, among the Borrowers, the Guarantors and the Administrative Agent, as amended,
modified, extended, restated, replaced, or supplemented from time to time.



     “Financial Covenants” shall mean the covenants set forth in Section 5.9 of this
Agreement.



     “Fitch” shall mean Fitch Ratings, Inc.



     “Foreclosed Mortgage Asset” shall mean a Mortgage Asset for which a foreclosure
proceeding has been commenced and completed.



     “Foreign Lender” shall mean any Lender that is organized under the laws of a
jurisdiction other than that in which a Borrower is resident for tax purposes. For purposes of
this definition, the United States of America, each State thereof and the District of Columbia
shall be deemed to constitute a single jurisdiction.



     “Fund” shall mean any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial loans and similar
extensions of credit in the ordinary course of its business.



     “Funding Date” shall mean the date upon which all conditions set forth in Sections 4.1
and 4.2 have been satisfied.



     “GAAP” shall mean generally accepted accounting principles in effect in the United
States of America applied on a consistent basis, subject, however, in the case of
determination of compliance with the financial covenants set out in Section 5.9, to the provisions
of Section 1.3.



     “Governmental Authority” shall mean the government of the United States of America or
any other nation, or of any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the European Union or the
European Central Bank).



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     “Ground Lease” shall mean with respect to any Underlying Mortgaged Property for which
the Obligor has a leasehold interest in the related Underlying Mortgaged Property or space lease
within such Underlying Mortgaged Property, the lease agreement creating such leasehold interest.



     “Guarantee Obligation” shall mean, 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” shall mean, individually and/or collectively, ART, Arbor Realty, ARSR and
any other entity that becomes party to this Agreement pursuant to Section 5.10 from time to time,
in each case together with their successors and permitted assigns.



     “Guarantor Joinder Agreement” shall mean a Guarantor Joinder Agreement in
substantially the form of Exhibit 1.1(d)(ii), executed and delivered by an Additional
Credit Party in accordance with the provisions of Section 5.10, as amended, restated, supplemented
or modified from time to time.



     “Guaranty” shall mean the guaranty of the Guarantors set forth in that certain First
Amended and Restated Guaranty Agreement, dated as of the Restatement Date, by and among the
Guarantors and the Administrative Agent, as amended, restated, supplemented or modified from time
to time.



     “Homewood Account Control Agreement” shall mean that certain executed first amended
and restated account control agreement, dated as of the Restatement Date, among the Borrowers, the
Administrative Agent and Wachovia granting control over the Homewood Interest Reserve identified
therein to the Administrative Agent as agent for the Secured Parties, in the form of Exhibit
1.1(m), as amended, modified, restated, replaced, waived, substituted, supplemented or extended
from time to time.



     “Homewood Interest Reserve” shall mean the account maintained at Wachovia identified
in the Homewood Account Control Agreement into which the interest reserve for the second, third and
fourth mortgage loans under the Homewood Mortgage Asset shall be held. Subject to the terms of
this Agreement, on each Payment Date, the monthly debt service amount for the Homewood Mortgage
Asset will be withdrawn from the Homewood Interest Reserve by the Administrative Agent and
deposited into the Collection Account to be applied under Section 2.9 of this Agreement;
provided, however, (i) no



18









 







amounts withdrawn from the Homewood Interest Reserve shall be paid to the Borrowers after an
Event of Default and (ii) after an event of default under the Mortgage Loan Documents for the
Homewood Mortgage Asset, and subject to the terms of the Mortgage Loan Documents for the Homewood
Mortgage Asset, the Administrative Agent shall be entitled to withdraw all of the funds in the
Homewood Interest Reserve and apply such funds to the Allocated Term Loan Amount and/or the
Allocated Revolving Loan Amount, as applicable, for the Homewood Mortgage Asset and any other
Obligations.



     “Homewood Mortgage Asset” shall mean the second, third and fourth mortgage Whole Loans
referred to as Homewood Village Resorts in Placer County, California, which are pledged to the
Administrative Agent, as Collateral, under the Security Documents.



     “Income” shall mean with respect to the Collateral and to the extent of a Borrower’s
or the holder’s interest therein, at any time, all of the following: all payments, collections,
prepayments, recoveries, proceeds (including, without limitation, insurance and condemnation
proceeds), Extraordinary Receipts and all other payments or amounts of any kind or nature
whatsoever paid, received, collected, recovered or distributed on, in connection with or in respect
of the Collateral or any other collateral for the Obligations, including, without limitation,
principal payments, interest payments, principal and interest payments, prepayment fees, extension
fees, exit fees, defeasance fees, transfer fees, late charges, late fees and all other fees or
charges of any kind or nature, premiums, yield maintenance charges, penalties, default interest,
dividends, gains, receipts, allocations, rents, interests, profits, payments in kind, returns or
repayment of contributions and all other distributions, payments and other amounts of any kind or
nature whatsoever payable thereon, in connection therewith, or with respect thereto, together with
amounts received from any Interest Rate Protection Agreement and amounts withdrawn from the
Homewood Interest Reserve by the Administrative Agent; provided, however, (i) prior
to an Event of Default, the Borrowers may net the Servicing Fee from Income and (ii) Income shall
not include any Obligor Reserve Payments unless a Borrower, a Servicer or a PSA Servicer has
exercised rights with respect to such payments under the terms of the related Mortgage Loan
Documents, the Servicing Agreements or the Pooling and Servicing Agreements, as applicable.



     “Indebtedness” shall mean, with respect to any Person, including such Person’s
Consolidated Subsidiaries determined on a consolidated basis, at the time of computation thereof,
all indebtedness of any kind including, without limitation (without duplication): (a) all
obligations of such Person in respect of money borrowed (including, without limitation, principal,
interest, assumption fees, prepayment fees, yield maintenance charges, penalties, exit fees,
contingent interest and other monetary obligations whether choate or inchoate and whether by loan,
the issuance and sale of debt securities or the sale of Property or assets to another Person
subject to an understanding or agreement, contingent or otherwise, to repurchase such Property or
assets, or otherwise); (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,
(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, or (iv) in
connection with the issuance of preferred equity or trust preferred securities; (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 under any
Mortgage Asset or any obligation senior to the Mortgage Asset, unfunded interest reserve



19









 







amount under any Mortgage Asset or any obligation that is senior to the Mortgage Asset,
purchase obligation, repurchase obligation, sale/buy–back agreement, takeout commitment or forward
equity commitment, 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 Derivatives Contract not entered into
as a hedge against existing indebtedness, in an amount equal to the Derivatives Termination Value
thereof; (i) all Non–Recourse Indebtedness, recourse indebtedness and all indebtedness of other
Persons which such Person has guaranteed or is otherwise recourse to such Person; (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; (k) all Contingent Liabilities;
(l) all obligations of such Person incurred in connection with the acquisition or carrying of fixed
assets by such Person or obligations of such Person to pay the deferred purchase or acquisition
price of Property or assets, including contracts for the deferred purchase price of Property or
assets that include the procurement of services; (m) indebtedness of general partnerships of which
such Person is liable as a general partner (whether secondarily or contingently liable or
otherwise); and (n) obligations of such Person to fund capital commitments under any Authority
Document, subscription agreement or otherwise.



     “Indemnified Amounts” shall have the meaning set forth in Section 10.5(b).



     “Indemnified Taxes” shall mean Taxes other than Excluded Taxes.



     “Indemnitee” shall have the meaning set forth in Section 10.5(b).



     “Independent Director” shall mean natural Person who (a) is not at the time of initial
appointment as Independent Director, and may not have been at any time during the five (5) years
preceding such initial appointment or at any time while serving as Independent Director, (i) a
stockholder, partner, member or direct or indirect legal or beneficial owner of a Borrower, a
Guarantor or any Subsidiary or Affiliate of any Credit Party; (ii) a contractor, creditor,
customer, supplier, director (with the exception of serving as the Independent Director of a
Borrower), officer, employee, attorney, manager or other Person who derives any of its purchases or
revenues from its activities with a Borrower, a Guarantor or any Affiliate or Subsidiary of any
Credit Party; (iii) a natural Person who controls (directly or indirectly or otherwise) a Borrower,
a Guarantor or any Affiliate or Subsidiary of any Credit Party or who controls or is under common
control with any Person that would be excluded from serving as an Independent Director under (i) or
(ii), above; or (iv) a member of the immediate family of a natural Person excluded from servicing
as an Independent Director under clauses (i) or (ii) above and (b) otherwise satisfies the then
current requirements of the Rating Agencies. A Person who is an employee of a nationally
recognized organization that supplies independent directors and who otherwise satisfies the
criteria in clause (a) but for the fact that such organization receives payment from a Borrower or
a Guarantor for providing such independent director shall not be disqualified from serving as an
Independent Director hereunder.



     “Information Materials” shall have the meaning set forth in Section 5.15.



     “Insolvency” shall mean, with respect to any Multiemployer Plan, the condition that
such Plan is insolvent within the meaning of such term as used in Section 4245 of ERISA.



20









 





     “Insolvency Event” shall mean, 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 sixty (60) 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” shall mean 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.



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



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



     “Intercreditor Agreement” shall mean that certain Intercreditor Agreement to be
entered into by and among the Administrative Agent and Wachovia, as administrative agent under the
Working Capital Facility, as amended, restated, modified or supplemented from time to time.



     “Interest Expense” shall mean, 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 Period” shall mean, with respect to any LIBOR Rate Loan,




     (a) initially, the period commencing on the Borrowing Date or conversion date, as the
case may be, with respect to such LIBOR Rate Loan and ending one, two, three or six months
thereafter, subject to availability to all applicable Lenders, as selected by Borrowers in
the Notice of Borrowing or Notice of Conversion given with respect thereto; and




     (b) thereafter, each period commencing on the last day of the immediately preceding
Interest Period applicable to such LIBOR Rate Loan and ending one, two, three or six months
thereafter, subject to availability to all applicable Lenders, as selected by the Borrowers
by irrevocable notice to the Administrative Agent not less than three Business Days prior to
the last day of the then current Interest Period with respect thereto; provided that
the foregoing provisions are subject to the following:




     (i) if any Interest Period pertaining to a LIBOR Rate Loan would otherwise end
on a day that is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension would be to carry
such



21









 







Interest Period into another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;




     (ii) any Interest Period pertaining to a LIBOR Rate Loan that begins on the
last Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period) shall
end on the last Business Day of the relevant calendar month;




     (iii) if the Borrowers shall fail to give notice of the applicable Interest
Period, in any Notice of Borrower or otherwise, the applicable Borrower shall be
deemed to have selected a one-month LIBOR Rate Loan;




     (iv) no Interest Period in respect of any Loan shall extend beyond the
applicable Maturity Date and, further with regard to the Term Loan, no Interest
Period shall extend beyond any principal amortization payment date with respect to
such Term Loan unless the portion of such Term Loan consisting of Alternate Base
Rate Loans together with the portion of such Term Loan consisting of LIBOR Rate
Loans with Interest Periods expiring prior to or concurrently with the date such
principal amortization payment date is due, is at least equal to the amount of such
principal amortization payment due on such date; and




     (v) no more than six (6) LIBOR Rate Loans may be in effect at any time. For
purposes hereof, LIBOR Rate Loans with different Interest Periods shall be
considered as separate LIBOR Rate Loans, even if they shall begin on the same date
and have the same duration, although borrowings, extensions and conversions may, in
accordance with the provisions hereof, be combined at the end of existing Interest
Periods to constitute a new LIBOR Rate Loan with a single Interest Period.



     “Interest Rate Protection Agreement” shall mean with respect to any or all of the
Mortgage Assets, (a) 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 (b) any Derivatives Contract put in place by any
Borrower, any Guarantor or any Subsidiary or Affiliate of the foregoing with respect to any
Mortgage Asset.



     “Internal Control Event” shall mean a material weakness in, or fraud that involves
management or other employees who have a significant role in, any Credit Party’s internal controls
over financial reporting, in each case as described in the Securities Laws.



     “Investment” shall mean, 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 Credit 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.



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     “Irrevocable Instruction” shall mean an irrevocable instruction letter in the form of
Exhibit 1.1(j) hereto duly executed by the applicable Credit Party, as amended, restated,
modified or supplemented from time to time.



     “Joinder Agreement” shall mean a Borrower Joinder Agreement and/or a Guarantor Joinder
Agreement, as applicable, as each may be amended, restated, supplemented or modified from time to
time.



     “Junior Interest” shall mean (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, in each
case where the Underlying Mortgaged Property is stabilized and non-transitional.



     “Junior Interest Document” shall mean the original executed promissory note,
Participation Certificate, Participation Agreement and any other evidence of a Junior Interest, as
applicable.



     “Land Loan” shall mean a Commercial Real Estate Loan secured by entitled land intended
for construction, which loan is acceptable to the Administrative Agent in its discretion. Land
Loans are not Eligible Assets unless deemed so on a case by case basis in the Administrative
Agent’s discretion.



     “Lender” shall have the meaning set forth in the first paragraph of this Agreement and
shall include the Revolving Lenders and the Term Loan Lenders.



     “Lender Commitment Letter” shall mean, with respect to any Lender, the letter (or
other correspondence) to such Lender from the Administrative Agent notifying such Lender of its
Revolving Commitment Percentage and its portion of the Commitment Fee and/or Term Loan Commitment
Percentage, as applicable.



     “Lender Consent” shall mean any lender consent delivered by a Lender on the
Restatement Date in the form of Exhibit 4.1(a).



     “LIBOR” shall mean, for any LIBOR Rate Loan for any Interest Period therefor, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen
LIBOR01 Page (or any successor page) as the London interbank offered rate for deposits in Dollars
at approximately 11:00 A.M. (London time) two (2) Business Days prior to the first day of such
Interest Period for a term comparable to such Interest Period. If for any reason such rate is not
available, then “LIBOR” shall mean the rate per annum at which, as determined by the Administrative
Agent in accordance with its customary practices, Dollars in an amount comparable to the Loans then
requested are being offered to leading banks at approximately 11:00 a.m. London time, two (2)
Business Days prior to the commencement of the applicable Interest Period for settlement in
immediately available funds by leading banks in the London interbank market for a period equal to
the Interest Period selected.



     “LIBOR Lending Office” shall mean, initially, the office(s) of each Lender designated
as such Lender’s LIBOR Lending Office in such Lender’s Administrative Questionnaire; and
thereafter, such other office of such Lender as such Lender may from time to time specify to the
Administrative Agent and the Borrowers as the office of such Lender at which the LIBOR Rate Loans
of such Lender are to be made.



     “LIBOR Rate” shall mean a LIBOR rate per annum (rounded upwards, if necessary, to the
next higher 1/100th of 1%) determined by the Administrative Agent in accordance with the definition
of “LIBOR”.



23









 





     “LIBOR Rate Loan” shall mean Loans the rate of interest applicable to which is based
on the LIBOR Rate.



     “Lien” shall mean any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security interest or any
preference, priority or other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title retention agreement
and any Capital Lease having substantially the same economic effect as any of the foregoing).



     “Liquidity” shall mean 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 Working Capital 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 5.9(a) hereunder and all financial covenants (other
than any liquidity covenants) under the Working Capital 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 Working Capital Facility.



     “Loan” shall mean a Revolving Loan and/or the Term Loan, as appropriate.



     “Loan–to–Value Ratio” or “LTV” shall mean with respect to any Mortgage Asset,
as of any date of determination, the ratio of the outstanding principal amount of such Mortgage
Asset to the market value of the related Underlying Mortgaged Property at such time, as determined
by the Administrative Agent in its discretion, as such LTV may be adjusted by the Administrative
Agent as the Administrative Agent determines in its discretion; provided, however,
that all such calculations shall be made taking into account any senior or pari passu debt or other
senior or pari passu obligations, including senior or pari passu debt or other senior or pari passu
obligations secured directly or indirectly by the applicable Underlying Mortgaged Property.



     “LTC” shall mean, with respect to any Mortgage Asset, that is a Bridge Loan, as of any
date of determination, the ratio of the outstanding principal amount of such Mortgage Asset to the
Construction Costs for such Mortgage Asset, as determined by the Administrative Agent in its
discretion, as such LTC may be adjusted by the Administrative Agent as the Administrative Agent
determines in its discretion; provided, however, that all such calculations shall
be made taking into account any senior or pari passu debt or other senior or pari passu
obligations, including senior or pari passu debt or other senior or pari passu obligations secured
directly or indirectly by the applicable Underlying Mortgaged Property.



     “Mandatory Redeemable Stock” shall mean, 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 or other equivalent common Equity Interests); in the
case of each clause (a) through (c), on or prior to the Maturity Date.



     “Market Value” shall mean, as of any date of determination 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 based on such sources and information (if any) as the
Administrative Agent may determine



24









 







to rely on in its discretion (which value may be determined to be zero (0)), as such Market
Value may be adjusted at any time by the Administrative Agent as the Administrative
Agent determines in its discretion (subject to the last sentence of the definition of Asset Value).



     “Material Adverse Effect” shall mean, any material adverse effect on or change in or
to (a) the Properties, assets, business, operations, financial condition, credit quality or
prospects of any Borrower or any Guarantor, (b) the ability of any Borrower, any Guarantor or any
other Credit Party to perform its obligations under any of the Credit Documents or any of the
Mortgage Loan Documents to which it is a party, (c) the validity, enforceability, legality or
binding effect of any of the Credit Documents or any Loan granted thereunder, (d) the rights and
remedies of the Administrative Agent or any Lender under any of the Credit Documents or the
Collateral, (e) the timely payment of any amounts payable under the Credit Documents, or (f) any
Collateral, the perfection or priority of any Loan granted with respect to the Collateral or the
value or Asset Value of any Collateral.



     “Material Contract” shall mean (a) any contract or other agreement listed on
Schedule 3.23, (b) any contract or other agreement, written or oral, of the Credit Parties
or any of their Subsidiaries involving monetary liability of or to any such Person in an amount in
excess of $3,000,000 per annum, (c) any contract or other agreement, written or oral, of the Credit
Parties or any of their Subsidiaries representing at least $3,000,000 of the total Consolidated
revenues of the Credit Parties and their Subsidiaries for any fiscal year and (d) any other
contract, agreement, permit or license, written or oral, of the Credit Parties or any of their
Subsidiaries as to which the breach, nonperformance, cancellation or failure to renew by any party
thereto, individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect.



     “Materials of Environmental Concern” shall mean any gasoline or petroleum (including
crude oil or any extraction thereof) or petroleum products or any hazardous or toxic substances,
materials or wastes, defined or regulated as such in or under any Environmental Law, including,
without limitation, asbestos, perchlorate, polychlorinated biphenyls and urea-formaldehyde
insulation.



     “Maturity Date” shall mean the earlier of (a)  the date that is three (3) years
following the Restatement Date, and (b) the date on which this Agreement shall terminate in
accordance with the provisions hereof or by operation of Requirements of Law. For the avoidance of
doubt, the Borrowers may not extend the Maturity Date without the Lenders’ and the Administrative
Agent’s consent in their discretion.



     “Maximum LTC” shall mean with respect to any Mortgage Asset that is a Bridge Loan, at
any time the Maximum LTC for related Underlying Mortgaged Property (a) in the case of Term Loan
Collateral for the Term Loans, as set forth on Schedule 1-A to the Fee Letter and (b) in
the case of Revolving Loan Collateral (including Mixed Collateral) for the Revolving Loans, the
Maximum LTC, determined by the Administrative Agent in its discretion and set forth in the related
Confirmation, which shall be no greater than the Maximum LTC set forth in Schedule 1-B to
the Fee Letter; provided, however, that all such calculations shall be made taking
into account any senior or pari passu debt or other senior or pari passu obligations, including
senior or pari passu debt or other senior or pari passu obligations secured directly or indirectly
by the applicable Underlying Mortgaged Property.



     “Maximum LTV” shall mean with respect to any Mortgage Asset, at any time, the Maximum
LTV for the related Underlying Mortgaged Property (a) in the case of Term Loan Collateral for the
Term Loans, as set forth on Schedule 1-A to the Fee Letter and (b) in the case of
Revolving Loan Collateral (including Mixed Collateral) for the Revolving Loans, the Maximum LTV set
forth in the related Confirmation, which shall be no greater than the Maximum LTV set forth in
Schedule 1-B to the Fee Letter; provided, however, that all such
calculations shall be made taking into account any senior or pari



25









 







passu debt or other senior or pari passu obligations, including senior or pari passu debt or
other senior or pari passu obligations secured directly or indirectly by the applicable Underlying
Mortgaged Property.



     “Mezzanine Loan” shall mean a performing mezzanine loan secured by pledges of all (or,
in the Administrative Agent’s discretion, less than all) the Equity Interest of the Person that
owns, directly or indirectly, income producing Underlying Mortgaged Property that is stabilized and
non-transitional.



     “Mezzanine Note” shall mean the original executed promissory note or other evidence of
Mezzanine Loan Indebtedness.



     “Minimum DSCR” shall mean with respect to any Mortgage Asset, at any time, the Minimum
DSCR for the related Underlying Mortgaged Property (a) in the case of Term Loan Collateral for the
Term Loans, as set forth on Schedule 1-A to the Fee Letter and (b) in the case of Revolving
Loan Collateral (including Mixed Collateral) for the Revolving Loans, the Minimum DSCR, determined
by the Administrative Agent in its discretion and set forth in the related Confirmation, which
shall be no less than the Minimum DSCR set forth in Schedule 1-B to the Fee Letter;
provided, however, that all such calculations shall be made taking into account any
senior or pari passu debt or other senior or pari passu obligations, including senior or pari passu
debt or other senior or pari passu obligations secured directly or indirectly by the applicable
Underlying Mortgaged Property.



     “Mixed Collateral” shall mean the portion of the Pledged Mortgage Assets included in
the Collateral with respect to which advances under the Term Loan (if any) are calculated and
determined and, with respect to any future advances under such Collateral that the Administrative
Agent determines to make in its discretion under the Revolving Loan Commitments, with respect to
which Revolving Loans (if any) are determined and calculated; provided, however,
Mixed Collateral shall be limited to the Mortgage Assets identified on Schedule 1.1(d).



     “Moody’s” shall mean Moody’s Investors Service, Inc.



     “Mortgage” shall mean each mortgage, assignment of rents, security agreement and
fixture filing, or deed of trust, assignment of rents, security agreement and fixture filing, or
similar instrument creating and evidencing a Lien on real property, fixtures and other Property and
rights incidental thereto.



     “Mortgage Asset” shall mean a Whole Loan, a Junior Interest, a Mezzanine Loan, a
Bridge Loan, a Preferred Equity Interest, an Equity Asset or, as applicable, a Condominium Loan or
Land Loan, in each case, the Underlying Mortgaged Property for which is included in the categories
for Property Types of Mortgage Assets; provided, however, the portion of any
Mortgage Asset to be pledged to the Administrative Agent shall not include any Retained Interest
(if any).



     “Mortgage Asset Data Summary” shall have the meaning set forth in Section 5.2(h).



     “Mortgage Asset File” shall have the meaning set forth in the Custodial Agreement.



     “Mortgage Asset File Checklist” shall have the meaning set forth in the Custodial
Agreement.



     “Mortgage Asset Security Agreement” shall mean, with respect to any Mortgage Asset,
any contract, instrument or other document related to security for repayment thereof (other than
the related Mortgage, Mortgage Note, Mezzanine Note or any other note, certificate or instrument)
executed by an Obligor and/or others in connection with such Mortgage Asset, including, without
limitation, any security agreement, UCC financing statement, Liens, warranties, guaranty, title
insurance policy, hazard insurance



26









 







policy, chattel mortgage, letter of credit, accounts, bank accounts or certificates of deposit
or other pledged accounts, and any other documents and records relating to any of the foregoing.



     “Mortgage Loan Documents” shall have the meaning set forth in the Custodial Agreement.



     “Mortgage Note” shall mean, that certain original executed promissory note or other
evidence of the Indebtedness of an Obligor under a Whole Loan that is secured by a Mortgage on the
related Underlying Mortgaged Property.



     “Mortgaged Property” shall mean the Commercial Real Estate (including all
improvements, buildings, fixtures, building equipment and personal property thereon and all
additions, alterations and replacements made at any time with respect to the foregoing) and all
other collateral securing repayment of the related debt evidenced by the Mortgage Loan Documents.



     “Mortgagee” shall mean the record holder of a Mortgage Note secured by a Mortgage.



     “Multiemployer Plan” shall mean a Plan that is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.



     “Net Cash Flow” shall mean, with respect to any Underlying Mortgaged Property, for any
period, the net income (or deficit) attributable to such Property for such period, determined in
accordance with GAAP, less the amount of all (a) capital expenditures incurred,
(b) reserves established, (c) leasing commissions paid (other than commissions paid from reserves
held under the Mortgage Loan Documents) and (d) tenant improvements paid during such period (other
than tenant improvements paid from reserves held under the Mortgage Loan Documents) in each case
attributable to such Underlying Mortgaged Property, plus all non–cash charges deducted in
the calculation of such net income.



     “Net Cash Proceeds” shall mean the aggregate cash proceeds, Cash Equivalents and the
Fair Market Value of all other Property and assets received by, or payable to, any Credit Party or
any Subsidiary or Affiliate in respect of any sale or other disposition of any Collateral, net of
(a) direct costs (including, without limitation, legal, accounting and investment banking fees, and
sales commissions) associated therewith, and (b) taxes paid or payable as a result thereof; it
being understood that “Net Cash Proceeds” shall include, without limitation, any cash received upon
the sale or other disposition of any non-cash consideration received by any Credit Party, any
Subsidiary or any Affiliate in any sale or other disposition of any Collateral.



     “Net Income” shall mean, 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 Total Liabilities” shall mean 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” shall have the meaning set forth in the Fee Letter.



     “Non-Recourse Indebtedness” shall mean, 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 (including exceptions relating to bankruptcy, insolvency, receivership, non-approved
transfers



27









 







or other customary or similar events)) is contractually limited to specific assets of such
Person encumbered by a Lien securing such Indebtedness.



     “Non–Table Funded Mortgage Asset” shall mean a Mortgage Asset that is not a Table
Funded Mortgage Asset.



     “Non–Wachovia Assets” shall mean any Mortgage Asset issued, extended or originated by
a Person other than Wachovia Corporation or an Affiliate of Wachovia Corporation.



     “Note” or “Notes” shall mean the Revolving Notes and/or the Term Loan Notes,
collectively, separately or individually, as appropriate, as any shall be amended, restated,
modified or supplemented from time to time.



     “Notice of Borrowing” shall mean a request for a Revolving Loan borrowing pursuant to
Section 2.1(b)(i), as amended, restated, modified or supplemented from time to time. A Form of
Notice of Borrowing is attached as Exhibit 1.1(e).



     “Notice of Conversion/Extension” shall mean the written notice of conversion of a
LIBOR Rate Loan to an Alternate Base Rate Loan or an Alternate Base Rate Loan to a LIBOR Rate Loan,
or extension of a LIBOR Rate Loan, in each case substantially in the form of
Exhibit 1.1(f).



     “Obligations” shall mean, without duplication, all of the obligations, indebtedness
and liabilities of the Credit Parties to the Lenders and the Administrative Agent, whenever
arising, under the Loans, this Agreement, the Notes, any of the other Credit Documents and all of
the other Credit Party-Related Obligations, including principal, interest, fees, reimbursements and
indemnification obligations and other amounts (including, but not limited to, any interest accruing
after the occurrence of a filing of a petition of bankruptcy under the Bankruptcy Code with respect
to any Credit Party, regardless of whether such interest is an allowed claim under the Bankruptcy
Code).



     “Obligor” shall mean, individually and collectively, as the context may expressly
provide or require, the borrowers, mortgagors, obligors or debtors under a Mortgage Asset,
including, but not limited to, any guarantor, any pledgor, any subordinator, any credit support
party, any indemnitor and any Person that is directly or indirectly obligated in respect thereof,
the borrowers, mortgagors, obligors or debtors of any debt, including any guarantor, any pledgor,
any subordinator, any credit support party, any indemnitor and any Person that is directly or
indirectly obligated in respect thereof, senior to the Mortgage Asset, including any of the
foregoing such Persons with respect to the debt secured by any Underlying Mortgaged Property, and
any Person that has not signed the related Mortgage Note, Junior Interest Documents, Mezzanine Note
or other note, certificate or instrument but owns an interest in the related Underlying Mortgaged
Property, which interest has been encumbered to secure such Mortgage Asset.



     “Obligor Reserve Payments” shall mean 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), excluding, however, the Homewood Interest Reserve.



     “OFAC” shall mean The Office of Foreign Assets Control of the U.S. Department of the
Treasury.



     “Off-Balance Sheet Obligations” shall mean, with respect to any Person and its
Consolidated Subsidiaries, as of any date of determination thereof, without duplication and to the
extent not included as



28









 







a liability on the consolidated balance sheet of such Person 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” shall mean, a certificate signed by a Responsible Officer of a
Borrower or a Guarantor, as applicable.



     “Operating Lease” shall mean, as applied to any Person, any lease (including, without
limitation, leases which may be terminated by the lessee at any time) of any Property (whether
real, personal or mixed) which is not a Capital Lease other than any such lease in which that
Person is the lessor.



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



     “Original Agreement” shall have the meaning set forth in the Recitals of this
Agreement.



     “Original Kodiak Indenture” shall have the meaning set forth in the definition of
“Eligible Subordinated Debt.”



     “Originator” shall mean, with respect to each Mortgage Asset, the Person who
originated such Mortgage Asset.



     “Other Taxes” shall mean all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Credit Document or from the execution, delivery or enforcement of, or otherwise
with respect to, this Agreement or any other Credit Document.



     “Participant” has the meaning assigned to such term in clause (d) of Section 10.6.



     “Participation Agreement” shall mean, with respect to any Junior Interest, any
executed participation agreement, sub–participation agreement, intercreditor, servicing, loan or
administrative agreement or any agreement that is similar to any of the foregoing agreements under
which the Junior Interest is created, evidenced, issued, serviced, administered and/or guaranteed.



     “Participation Certificate” shall mean, with respect to any Junior Interest, an
executed certificate, note, instrument or other document representing the interest, participation
interest or sub–participation interest granted under a Participation Agreement.



     “Patriot Act” shall mean The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of Pub. L.
No. 107-56 (signed into law October 26, 2001)), as amended, restated modified or supplemented from
time to time.



29









 





     “paying Borrower” shall have the meaning set forth in Section 10.29(b).



     “Payment Date” shall mean (a) the 28th day of each calendar month;
provided, however, if such day is not a Business Day (i) if the next Business Day
occurs during the succeeding month, the previous Business Day and (ii) if the next Business Day
does not occur during the succeeding month, the next succeeding Business Day and (b) as to any Loan
which is the subject of a mandatory prepayment required pursuant to Section 2.5(b), the date on
which such mandatory prepayment is due.



     “PBGC” shall mean the Pension Benefit Guaranty Corporation established pursuant to
Subtitle A of Title IV of ERISA.



     “Permitted Indebtedness” shall mean, with respect to Preferred Equity Interests or
Equity Assets, as applicable, Indebtedness that is permitted under the related Mortgage Loan
Documents and disclosed in writing to the Administrative Agent in a Confirmation.



     “Permitted Liens” shall mean 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 Requirements of 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 Security Documents and (d) in the case of the Mortgage Assets only and not
any Borrower’s interest therein, with respect to any Underlying Mortgaged Property, Liens which are
permitted pursuant to the terms of the Mortgage Loan Documents.



     “Person” shall mean any natural person, corporation, limited liability company, trust,
joint venture, association, company, partnership, Governmental Authority or other entity.



     “Plan” shall mean, as of any date of determination, any employee benefit plan which is
covered by Title IV of ERISA and in respect of which any Credit Party or a Commonly Controlled
Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.



     “Pledge Agreements” shall mean each Pledge and Security Agreement and the
Equity/Preferred Equity Pledge and Security Agreement, as each such agreement may be amended,
modified, restated or supplemented from time to time.



     “Pledge and Security Agreement” shall mean, individually or collectively, as the
context may require, (a) the First Amended and Restated Pledge and Security Agreement, dated as of
the Restatement Date, by ARSR for the benefit of the Lenders and the Administrative Agent, and (b)
the First Amended and Restated Pledge and Security Agreement, dated as of the Restatement Date, by
Arbor ESH Holdings LLC for the benefit of the Lenders and the Administrative Agent, as each such
agreement may be amended, modified, waived, supplemented, extended, restated or replaced from time
to time.



     “Pledged Collateral” shall have the meaning given to such term in the Pledge and
Security Agreement.



     “Pledged Mortgage Asset” shall mean the Mortgage Assets that have been pledged to the
Administrative Agent as Collateral under the Security Documents.



30









 





     “Pledgor” shall mean Arbor Realty SR, Inc., a Maryland corporation, and Arbor ESH
Holdings LLC, a Delaware limited liability company, together with each of their successors and
assigns.



     “Pooling and Servicing Agreements” shall mean any and all pooling and servicing
agreements governing servicing and other matters entered into in connection with a securitization
of one (1) or more interests that are senior, junior or pari passu with a Mortgage Asset.



     “Preferred Equity Grantor” shall mean the entity in which a Preferred Equity Interest
represents an Investment.



     “Preferred Equity Interest” shall mean all (or, if approved by the Administrative
Agent in its discretion, less than all) of the Equity Interests representing the preferred equity
interest in an entity that owns, directly or indirectly, stabilized and non-transitional Commercial
Real Estate, including, but not limited to, all equity interests representing a dividend on any of
the Equity Interests of the Preferred Equity Grantor or representing a distribution or return of
capital upon or in respect of the Equity Interests of the Preferred Equity Grantor, in each case as
it relates to a Preferred Equity Interest; provided, however, (a) such Preferred
Equity Interest must contain a synthetic maturity feature acceptable to the Administrative Agent in
its discretion, (b) the funding of the Preferred Equity Interest is subject to regulatory and
compliance criteria, and (c) the Administrative Agent reserves the right to require that each
Preferred Equity Interest be acquired by and pledged to the Administrative Agent by a bankruptcy
remote special purpose entity, which entity shall join the Credit Documents as a co–Borrower
pursuant to a Borrower Joinder Agreement as a condition to the pledge of the Preferred Equity
Interest, and for the Equity Interests in such Borrower to be pledged to the Administrative Agent
as additional Collateral for the Obligations. All references to, and calculations required to be
made in respect of, any principal and/or interest associated with any Mortgage Asset, shall, with
respect to Mortgage Assets consisting of Preferred Equity Interests, be deemed to refer,
respectively, to the face amount of such Preferred Equity Interest and the preferred return or
yield (however such terms are denominated, as set forth in the related Mortgage Loan Documents),
whether payable or accrued.



     “Preferred Equity Interest Documents” shall mean the Authority Documents of the
Preferred Equity Grantor, together with a certificate, instrument or other tangible evidence of the
Equity Interests in the Preferred Equity Grantor.



     “Prime Pledged Mortgage Asset” shall mean the Equity Asset pledged to the
Administrative Agent that relates to the Underlying Mortgaged Properties involving the Prime Retail
Outlets and more specifically described in the related Underwriting Package and Confirmation.



     “Prime Rate” shall have the meaning set forth in the definition of Alternate Base
Rate.



     “Principal Reduction Date” shall have the meaning set forth in Section 2.2(b).



     “Private Information” shall have the meaning set forth in Section 5.15.



     “Property” shall mean any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed, and whether tangible or intangible; provided that the term
“Property” or “Properties” as used in Section 3.10 shall include only the right or interest in or
to property of any kind whatsoever, whether real, personal or mixed, and whether tangible or
intangible of any Credit Party.



     “Property Type” shall mean, with respect to a Mortgage Asset, such Mortgaged
Property’s classification as one of the following: multifamily, retail, office, industrial, hotel
or self–storage facility.



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     “PSA Servicer” shall mean a third party servicer (other than a Borrower) servicing all
or a portion of the Collateral under a Pooling and Servicing Agreement.



     “Public Information” shall have the meaning set forth in Section 5.15.



     “Rating Agencies” shall mean each of S&P, Moody’s, Fitch and any other nationally
recognized statistical rating agency that has been requested to issue a rating with respect to the
matter at issue, including successors of the foregoing.



     “Register” shall have the meaning set forth in Section 10.6(c).



     “Registration Rights Agreement” means that certain Arbor Realty Trust, Inc.
Registration Rights Agreement, dated as of the Restatement Date, by and between ART and Wachovia,
as amended, restated, modified or supplemented from time to time.



     “REIT” shall mean a “real estate investment trust” within the meaning of the Code.



     “Related Parties” shall mean, with respect to any Person, such Person’s Subsidiaries
and Affiliates and the partners, directors, officers, employees, agents and advisors of such Person
and of such Person’s Subsidiaries and Affiliates.



     “Related Party Loan” shall mean 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” shall mean 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.



     “Release Amount” shall mean, (i) with respect to any Collateral other than the ESH
Pledged Mortgage Assets or the Additional Term Loan Collateral, the Allocated Term Loan Amount for
such Collateral, plus, if applicable, the Allocated Revolving Loan Amount allocated to such
Collateral, (ii) with respect to the ESH Pledged Mortgage Assets, the Total ESH Release Amount,
(iii) with respect to the Additional Term Loan Collateral other than the Alpine Asset, the
Additional Term Loan Collateral Release Amount applicable to such Pledged Mortgage Asset, and (iv)
with respect to the Alpine Asset, the Additional Term Loan Collateral Release Amount applicable to
the Alpine Asset plus the ESH Release Amount applicable to the Alpine Asset.



     “Remedial Work” shall mean 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.



     “REMIC” shall mean a real estate mortgage investment conduit.



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     “REO Property” shall mean an Underlying Mortgaged Property acquired by a Credit Party
or a nominee thereof through foreclosure, acceptance of a deed-in-lieu of foreclosure or otherwise
in accordance with Requirements of Law.



     “Reorganization” shall mean, with respect to any Multiemployer Plan, the condition
that such Plan is in reorganization within the meaning of such term as used in Section 4241 of
ERISA.



     “Reportable Event” shall mean any of the events set forth in Section 4043(c) of ERISA,
other than those events as to which the thirty-day notice period is waived under PBGC Reg. §4043.



     “Required Lenders” shall mean, as of any date of determination, Lenders holding at
least a majority of (a) the outstanding Revolving Commitments and Term Loan or (b) if the Revolving
Commitments have been terminated, the outstanding Loans; provided, however, that if
any Lender shall be a Defaulting Lender at such time, then there shall be excluded from the
determination of Required Lenders the Obligations owing to such Defaulting Lender and such
Defaulting Lender’s Commitments.



     “Required Payments” shall mean all payments required under Section 2.5(b)(iii) 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.



     “Requirement of Law” shall mean, as to any Person, (a) the Authority Documents of such
Person, and (b) all international, foreign, Federal, state and local statutes, treaties, rules,
guidelines, regulations, ordinances, codes, executive orders, and administrative or judicial
precedents or authorities, including the interpretation or administration thereof by any
Governmental Authority charged with the enforcement, interpretation or administration thereof, and
all applicable administrative orders, directed duties, requests, licenses, authorizations and
permits of, and agreements with, any Governmental Authority (in each case whether or not having the
force of law); in each case applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.



     “Responsible Officer” shall mean, for any Credit Party, any duly authorized officer
thereof with direct responsibility for the administration of the Credit Documents, and also, with
respect to any particular matter, any other duly authorized officer with knowledge of or
familiarity with the particular subject matter and, in each case, the Administrative Agent has an
incumbency certificate indicating such officer is a duly authorized officer thereof.



     “Restatement Date” shall mean the date of this Agreement.



     “Restricted Payment” shall mean (a) any dividend or other distribution, direct or
indirect, on account of any Equity Interests of any Credit Party or any Consolidated Subsidiary of
any Credit Party 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 any Credit Party or any Consolidated Subsidiary of any Credit
Party 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 any Credit
Party or any Consolidated Subsidiary of any Credit Party now or hereafter outstanding.



     “Retained Interest” shall mean (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,



33









 







contributions, payments or credits with respect to such Mortgage Asset, (b) all duties,
obligations and liabilities of a Borrower under any Mortgage Asset or any related Interest Rate
Protection Agreement, including but not limited to any payment or indemnity obligations and
(c) with respect to any Mortgage Asset that is pledged or to be pledged to the Administrative
Agent, (i) all of the obligations, if any, of the agent(s), trustee(s), servicer(s), administrators
or other similar Persons 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” shall mean, with respect to each Revolving Lender, the
commitment of such Revolving Lender to make Revolving Loans in an aggregate principal amount at any
time outstanding up to an amount equal to such Revolving Lender’s Revolving Commitment Percentage
of the Revolving Committed Amount.



     “Revolving Commitment Percentage” shall mean, for each Lender, the percentage
identified as its Revolving Commitment Percentage in its Lender Commitment Letter or in the
Assignment and Assumption pursuant to which such Lender became a Lender hereunder, as such
percentage may be modified in connection with any assignment made in accordance with the provisions
of Section 10.6(c).



     “Revolving Committed Amount” shall have the meaning set forth in Section 2.1(a).



     “Revolving Lender” shall mean, as of any date of determination, a Lender holding a
Revolving Commitment or a Revolving Loan on such date.



     “Revolving Loan” shall have the meaning set forth in Section 2.1(a).



     “Revolving Loan Collateral” shall mean the portion of the Pledged Mortgage Assets
included in the Collateral (including, without limitation, the portion of any Mixed Collateral with
respect to which Revolving Loan advances, if any, are calculated and determined) with respect to
which Revolving Loans (if any) are calculated and determined.



     “Revolving Note” or “Revolving Notes” shall mean the first amended and
restated promissory notes of the Borrowers provided pursuant to Section 2.1(f) in favor of any of
the Revolving Lenders evidencing the Revolving Loans provided by any such Revolving Lender pursuant
to Section 2.1(a), individually or collectively, as appropriate, as such promissory notes may be
amended, modified, extended, restated, replaced, or supplemented from time to time.



     “S&P” shall mean Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.



     “Sale” shall have the meaning set forth in Section 5.7(j).



     “Sanctioned Entity” shall mean (a) a country or a government of a country, (b) an
agency of the government of a country, (c) an organization directly or indirectly controlled by a
country or its government, or (d) a person or entity resident in or determined to be resident in a
country, that is subject to a country sanctions program administered and enforced by OFAC described
or referenced at http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published
from time to time.



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     “Sanctioned Person” shall mean a person named on the list of Specially Designated
Nationals maintained by OFAC available at or through
http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published from time to
time.



     “Sarbanes-Oxley” shall mean the Sarbanes-Oxley Act of 2002, as amended or modified
from time to time.



     “SEC” shall mean the Securities and Exchange Commission or any successor Governmental
Authority.



     “Secured Parties” shall mean the Administrative Agent and the Lenders.



     “Securities Act” shall mean the Securities Act of 1933, together with any amendment
thereto or replacement thereof and any rules or regulations promulgated thereunder.



     “Securities Laws” shall mean the Securities Act, the Exchange Act, Sarbanes-Oxley, the
applicable accounting and auditing principles, rules, standards and practices promulgated, approved
or incorporated by the SEC or the Public Company Accounting Oversight Board, and applicable blue
sky and state securities laws and regulations, as each of the foregoing may be amended and in
effect on any applicable date hereunder.



     “Security Agreement” shall mean the First Amended and Restated Security Agreement,
dated as of the Restatement Date, executed by Borrowers in favor of the Administrative Agent, for
the benefit of the Secured Parties, as amended, modified, extended, restated, replaced, or
supplemented from time to time in accordance with its terms.



     “Security Documents” shall mean the Security Agreement, the Account Control Agreement,
the Custodial Agreement, all Assignments, all Irrevocable Instructions, the Homewood Account
Control Agreement, the Intercreditor Agreement, the Pledge Agreements and all other agreements,
documents and instruments relating to, arising out of, or in any way connected with any of the
foregoing documents or granting to the Administrative Agent Liens or security interests to secure,
inter alia, the Obligations whether now or hereafter executed and/or filed, each as may be amended
from time to time in accordance with the terms hereof, executed and delivered in connection with
the granting, attachment and perfection of the Administrative Agent’s security interests and Liens
arising thereunder, including, without limitation, UCC financing statements, as such agreements or
instruments are amended, restated, modified or supplemented from time to time.



     “Servicer” shall mean a Person (other than a Borrower) servicing all or a portion of a
Mortgage Asset under a Servicing Agreement, which Servicer shall be acceptable to the
Administrative Agent in its reasonable discretion.



     “Servicer Account” shall mean any account established by a Servicer or a PSA Servicer
in connection with the servicing of the Mortgage Asset.



     “Servicer Default” shall have the meaning set forth in Section 9.12.



     “Servicer Redirection Notice” shall mean a notice from a Borrower to a Servicer,
substantially in the form of Exhibit 1.1(k) attached hereto, duly executed by the parties
thereto.



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     “Servicing Agreement” shall mean an agreement entered into by the applicable Borrower
and a third party for the servicing of a Mortgage Asset, the form and substance of which has been
approved in writing by the Administrative Agent in its reasonable discretion.



     “Servicing Fee” shall have the meaning set forth in Section 9.9.



     “Servicing File” shall mean, with respect to each Mortgage Asset, the file retained by
a Borrower consisting of the originals of all documents in the Mortgage Asset File that are not
delivered to the Custodian and copies of all documents in the Mortgage Asset File set forth in
Section 3.1 of the Custodial Agreement.



     “Servicing Records” shall have the meaning set forth in Section 9.2.



     “Single Employer Plan” shall mean any Plan that is not a Multiemployer Plan.



     “Solvent” shall mean, 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.



     “Stock Exchange” shall have the meaning set forth in Section 3.38.



     “Subsidiary” shall mean, as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having such power only by
reason of the happening of a contingency) to elect a majority of the board of directors or other
managers of such corporation, limited liability company, partnership or other entity are at the
time owned, or the management of which is otherwise controlled, directly or indirectly through one
or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a
“Subsidiary” or to “Subsidiaries” in this Agreement shall refer to a Subsidiary or Subsidiaries of
any Credit Party.



     “Table Funded Mortgage Asset” shall mean a Mortgage Asset which is pledged to the
Administrative Agent simultaneously with the origination or acquisition thereof, which origination
or acquisition, pursuant to a Borrower’s request, is financed with the proceeds of a Revolving Loan
and paid directly to a title company or other settlement agent, in each case, approved in writing
by the Administrative Agent in its discretion, for disbursement to the parties entitled thereto in
connection with such origination or acquisition. A Mortgage Asset shall cease to be a Table Funded
Mortgage Asset after the Custodian has delivered a Trust Receipt (along with a completed Mortgage
Asset File Checklist attached thereto) to the Administrative Agent certifying its receipt of the
Mortgage Asset File therefor.



     “Table Funded Trust Receipt” shall mean a Trust Receipt in the form of
Annex 2–B to the Custodial Agreement.



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     “Tangible Net Worth” shall mean net worth as determined in accordance with GAAP.



     “Target Reduced Principal Amount” shall have the meaning set forth in Section 2.2(b)
(as set forth in the Fee Letter).



     “Taxes” shall mean all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.



     “Term Loan” shall have the meaning set forth in Section 2.2(a).



     “Term Loan Collateral” shall mean the portion of the Pledged Mortgage Assets included
in the Collateral (including, without limitation, the portion of any Mixed Collateral with respect
to which Term Loan advances, if any, are calculated and determined) with respect to which advances
under the Term Loan (if any) are calculated and determined.



     “Term Loan Commitment” shall mean, with respect to each Term Loan Lender, the
commitment of such Term Loan Lender to make its portion of the Term Loan in a principal amount
equal to such Term Loan Lender’s Term Loan Commitment Percentage of the Term Loan Committed Amount.



     “Term Loan Commitment Percentage” shall mean, for any Term Loan Lender, the percentage
identified as its Term Loan Commitment Percentage in its Lender Commitment Letter, or in the
Assignment and Assumption pursuant to which such Lender became a Lender hereunder, as such
percentage may be modified in connection with any assignment made in accordance with the provisions
of Section 10.6(c).



     “Term Loan Committed Amount” shall have the meaning set forth in Section 2.2(a).



     “Term Loan Lender” shall mean a Lender holding a Term Loan Commitment or a portion of
the outstanding Term Loan.



     “Term Loan Note” or “Term Loan Notes” shall mean the first amended and
restated promissory notes of the Borrowers (if any) in favor of any of the Term Loan Lenders
evidencing the portion of the Term Loan provided by any such Term Loan Lender pursuant to
Section 2.2(a), individually or collectively, as appropriate, as such promissory notes may be
amended, modified, extended, restated, replaced, or supplemented from time to time.



     “Test Period” “shall mean the immediately preceding calendar quarter.



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



     “Total ESH Release Amount”: The aggregate ESH Release Amounts for all ESH Allocated
Assets, which cumulative amount is equal to $15,000,000. For purposes hereof, so long as (a) no
Underlying Mortgaged Properties for the related Pledged Mortgage Asset are being released in
connection with the related payment, prepayment or reduction, (b) the related Pledged Mortgage
Asset is not a Foreclosed Mortgage Asset or REO Property and (c) no Default or Event of Default has
occurred and is continuing, the first dollars received on or after the Restatement Date with
respect to an ESH Allocated Asset will be applied to the ESH Release Amount, or, if (x) any
Underlying Mortgaged Properties for the related Pledged Mortgage Asset are being released in
connection with the related payment, prepayment or reduction, (y) the related Pledged Mortgage
Asset is not a Foreclosed Mortgage



37









 







Asset or REO Property and (z) no Default or Event of Default has occurred and is continuing, the
dollars received on or after the Restatement Date with respect to an ESH Allocated Asset will be
applied, on a pro rata basis, to (i) the Allocated Term Loan Amount that is unrelated to the ESH
Release Amount and (ii) that portion of the Allocated Term Loan Amount that is ESH Release Amount;
provided, that with respect to an ESH Allocated Asset that becomes REO Property, any
amounts received in addition to payments required pursuant to Section 2.5(b)(viii) hereof shall be
applied toward the ESH Release Amount for such ESH Allocated Asset. In all other circumstances,
dollars received on or after the Restatement Date with respect to an ESH Allocated Asset will be
applied to the ESH Release Amount last.



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



     “Tranche” shall mean the collective reference to (a) LIBOR Rate Loans whose Interest
Periods begin and end on the same day and (b) Alternate Base Rate Loans made on the same day.



     “Transactions” shall mean the closing of this Agreement, the other Credit Documents
and the other transactions contemplated hereby to occur in connection with such closing (including,
without limitation, the initial borrowings under the Credit Documents and the payment of fees and
expenses in connection with all of the foregoing).



     “Transfer Effective Date” shall have the meaning set forth in each Assignment and
Assumption.



     “Trust Preferred Debt” shall mean (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”, (ii) has enforceable subordination
provisions, and (iii) has a maturity date no earlier than the date that is six (6) months following
the Maturity Date.



     “Trust Receipt” shall have the meaning set forth in the Custodial Agreement.



     “Type” shall mean, as to any Loan, its nature as an Alternate Base Rate Loan or LIBOR
Rate Loan, as the case may be.



     “UCC” shall mean the Uniform Commercial Code from time to time in effect in any
applicable jurisdiction.



     “Underlying Mortgaged Property” shall mean (a) in the case of a Whole Loan, the
Mortgaged Property securing the Whole Loan, (b) in the case of a Junior Interest, the Mortgaged
Property securing such Junior Interest (if the Junior Interest is of the type described in
clause (b) of the definition thereof), or the Mortgaged Property securing the mortgage loan in
which such Junior Interest represents a participation (if the Junior Interest is of the type
described in clause (a) of the definition thereof), (c) in the case of a Mezzanine Loan or a Junior
Interest in a Mezzanine Loan, the Mortgaged Property that is owned directly or indirectly by the
Person the Equity Interests of which are pledged as collateral security for such Mezzanine Loan,
(d) in the case of a Bridge Loan, a Condominium Loan or a Land Loan, depending on such Bridge
Loan’s, a Condominium Loan’s or a Land Loan’s classification as a Whole Loan, Junior Interest or
Mezzanine Loan, the Underlying Mortgaged Property for the Whole Loan, Junior Loan or Mezzanine
Loan, as applicable, (e) in the case of a Preferred Equity Interest, the Mortgaged



38









 







Property that is owned directly or indirectly by the Preferred Equity Grantor and (f) in the
case of an Equity Asset, the Mortgaged Property that is owned directly or indirectly by the Equity
Asset Grantor.



     “Underwriting Package” shall mean, any internal document prepared by the applicable
Borrower for its evaluation of a Mortgage Asset, to include at a minimum the data required in the
relevant Confirmation. In addition, with respect to each Mortgage Asset, the Underwriting Package
shall include, to the extent applicable, (a) a copy of the appraisal, (b) the current rent roll,
(c) a minimum of two (2) years of property level financial statements to the extent available, (d)
the current financial statement of the Obligor on the Commercial Real Estate Loan, (e) the complete
Mortgage Asset File, (f) any financial analysis, site inspection, market studies and any other
diligence conducted by a Borrower, and (g) such further documents or information as the
Administrative Agent may request. With respect to Bridge Loans and any other Mortgage Asset with
construction, the Underwriting Package shall also include the Construction Draw Deliveries for each
Extension of Credit.



     “Voting Interests” shall mean, 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” shall mean Wachovia Bank, National Association, a national banking
association, together with its successors and/or assigns.



     “Wachovia Assets” shall mean, any Mortgage Asset issued, extended or originated by
Wachovia Corporation or an Affiliate of Wachovia Corporation.



     “Wachovia Derivatives Contract” shall mean any Derivatives Contract between a Credit
Party and a Derivatives Contract Provider, as amended, modified, extended, restated, replaced, or
supplemented from time to time.



     “Warrant Agreements” shall mean the three (3) separate Common Stock Purchase Warrants,
issued on the Restatement Date, by ART for the benefit of Wachovia, as amended, restated, modified
or supplemented from time to time.



     “Warehouse Lender’s Release Letter” shall mean a letter in the form of Exhibit
1.1(l) hereto, duly executed by the applicable warehouse lender, as such agreement is amended,
modified, restated, replaced, waived, substituted, supplemented or extended from time to time.



     “Whole Loan” shall mean a performing Commercial Real Estate whole loan secured by a
first priority security interest in stabilized and non-transitional Underlying Mortgaged Property.



     “Working Capital Facility” shall mean that certain facility entered into and evidenced
by, among other agreements, the Working Capital Facility Loan Agreement, as such agreements are
amended, modified, restated, replaced, waived, substituted, supplemented or extended from time to
time.



     “Working Capital Facility Loan Agreement” shall mean that certain First Amended and
Restated Revolving Loan Agreement, dated as of June 8, 2009, among Wachovia, Arbor Realty Trust,
Inc., Arbor Realty GPOP, Inc., Arbor Realty LPOP, Inc., Arbor Realty Limited Partnership, Arbor
Realty SR, Inc., Arbor Realty Collateral Management, LLC, each other party that becomes a party
thereto, each of the guarantors that becomes a party thereto, and each other lender that becomes a
party thereto, as such agreement is amended, modified, restated, replaced, waived, substituted,
supplemented or extended from time to time.



39









 





     Section 1.2 Other Definitional Provisions.



     The definitions of terms herein shall apply equally to the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to
have the same meaning and effect as the word “shall.” Unless the context requires otherwise
(a) any definition of or reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein), (b) any reference herein to any Person shall be
construed to include such Person’s successors and assigns, (c) the words “herein,” “hereof” and
“hereunder,” and words of similar import, shall be construed to refer to this Agreement in its
entirety and not to any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall,
unless otherwise specified, refer to such law or regulation as amended, modified or supplemented
from time to time and (f) the word “asset” shall be construed to have the same meaning and effect
as Property.



     Section 1.3 Accounting Terms.



     Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements required to be
delivered hereunder shall be prepared in accordance with GAAP applied on a basis consistent with
the most recent audited Consolidated financial statements of the Borrowers and the Guarantors
delivered to the Lenders; provided that, if the Borrowers or the Guarantors shall notify
the Administrative Agent that they wish to amend any definitions or covenant incorporated in
Section 5.9 to eliminate the effect of any change in GAAP on the operation of any such definition
or provision and the Required Lenders consent to such amendment, then the Borrowers’ and the
Guarantors’ compliance with such provisions shall be determined on the basis of GAAP in effect
immediately before the relevant change in GAAP became effective, until either such notice is
withdrawn or such definition or provision is amended in a manner satisfactory to the Borrowers, the
Guarantors, the Administrative Agent and the Required Lenders.



     The Borrowers and the Guarantors shall deliver to the Administrative Agent and each Lender at
the same time as the delivery of any annual or quarterly financial statements given in accordance
with the provisions of Section 5.1, (a) a description in reasonable detail of any material change
in the application of accounting principles employed in the preparation of such financial
statements from those applied in the most recently preceding quarterly or annual financial
statements as to which no objection shall have been made in accordance with the provisions above
and (b) a reasonable estimate of the effect on the financial statements on account of such changes
in application.



     Section 1.4 Time References.



     Unless otherwise specified, all references herein to times of day shall be references to
Eastern time (daylight or standard, as applicable). Reference to day or days without further
qualification means calendar days. 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 1.5 Execution of Documents.



     Unless otherwise specified, all Credit Documents and all other certificates executed in
connection therewith must be signed by a Responsible Officer. 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 the Credit Documents with respect to the Credit
Parties, the Administrative Agent and the Lenders 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.



     Section 1.6 UCC Terms.



     All terms used in Articles 8 and 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 8 and 9.



     Section 1.7 References to Discretion.



     Reference herein or in any Credit Document to the Administrative Agent’s or a Lender’s
discretion shall mean, unless otherwise stated herein or therein, the Administrative Agent’s or a
Lender’s (as the case may be) 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 to or approved by (or any similar language
or terms) the Administrative Agent or a Lender (as the case may be), 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 (as the case may be), and such decision shall be final
and conclusive, except as may be otherwise specifically provided herein.



     Section 1.8 References to Payment.



     Unless otherwise specifically provided herein, all payments due by any Credit Party to the
Administrative Agent or the Lenders shall be due by 3:00 p.m. on the date due.



ARTICLE II




THE LOANS; AMOUNT AND TERMS




     Section 2.1 Future Funding Loans.




     (a) Revolving Commitment. During the Commitment Period, subject to the terms
and conditions hereof, each Revolving Lender severally, but not jointly, agrees to make
credit loans in Dollars (“Revolving Loans”) to the Borrowers from time to time in an
aggregate principal amount of up to THIRTY FIVE MILLION TWO HUNDRED SEVENTY THOUSAND NINE
HUNDRED NINETY FIVE DOLLARS ($35,270,995.00) (as such aggregate maximum amount may
be reduced from time to time as provided in Section 2.4, the “Revolving Committed
Amount”); provided, however, that (i) with regard to each Revolving
Lender individually, the sum of such Revolving Lender’s Revolving Commitment Percentage of
the aggregate principal amount of outstanding Revolving Loans shall not exceed such
Revolving Lender’s Revolving Commitment and (ii) with regard to the Revolving Lenders
collectively, the sum of the aggregate principal amount of outstanding Revolving Loans shall
not exceed the Revolving Committed Amount then in effect. No Revolving Loan shall be made
by any Revolving Lender if (i) such



41









 







Revolving Loan and the Revolving Loan Collateral therefor are not approved by the
Administrative Agent in its discretion, (ii) before or after giving effect to such Revolving
Loan, the Availability is or would be negative and (iii) the conditions to Extensions of
Credit in Section 4.2 are not satisfied. Revolving Loans may consist of Alternate Base Rate
Loans or LIBOR Rate Loans, or a combination thereof, as the Borrowers may request, and may
be repaid in accordance with the provisions hereof; provided, however, the
Revolving Loans made on the Restatement Date or any of the three (3) Business Days following
the Restatement Date, may only consist of Alternate Base Rate Loans unless the Borrowers
deliver a funding indemnity letter, substantially in the form of Exhibit 2.1(a),
reasonably acceptable to the Administrative Agent not less than three (3) Business Days
prior to the Restatement Date. LIBOR Rate Loans shall be made by each Revolving Lender at
its LIBOR Lending Office and Alternate Base Rate Loans at its Domestic Lending Office.




     (b) Revolving Loan Borrowings.




     (i) Notice of Borrowing.




     (1) The Borrowers may request Revolving Loans for the purpose of
financing unfunded future funding obligations under Mixed Collateral set
forth on Schedule 2.1(a) that are Eligible Assets and for no other
purpose. The Borrowers shall request a Revolving Loan borrowing by
delivering a written Notice of Borrowing (or telephone notice promptly
confirmed in writing by delivery of a written Notice of Borrowing, which
delivery may be by Electronic Transmission) to the Administrative Agent
along with a Compliance Certificate, Borrower Asset Schedule and
Underwriting Package for the related Eligible Asset(s) to be financed not
later than (A) twelve (12) Business Days for Non-Wachovia Assets and (B)
seven (7) Business Days for Wachovia Assets from the delivery of the
applicable Notice of Borrowing. Each such Notice of Borrowing shall be
irrevocable and shall specify (A) that a Revolving 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) whether the borrowing
shall be comprised of Alternate Base Rate Loans, LIBOR Rate Loans or a
combination thereof, and if LIBOR Rate Loans are requested, the Interest
Period(s) therefor, (E) the applicable Borrower and the Eligible Asset to be
financed and (F) a calculation of Availability. If the Borrowers shall fail
to specify in any such Notice of Borrowing (1) an applicable Interest Period
in the case of a LIBOR Rate Loan, then such notice shall be deemed to be a
request for an Interest Period of one month, or (2) the Type of Revolving
Loan requested, then such notice shall be deemed to be a request for a
one-month LIBOR Rate Loan hereunder.




     (2) The Administrative Agent shall notify the applicable Borrower in
writing of the Administrative Agent’s tentative approval (and the proposed
Allocated Revolving Loan Amount for each Eligible Asset) or final
disapproval of each proposed Eligible Asset within, (i) in the case of
Non–Wachovia Assets, ten (10) Business Days (or such greater time as the
Administrative Agent determines in its discretion for multiple assets or
assets with multiple Mortgaged Properties) and, (ii) in the case of Wachovia
Assets, five (5) Business Days (or such greater time as the Administrative
Agent determines in its discretion for multiple assets or assets with
multiple Mortgaged Properties) after its receipt of the Notice of Borrowing,
the Borrower Asset Schedule, the Compliance Certificate, the complete
Underwriting Package and any supplemental requests



42









 







(requested orally or in writing) relating to such proposed Eligible
Asset. Unless the Administrative Agent notifies the Borrowers in writing of
the Administrative Agent’s approval of such proposed Eligible Asset within
the applicable period, the Administrative Agent shall be deemed not to have
approved such proposed Eligible Asset. The Administrative Agent in its
discretion may waive, shorten or increase any of the applicable time periods
for the review of proposed Eligible Assets or the delivery of documents.




     (3) Provided that the Administrative Agent on behalf of the Secured
Parties has tentatively agreed to finance the Eligible Asset described in
the Notice of Borrowing and the proposed Allocated Revolving Loan Amount is
acceptable to the applicable Borrower, the applicable Borrower shall forward
to the Administrative Agent, via Electronic Transmission, at least two (2)
Business Days prior to the requested Borrowing Date (which must be received
by the Administrative Agent no later than 10:00 a.m. two (2) Business Days
prior to the requested Borrowing Date) an executed confirmation for each
Eligible Asset, substantially in the form of Exhibit 2.1(b) attached
hereto (a “Confirmation”). The Confirmation shall specify the
Allocated Revolving Loan Amount for the related Eligible Asset and any
additional terms or conditions of the related Revolving Loan not
inconsistent with this Agreement. The Confirmation shall be irrevocable.
The delivery of the Confirmation to the Administrative Agent shall be deemed
to be a certification by the applicable Borrower that, among other things,
all conditions precedent to such Revolving Loan set forth in Articles II and
IV have been satisfied (except the Administrative Agent’s consent). Unless
otherwise agreed in writing, upon receipt of the Confirmation, the
Administrative Agent, on behalf of the Secured Parties, may, in the
Administrative Agent’s discretion, agree to enter into the requested
Revolving Loan with respect to an Eligible Asset, and such agreement shall
be evidenced by the Administrative Agent’s signature on the Confirmation.
Any Confirmation executed by the Administrative Agent shall be deemed to
have been received by the applicable Borrower on the date actually received
by the applicable Borrower.




     (4) Upon receipt of the Confirmation executed by the Administrative
Agent, (i) the applicable Borrower shall release or cause to be released to
the Custodian in accordance with the Custodial Agreement (1) in the case of
a Non–Table Funded Mortgage Asset, no later than 3:00 p.m. two (2) Business
Days prior to the requested Borrowing Date, and (2) in the case of a Table
Funded Mortgage Asset, no later than 1:00 p.m. three (3) Business Days
following the applicable Borrowing Date, the Mortgage Asset File pertaining
to each Eligible Asset to be financed by the Revolving Lenders, and (ii) the
applicable Borrower shall deliver to the Custodian, in connection with the
applicable delivery under clause (i) above, a Custodial Identification
Certificate and a Mortgage Asset File Checklist required under Section 3.2
of the Custodial Agreement.




     (5) Each Confirmation, together with this Agreement, shall constitute
conclusive evidence of the terms agreed between the Administrative Agent and
the applicable Borrower with respect to the Revolving Loan to which the
Confirmation relates, and the applicable Borrower’s acceptance of the
related proceeds shall constitute the applicable Borrower’s agreement to the
terms of such Confirmation. It is the intention of the parties that each
Confirmation shall not be separate from this Agreement but shall be made a
part of this Agreement.



43









 






To the extent of a conflict between this Agreement and the related
Confirmation, the Confirmation shall control.




     (6) Pursuant to the Custodial Agreement, the Custodian shall deliver to
the Administrative Agent and the applicable Borrower by 11:00 a.m. on the
Borrowing Date for each Non–Table Funded Mortgage Asset a Trust Receipt
(along with a completed Mortgage Asset File Checklist attached thereto) and
an Asset Schedule and Exception Report relating to the Basic Mortgage Asset
Documents with respect to the Eligible Assets that the applicable Borrower
has requested the Revolving Lenders to finance on such Borrowing Date. With
respect to each Table Funded Mortgage Asset, the applicable Borrower shall
cause the Bailee to deliver to the Custodian with a copy to the
Administrative Agent no later than 10:00 a.m. on the Borrowing Date by
facsimile the related Basic Mortgage Asset Documents, the insured closing
letter (if any), the escrow instructions (if any), a fully executed Bailee
Agreement, a Bailee’s Trust Receipt issued by the Bailee thereunder and such
other evidence satisfactory to the Administrative Agent in its discretion
that all documents necessary to effect a pledge of the related Eligible
Asset and the related Collateral to the Administrative Agent on behalf of
the Secured Parties have been delivered to Bailee. With respect to each
Table Funded Mortgage Asset, the Custodian shall deliver to the
Administrative Agent a Table Funded Trust Receipt no later than 1:00 p.m. on
the Borrowing Date, which documents shall be acceptable to the
Administrative Agent in its discretion. In the case of a Table Funded
Mortgage Asset, on the second (2nd) Business Day following the Custodian’s
receipt of the related Mortgage Loan Documents comprising the Mortgage Asset
File, the Custodian shall deliver to the Administrative Agent a Trust
Receipt (along with a completed Mortgage Asset File Checklist attached
thereto) certifying its receipt of the documents required to be delivered
pursuant to the Custodial Agreement, together with an Asset Schedule and
Exception Report relating to the Basic Mortgage Asset Documents, with any
Exceptions identified by the Custodian as of the date and time of delivery
of such Asset Schedule and Exception Report. The Custodian shall deliver to
the Administrative Agent an Asset Schedule and Exception Report relating to
all of the Mortgage Loan Documents within five (5) Business Days of its
receipt of the related Mortgage Asset Files.




     (7) Once the Confirmation is executed by the Administrative Agent, the
Administrative Agent shall give notice to each Revolving Lender at least one
(1) Business Day prior to the Borrowing Date of each such Revolving Lender’s
share thereof.




     (ii) Minimum Amounts. Each Revolving Loan that is made as an Alternate
Base Rate Loan shall be in a minimum aggregate amount of $500,000 and in integral
multiples of $10,000 in excess thereof (or the remaining amount of the Revolving
Committed Amount, if less). Each Revolving Loan that is made as a LIBOR Rate Loan
shall be in a minimum aggregate amount of $500,000 and in integral multiples of
$10,000 in excess thereof (or the remaining amount of the Revolving Committed
Amount, if less).




     (iii) Advances. Each Revolving Lender will make its Revolving
Commitment Percentage of each Revolving Loan borrowing available to the
Administrative Agent for the account of the applicable Borrower at the office of the
Administrative Agent specified in Section 10.2, or at such other office as the



44









 







Administrative Agent may designate in writing, by 1:00 p.m. on the Borrowing
Date, in Dollars and in funds immediately available to the Administrative Agent.
The Administrative Agent shall use reasonable best efforts to make such borrowing
available to the applicable Borrower by 3:30 p.m., but in any case, no later than
5:00 p.m. on the Borrowing Date by the Administrative Agent by crediting the account
of the applicable Borrower on the books of such office (or such other account that
the Borrowers may designate in writing to the Administrative Agent) with the
aggregate of the amounts made available to the Administrative Agent by the Revolving
Lenders and in like funds as received by the Administrative Agent.




     (c) Repayment The credit facility evidenced by this Section 2.1 is solely for
the purpose of funding future fundings under Mixed Collateral. Accordingly, notwithstanding
anything contained in any of the Credit Documents to the contrary, the Borrowers will not
have the right to reborrow any amounts repaid to the Lenders under this Agreement and the
other Credit Documents. The principal amount of all Revolving Loans shall be due and
payable in full on the Maturity Date, unless accelerated sooner pursuant to Section 7.2.
The Borrowers shall have the right to repay Revolving Loans in whole or in part from time to
time; provided, however; that each partial repayment of a Revolving Loan
shall be in a minimum principal amount of $1,000,000 and integral multiples of $100,000 in
excess thereof (or the remaining outstanding principal amount). Such repayment will be
applied to the outstanding Revolving Loans and Revolving Loan Collateral in such manner as
the Borrowers shall direct.




     (d) Interest. Subject to the provisions of Section 2.6, Revolving Loans shall
bear interest as follows:




     (i) Alternate Base Rate Loans. During such periods as any Revolving
Loans shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate
Loan shall bear interest at a per annum rate equal to the sum of the Alternate Base
Rate plus the Applicable Percentage; and




     (ii) LIBOR Rate Loans. During such periods as Revolving Loans shall be
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a
per annum rate equal to the sum of the LIBOR Rate plus the Applicable
Percentage.




Interest on Revolving Loans shall be payable in arrears on each Payment Date.




     (e) [Reserved].




     (f) Revolving Notes; Covenant to Pay. The Borrowers’ obligation to pay each
Revolving Lender shall be evidenced by this Agreement and, upon such Revolving Lender’s
request, by a duly executed promissory note of the Borrowers to such Revolving Lender in
substantially the form of Exhibit 2.1(f). The Borrowers covenant and agree to pay
the Revolving Loans in accordance with the terms of this Agreement.




     (g) [Reserved].




     (h) Confirmations. Notwithstanding anything to the contrary in this Section
2.1 and notwithstanding any oral or verbal approval of an Extension of Credit by the
Administrative Agent, no Extension of Credit shall be deemed approved until a Confirmation
or revised Confirmation, as applicable, has been executed by the Administrative Agent. Each
pledge of a Mortgage Asset, regardless of whether a Loan is made to the Borrowers in
connection therewith,



45









 







shall be evidenced by a Confirmation. Each Confirmation, together with this Agreement,
shall constitute conclusive evidence of the terms agreed between the Administrative Agent
and the applicable Borrower with respect to the Revolving Loan to which the Confirmation
relates, and the applicable Borrower’s acceptance of the related proceeds shall constitute
the applicable Borrower’s agreement to the terms of such Confirmation. It is the intention
of the parties that each Confirmation shall not be separate from this Agreement but shall be
made a part of this Agreement. To the extent of a conflict between this Agreement and the
related Confirmation, the Confirmation shall control.



     Section 2.2 Term Loan.




     (a) Term Loan. Subject to the terms and conditions hereof (including, without
limitation, Sections 4.1 and 4.2 of this Agreement) and in reliance upon the representations
and warranties set forth herein, each Term Loan Lender severally, but not jointly, agrees to
make available to the Borrowers (through the Administrative Agent) on the Funding Date such
Term Loan Lender’s Term Loan Commitment Percentage of a term loan in Dollars (the “Term
Loan”) in the aggregate principal amount of THREE HUNDRED SIXTEEN MILLION SEVEN HUNDRED
TWENTY NINE THOUSAND FIVE DOLLARS ($316,729,005.00), which amount shall equal the aggregate
Allocated Term Loan Amounts approved by the Administrative Agent in its discretion for the
Eligible Assets approved by the Administrative Agent in its discretion and included in the
Term Loan Collateral (the “Term Loan Committed Amount”) for the purposes hereinafter
set forth. The Term Loan Collateral and the Allocated Term Loan Amount for each item of
Term Loan Collateral shall be evidenced by Confirmations executed by the applicable Borrower
and the Administrative Agent. Upon receipt by the Administrative Agent of the proceeds of
the Term Loan, such proceeds will then be made available to the Borrowers by the
Administrative Agent by crediting the account of the Borrowers on the books of the office of
the Administrative Agent specified in Section 10.2, or at such other office as the
Administrative Agent may designate in writing, with the aggregate of such proceeds made
available to the Administrative Agent by the Term Loan Lenders and in like funds as received
by the Administrative Agent (or by crediting such other account(s) as directed by the
Borrowers). The Term Loan may consist of Alternate Base Rate Loans or LIBOR Rate Loans, or
a combination thereof, as the Borrowers’ may request; provided, however,
that the Term Loan made on the Restatement Date or any of the three (3) Business Days
following the Restatement Date may only consist of Alternate Base Rate Loans unless the
Borrowers deliver a funding indemnity letter, substantially in the form of
Exhibit 2.1(a), reasonably acceptable to the Administrative Agent not less than
three (3) Business Days prior to the Restatement Date. LIBOR Rate Loans shall be made by
each Term Loan Lender at its LIBOR Lending Office and Alternate Base Rate Loans at its
Domestic Lending Office.




     (b) Repayment of Term Loan. The terms and provisions governing repayment of
the Term Loan are set forth in the Fee Letter and are hereby incorporated by reference. All
outstandings under the Term Loan shall be due and payable in full on the Maturity Date
unless accelerated sooner pursuant to Section 7.2. Amounts repaid or prepaid on the Term
Loan may not be reborrowed. Any repayment hereunder will be applied to the outstanding Term
Loans in accordance with Section 2.5(c)(i)(A) until the outstanding principal amount of the
Term Loans has been paid in full.




     (c) Interest on the Term Loan. Subject to the provisions of Section 2.6, the
Term Loan shall bear interest as follows:



46









 






     (i) Alternate Base Rate Loans. During such periods as the Term Loan
shall be comprised of Alternate Base Rate Loans, each such Alternate Base Rate Loan
shall bear interest at a per annum rate equal to the sum of the Alternate Base Rate
plus the Applicable Percentage; and




     (ii) LIBOR Rate Loans. During such periods as the Term Loan shall be
comprised of LIBOR Rate Loans, each such LIBOR Rate Loan shall bear interest at a
per annum rate equal to the sum of the LIBOR Rate plus the Applicable
Percentage.




Interest on the Term Loan shall be payable in arrears on each Payment Date.




     (d) Term Loan Notes; Covenant to Pay. The Borrowers’ obligation to pay each
Term Loan Lender shall be evidenced by this Agreement and, upon such Term Loan Lender’s
request, by a duly executed promissory note of the Borrowers to such Term Loan Lender in
substantially the form of Exhibit 2.2(d). The Borrowers covenant and agree to pay
the Term Loan in accordance with the terms of this Agreement.




     (e) [Reserved].




     (f) Confirmations. Notwithstanding anything to the contrary in this Section 2.2
and notwithstanding any oral or verbal approval of an Extension of Credit by the
Administrative Agent, no Extension of Credit shall be deemed approved until a Confirmation
or revised Confirmation, as applicable, has been executed by the Administrative Agent.
Each pledge of a Mortgage Asset, regardless of whether a Loan is made to the Borrowers in
connection therewith, shall be evidenced by a Confirmation. Each Confirmation, together
with this Agreement, shall constitute conclusive evidence of the terms agreed between the
Administrative Agent and the applicable Borrower with respect to the Term Loan to which the
Confirmation relates, and the applicable Borrower’s acceptance of the related proceeds shall
constitute the applicable Borrower’s agreement to the terms of such Confirmation. It is the
intention of the parties that each Confirmation shall not be separate from this Agreement
but shall be made a part of this Agreement. To the extent of a conflict between this
Agreement and the related Confirmation, the Confirmation shall control.



     Section 2.3 Fees.



     The Borrowers shall pay all fees provided for in the Fee Letter to the Administrative Agent
for distribution to the Lenders and the Administrative Agent in accordance therewith.



     Section 2.4 Commitment Reductions.




     (a) Voluntary Reductions. The Borrowers shall have the right to terminate or
permanently reduce the unused portion of the Revolving Committed Amount at any time or from
time to time upon not less than five (5) Business Days’ prior written notice to the
Administrative Agent (which shall notify the Lenders thereof as soon as practicable) of each
such termination or reduction, which notice shall specify the effective date thereof and the
amount of any such reduction which shall be in a minimum amount of $1,000,000 or a whole
multiple of $1,000,000 in excess thereof and shall be irrevocable and effective upon receipt
by the Administrative Agent; provided that no such reduction or termination shall be
permitted if after giving effect thereto, and to any prepayments of the Revolving Loans made
on the effective date thereof, (i) the sum of the aggregate principal amount of outstanding
Revolving Loans would exceed the Revolving Committed Amount then in effect or (ii) the
Availability would be negative.



47









 






     (b) Maturity Date. The Commitments shall automatically terminate on the
Maturity Date unless accelerated sooner pursuant to Section 7.2 hereof.



     Section 2.5 Prepayments.




     (a) Optional Prepayments. The Borrowers shall have the right to prepay the
Term Loans and the Revolving Loans in whole or in part from time to time; provided,
however, that each partial prepayment of a Term Loan shall be in a minimum principal
amount of $500,000 (or the remaining outstanding principal amount). The Borrowers shall
give three Business Days’ irrevocable notice of prepayment in the case of LIBOR Rate Loans
and same-day irrevocable notice on any Business Day in the case of Alternate Base Rate
Loans, to the Administrative Agent (which shall notify the Lenders thereof as soon as
practicable). To the extent that the Borrowers elect to prepay the Term Loans, amounts
prepaid under this Section shall be applied (i) to the extent the outstanding principal
amount under the Term Loans, both before and after giving effect to such optional
prepayment, is greater than $150,000,000 and there are more than eight (8) Pledged Mortgage
Assets, as the Borrowers may direct and (ii) to the extent the outstanding principal amount
under the Term Loans, either before or after giving effect to such optional prepayment, is
less than or equal to $150,000,000 or there are less than or equal to eight (8) Pledged
Mortgage Assets, as the Administrative Agent may elect in its reasonable discretion. Within
the foregoing parameters, prepayments under this Section shall be applied first to Alternate
Base Rate Loans and then to LIBOR Rate Loans in direct order of Interest Period maturities.
All prepayments under this Section shall be subject to Section 2.13, but otherwise without
premium or penalty. Interest on the principal amount prepaid shall be payable on the next
occurring Payment Date that would have occurred had such loan not been prepaid or, at the
request of the Administrative Agent, interest on the principal amount prepaid shall be
payable on any date that a prepayment is made hereunder through the date of prepayment.
Revolving Loans may be prepaid in accordance with the terms of Section 2.1(c) of this
Agreement. Prepayments of the Loans are subject to the requirements of Section 2.5(b)(vi)
of this Agreement and the Fee Letter.




     (b) Mandatory Prepayments.




     (i) Availability and Revolving Committed Amount.




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




     (B) Revolving Loan Committed Amount. If at any time after the
Restatement Date, the sum of the aggregate principal amount of outstanding
Revolving Loans shall exceed the Revolving Committed Amount, the Borrowers
shall immediately prepay the Revolving Loans in an amount sufficient to
eliminate such excess.




     (ii) Equity Issuance. 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.




     (iii) Extraordinary Receipts. Immediately, and in any event, within
one (1) Business Day upon receipt by any Credit Party or any of its Subsidiaries of
proceeds



48









 







from any Extraordinary Receipt, the Borrowers shall prepay the Term Loans
and/or the Revolving Loans, as applicable, in an aggregate principal amount equal to
one hundred percent (100%) of such Extraordinary Receipt to be applied to the Term
Loan and/or the Revolving Loans depending on whether the Extraordinary Receipt is
from Term Loan Collateral or Revolving Loan Collateral, or both.




     (iv) Reduction of Asset Value Prepayment. The terms and provisions
governing mandatory prepayments in connection with a reduction of Asset Value are
set forth in the Fee Letter and are hereby incorporated by reference.




     (v) Defaulted Collateral Prepayment. The terms and provisions
governing mandatory prepayments in connection with a Defaulted Collateral Prepayment
are set forth in the Fee Letter and are hereby incorporated by reference.




     (vi) Collateral Release Prepayment. The terms and provisions governing
mandatory prepayments in connection with repayments, prepayments and/or reductions
of the Loans and/or under the Collateral and the releases of Collateral are set
forth in the Fee Letter and are hereby incorporated by reference.




     (vii) 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 Term Loans in an aggregate principal amount
equal to one hundred percent (100%) of all such excess dividends or distributions.
Such amounts shall be applied first to the Working Capital Facility in accordance
with Section 2.2(a)(viii) thereof and then to the Obligations under this Agreement
in such manner as the Administrative Agent may determine in its discretion.




     (viii) REO Property and Foreclosed Mortgage Asset Prepayments. The
terms and provisions governing mandatory prepayments in connection with REO Property
and Foreclosed Mortgage Assets are set forth in the Fee Letter and are hereby
incorporated by reference.




     (c) Application of Mandatory Prepayments.




     (i) Unless otherwise set forth above or in the Fee Letter, all amounts
required to be paid pursuant to this Section shall be applied as follows:
(A) first, to the outstanding Term Loans and Term Loan Collateral, as the
Administrative Agent may elect in its discretion, until the outstanding
principal amount of the Term Loans has been paid and full; and (B) second,
to the outstanding Revolving Loans and Revolving Loan Collateral in such
manner as the Administrative Agent may elect in its discretion until the
outstanding principal amount of the Revolving Loans has been paid in full.
Within the parameters of the applications set forth above, prepayments shall
be applied first to Alternate Base Rate Loans and then to LIBOR Rate Loans
in direct order of Interest Period maturities. All prepayments under this
Section shall be subject to Section 2.13 and be accompanied by interest on
the principal amount prepaid through the date of prepayment, but otherwise
without premium or penalty; and




     (ii) All amounts required to be paid pursuant to this Section shall be
deposited in the Collection Account and shall be accompanied by any
applicable



49









 







costs incurred pursuant to Section 2.13 (if any) and any applicable interest
payments.




     (d) Junior/Senior Positions. Notwithstanding anything contained in this
Agreement to the contrary, in the event the Borrowers pledge to the Administrative Agent
(whether simultaneously or on separate occasions) the senior and junior positions with
respect to certain Commercial Real Estate and the Loans with respect to the Eligible
Asset(s) that are senior in priority have been repaid or prepaid by the Borrowers or the
related Obligors, (i) the Asset Value of the junior–most Eligible Asset(s) shall be reduced
to zero (0) and (ii) the Administrative Agent shall not release its Lien on the Eligible
Asset(s) (including any Income related thereto) that are senior in priority to the
junior–most Eligible Asset(s) that the Administrative Agent continues to have a Lien on
(regardless of whether the outstanding Allocated Revolving Loan Amount or Allocated Term
Loan Amount, as applicable, and related amounts due have been paid in full) until the
junior–most Eligible Asset(s) is repaid or prepaid and the outstanding Allocated Revolving
Loan Amount or Allocated Term Loan Amount, as applicable, for the junior-most Eligible
Asset plus any accrued and unpaid interest and any related breakage costs under Section 2.3
are paid in full; provided, however, if (A) the Loans with respect to the
senior position are repaid due to repayments or prepayments by the related Obligor, (B)  the
Administrative Agent has reevaluated the remaining junior–most Eligible Asset(s), including,
without limitation, a reassessment and possible redetermination of the Asset Value of such
Eligible Asset, and, based on the reevaluation, the Administrative Agent is satisfied in its
discretion with continuing to hold the junior–most Eligible Asset(s) as Collateral as is or
upon certain specified conditions, including, without limitation, assigning a new Asset
Value to such Eligible Asset, which approval shall be in writing to be effective, and
(C) there are no Events of Default or Defaults outstanding (each to be evidenced by an
Officer’s Certificate), then the Administrative Agent will consent in writing to and effect
the release of the senior Eligible Asset from the Collateral.



     Section 2.6 Default Rate and Payment Dates.




     (a) If all or a portion of the principal amount of any Loan which is a LIBOR Rate Loan
shall not be paid when due or continued as a LIBOR Rate Loan in accordance with the
provisions of Section 2.7 (whether at the stated maturity, by acceleration or otherwise),
such overdue principal amount of such Loan shall be converted to an Alternate Base Rate Loan
at the end of the Interest Period applicable thereto.




     (b) (i) If all or a portion of the principal amount of any LIBOR Rate Loan shall not be
paid when due, such overdue amount shall bear interest at a rate per annum which is equal to
the rate that would otherwise be applicable thereto plus 2%, until the end of the
Interest Period applicable thereto, and thereafter at a rate per annum which is equal to the
Alternate Base Rate plus the sum of the Applicable Percentage then in effect for
Alternate Base Rate Loans and 2% (the “ABR Default Rate”) or (ii) if any interest
payable on the principal amount of any Loan or any fee or other amount, including the
principal amount of any Alternate Base Rate Loan, payable hereunder shall not be paid when
due (whether at the stated maturity, by acceleration or otherwise), such overdue amount
shall bear interest at a rate per annum which is equal to the ABR Default Rate, in each case
from the date of such non-payment until such amount is paid in full (after as well as before
judgment). Upon the occurrence, and during the continuance, of any other Event of Default
hereunder, at the option of the Required Lenders, the principal of and, to the extent
permitted by Requirements of Law, interest on the Loans and any other amounts owing
hereunder or under the other Credit Documents shall bear interest, payable on demand, at a
per annum rate which is (A) in the case of principal, the rate that would otherwise be
applicable



50









 







thereto plus 2% or (B) in the case of interest, fees or other amounts, the ABR
Default Rate (after as well as before judgment).




     (c) Interest on each Loan shall be payable in arrears on each Payment Date;
provided that interest accruing pursuant to paragraph (b) of this Section shall be
payable from time to time on demand.



     Section 2.7 Conversion Options.




     (a) The Borrowers may, in the case of Revolving Loans and the Term Loan, elect from
time to time to convert Alternate Base Rate Loans to LIBOR Rate Loans or to continue LIBOR
Rate Loans by delivering a Notice of Conversion/Extension to the Administrative Agent at
least three Business Days prior to the proposed date of conversion or extension, as
applicable. In addition, the Borrowers may elect from time to time to convert all or any
portion of a LIBOR Rate Loan to an Alternate Base Rate Loan by giving the Administrative
Agent irrevocable written notice thereof by 11:00 a.m. one (1) Business Day prior to the
proposed date of conversion. If the date upon which an Alternate Base Rate Loan is to be
converted to a LIBOR Rate Loan is not a Business Day, then such conversion shall be made on
the next succeeding Business Day and during the period from such last day of an Interest
Period to such succeeding Business Day such Loan shall bear interest as if it were an
Alternate Base Rate Loan. LIBOR Rate Loans may only be converted to Alternate Base Rate
Loans on the last day of the applicable Interest Period. If the date upon which a LIBOR
Rate Loan is to be converted to an Alternate Base Rate Loan is not a Business Day, then such
conversion shall be made on the next succeeding Business Day and during the period from such
last day of an Interest Period to such succeeding Business Day such Loan shall bear interest
as if it were an Alternate Base Rate Loan. All or any part of outstanding Alternate Base
Rate Loans may be converted as provided herein; provided that (i) no Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default has occurred and is
continuing and (ii) partial conversions shall be in an aggregate principal amount of
$1,000,000 or a whole multiple of $100,000 in excess thereof. All or any part of
outstanding LIBOR Rate Loans may be converted as provided herein; provided that
partial conversions shall be in an aggregate principal amount of $1,000,000 or a whole
multiple of $100,000 in excess thereof.




     (b) Any LIBOR Rate Loans may be continued as such upon the expiration of an Interest
Period with respect thereto by compliance by the Borrowers with the notice provisions
contained in Section 2.7(a); provided, that no LIBOR Rate Loan may be continued as
such when any Default or Event of Default has occurred and is continuing, in which case such
Loan shall be automatically converted to an Alternate Base Rate Loan at the end of the
applicable Interest Period with respect thereto. So long as no Default or Event of Default
has occurred and is continuing and all conditions set forth in Section 4.2 have been
satisfied and the Borrowers shall fail to give timely notice of an election to continue a
LIBOR Rate Loan, such LIBOR Rate Loans shall be automatically converted to a one-month LIBOR
Rate Loan at the end of the applicable Interest Period with respect thereto. To the extent
a Default or Event of Default has occurred and is continuing and the Borrowers shall fail to
give timely notice of an election to continue a LIBOR Rate Loan or the continuation of LIBOR
Rate Loans is not permitted hereunder, such LIBOR Rate Loans shall automatically be
converted to Alternate Base Rate Loans at the end of the applicable Interest Period with
respect thereto.



     Section 2.8 Computation of Interest and Fees; Usury.




     (a) Interest payable hereunder with respect to any Alternate Base Rate Loan based on
the Prime Rate shall be calculated on the basis of a year of 365 days (or 366 days, as



51









 







applicable) for the actual days elapsed. All other fees, interest and all other
amounts payable hereunder shall be calculated on the basis of a 360-day year for the actual
days elapsed. The Administrative Agent shall as soon as practicable notify the Borrowers
and the Lenders of each determination of a LIBOR Rate on the Business Day of the
determination thereof. Any change in the interest rate on a Loan resulting from a change in
the Alternate Base Rate shall become effective as of the opening of business on the day on
which such change in the Alternate Base Rate shall become effective. The Administrative
Agent shall as soon as practicable notify the Borrowers and the Lenders of the effective
date and the amount of each such change.




     (b) Each determination of an interest rate by the Administrative Agent pursuant to any
provision of this Agreement shall be conclusive and binding on the Borrowers and the Lenders
in the absence of manifest error. The Administrative Agent shall, at the request of the
Borrowers, deliver to the Borrowers a statement showing the computations used by the
Administrative Agent in determining any interest rate.




     (c) It is the intent of the Lenders and the Credit Parties 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 Credit Parties are hereby limited by the provisions of this
subsection 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
Obligation), shall the interest taken, reserved, contracted for, charged, or received under
this Agreement, under the Notes or otherwise, exceed the maximum nonusurious amount
permissible under Requirements of Law. If, from any possible construction of any of the
Credit 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
paragraph and such interest shall be automatically reduced to the maximum nonusurious amount
permitted under Requirements of 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 Requirements of 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 Indebtedness evidenced by any of the Credit Documents does not
include the right to receive any interest that 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 Requirements of 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 Requirements of Law.



     Section 2.9 Pro Rata Treatment and Payments.



        (a) Allocation of Payments Prior to Exercise of Remedies.




     (i) Each borrowing of Revolving Loans and any reduction of the Revolving
Commitments shall be made pro rata according to the respective Revolving Commitment
Percentages of the Revolving Lenders. Each payment on account of any fees pursuant
to Section 2.3 shall be made pro rata in accordance with the respective amounts due
and



52









 







owing. Each payment (other than prepayments) by the Borrowers on account of
principal of and interest on the Revolving Loans and on the Term Loan, as
applicable, shall be applied to such Loans, as applicable, on a pro rata basis in
accordance with the terms of Section 2.5(a) hereof. Each optional prepayment on
account of principal of the Loans shall be applied in accordance with
Section 2.5(a). Each mandatory prepayment on account of principal of the Loans
shall be applied in accordance with Sections 2.2(b) and 2.5(b). Unless payments are
specifically payable to Revolving Loans or Term Loans, all payments are shared pari
passu and pro rata (based on the amounts of such Loans) between Revolving Loans and
Term Loans. All payments (including prepayments) to be made by the Borrowers on
account of principal, interest and fees shall be made without defense, set-off or
counterclaim and shall be made to the Administrative Agent for the account of the
Lenders at the Administrative Agent’s office specified on Section 10.2 in Dollars
and in immediately available funds not later than 1:00 p.m. on the date when due.
The Administrative Agent shall distribute such payments to the Lenders entitled
thereto promptly upon receipt in like funds as received. If any payment hereunder
(other than payments on the LIBOR Rate Loans) becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next succeeding Business
Day, and, with respect to payments of principal, interest thereon shall be payable
at the then applicable rate during such extension. If any payment on a LIBOR Rate
Loan becomes due and payable on a day other than a Business Day, such payment date
shall be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day.




     (ii) The Administrative Agent as agent for the Secured Parties shall be
entitled to receive an amount equal to all Income paid or distributed on or in
respect of the Collateral, which amount shall be deposited by the Borrowers, the
Credit Parties and any Servicer or PSA Servicer under a Pooling and Servicing
Agreement into the Collection Account. The Borrowers hereby agree to instruct each
applicable Servicer to transfer within two (2) Business Days of receipt thereof, and
each applicable PSA Servicer under a Pooling and Servicing Agreement to deposit
within two (2) Business Days of the date on which such Person is obligated under the
applicable Pooling and Servicing Agreement to disburse such funds, all Income with
respect to the Collateral directly into the Collection Account. On each Payment
Date, any Cash Collateral and any amounts on deposit in the Collection Account and
amounts permitted to be withdrawn from the Homewood Interest Reserve shall be
withdrawn by the Administrative Agent and shall be applied as follows:




     FIRST, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to the payment of all fees, expenses, and other obligations then due to
the Administrative Agent and the Lenders pursuant to this Agreement and/or the Fee
Letter, other than the interest and principal on the Loans;




     SECOND, to the extent not paid by the Borrowers, to the payment of fees and
expenses owed to the Custodian under the Custodial Agreement or Custodial Fee
Letter;




     THIRD, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to the Lenders for the payment of accrued and unpaid interest on the
Loans outstanding;



53









 






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




     FIFTH, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to the extent any Income or Cash Collateral includes payments or
prepayments of principal on or from any Collateral (including, without limitation,
insurance or condemnation proceeds or recoveries from any foreclosures not otherwise
applied under Section 2.5(b) or clause FOURTH above), such payments shall be applied
to reduce the Allocated Term Loan Amount and Allocated Revolving Loan Amount for the
related Term Loan Collateral or Revolving Loan Collateral, as applicable;




     SIXTH, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to the extent not previously paid pursuant to Article II, to the
Lenders to pay any other principal payments then due or required to be paid
(including principal payments required with respect to the Homewood Mortgage Asset
under the terms of the definition of Homewood Interest Reserve);




     SEVENTH, pari passu and pro rata (based on the amounts owed to such Persons
under this clause) to the payment of all other amounts then due and owing to the
Administrative Agent, the Lenders or any other Person pursuant to this Agreement and
the other Credit Documents; and




     EIGHTH, to the Borrowers, for such purposes as the Borrowers shall determine in
their sole discretion;



     provided, however, that if a Default or Event of Default has occurred and is
continuing or a mandatory prepayment under Section 2.5 is due but the applicable time period for
payment of such amount has not expired, such amounts under clause “EIGHTH” shall not be transferred
to the Borrowers but shall remain in the Collection Account and applied (i) in the case of a
mandatory prepayment under Sections 2.2 or 2.5, in reduction of such mandatory prepayments when due
and payable, with the balance being remitted to the Borrowers and (ii) in the case of a Default or
Event of Default, in reduction of the Obligations in accordance with Section 2.9(b).



     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 the Borrowers, be promptly transferred from the Collection Account to the
Borrowers for the Borrowers to transfer into the appropriate escrow or reserve accounts.



     In carrying out the foregoing, amounts received shall be applied in the numerical order
provided until exhausted prior to application of the next succeeding category.




     (b) Allocation of Payments After Exercise of Remedies. Notwithstanding any
other provisions of this Agreement to the contrary, after the exercise of remedies (other
than the invocation of default interest pursuant to Section 2.6) by the Administrative Agent
or the Lenders pursuant to Section 7.2 (or after the Commitments shall automatically
terminate and the Loans (with accrued interest thereon) and all other amounts under the
Credit Documents shall automatically become due and payable in accordance with the terms of
such Section), all amounts collected or received by the Administrative Agent or any Lender
on account of the Obligations or



54









 







any other amounts outstanding under any of the Credit Documents or in respect of the
Collateral and all amounts on deposit in the Collection Account and the Homewood Reserve
Account shall be paid over or delivered to the Administrative Agent and applied as follows
(irrespective of whether the following costs, expenses, fees, interest, premiums, scheduled
periodic payments or Obligations are allowed, permitted or recognized as a claim in any
proceeding resulting from the occurrence of a Bankruptcy Event):




     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 Credit
Documents and any protective advances made by the Administrative Agent with respect
to the Collateral under or pursuant to the terms of the Security Documents;




     SECOND, to the payment of any fees owed to the Administrative Agent;




     THIRD, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to the payment of all reasonable out-of-pocket costs and expenses
(including without limitation, reasonable attorneys’ fees) of each of the Lenders in
connection with enforcing its rights under the Credit Documents or otherwise with
respect to the Obligations owing to such Lender;




     FOURTH, pari passu and pro rata (based on the amounts owed to such Persons
under this clause) to the payment of all of the Obligations consisting of accrued
fees and interest;



          FIFTH, pari passu and pro rata (based on the amounts owed to such Persons under this
clause) to the Lenders and the Administrative Agent for the payment of the outstanding
principal amount of the Obligations;





     SIXTH, pari passu and pro rata (based on the amounts owed to such Persons under
this clause) to all other Obligations and other obligations which shall have become
due and payable under the Credit Documents or otherwise and not repaid pursuant to
clauses ”FIRST” through “FIFTH” above; and




     SEVENTH, pari passu and pro rata (based on the amounts owed to such Persons
under this clause) to the payment of the surplus, if any, to whoever may be lawfully
entitled to receive such surplus.




     In carrying out the foregoing, (a) amounts received shall be applied in the numerical
order provided until exhausted prior to application to the next succeeding category; and
(b) each of the Lenders shall receive an amount equal to its pro rata share (based on the
proportion of the then outstanding Loans held by such Lender) of amounts available to be
applied pursuant to clauses “THIRD”, “FOURTH”, “FIFTH” and “SIXTH” above.



     Section 2.10 Non-Receipt of Funds by the Administrative Agent.




     (a) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received written notice from a Lender prior to the proposed
date of any Extension of Credit that such Lender will not make available to the
Administrative Agent such Lender’s share of such Extension of Credit, the Administrative
Agent may assume that such Lender has made such share available on such date in accordance
with this Agreement and may,



55









 







in reliance upon such assumption, make available to the Borrowers a corresponding
amount. In such event, if a Lender has not in fact made its share of the applicable
Extension of Credit available to the Administrative Agent, then the applicable Lender and
the Borrowers severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the date such
amount is made available to the Borrowers to but excluding the date of payment to the
Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater
of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation and (ii) in the case of a
payment to be made by the Borrowers, the interest rate applicable to Alternate Base Rate
Loans. If the Borrowers and such Lender shall pay such interest to the Administrative Agent
for the same or an overlapping period, the Administrative Agent shall promptly remit to the
Borrowers the amount of such interest paid by the Borrowers for such period. If such Lender
pays its share of the applicable Extension of Credit to the Administrative Agent, then the
amount so paid shall constitute such Lender’s Loan included in such Extension of Credit.
Any payment by the Borrowers shall be without prejudice to any claim the Borrowers may have
against a Lender that shall have failed to make such payment to the Administrative Agent.




     (b) Payments by Borrowers; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrowers prior to the date on
which any payment is due to the Administrative Agent for the account of the Lenders
hereunder that the Borrowers will not make such payment, the Administrative Agent may assume
that the Borrowers have made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In such event, if
the Borrowers have not in fact made such payment, then each of the Lenders severally agrees
to repay to the Administrative Agent forthwith on demand the amount so distributed to such
Lender, with interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the Administrative
Agent in accordance with banking industry rules on interbank compensation.




     A notice of the Administrative Agent to any Lender or the Borrowers with respect to any
amount owing under subsections (a) and (b) of this Section shall be conclusive, absent
manifest error.




     (c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender as provided in the
foregoing provisions of this Article II, and such funds are not made available to the
Borrowers by the Administrative Agent because the conditions to the applicable Extension of
Credit set forth in Article IV are not satisfied or waived in accordance with the terms
thereof, the Administrative Agent shall return such funds (in like funds as received from
such Lender) to such Lender, without interest.




     (d) Obligations of Lenders Several. The obligations of the Lenders hereunder
to make Term Loans and Revolving Loans, and to make payments pursuant to Section 10.5(c) are
several and not joint. The failure of any Lender to make any Loan, to fund any such
participation or to make any such payment under Sections 8.7 and 10.5(c) on any date
required hereunder shall not relieve any other Lender of its corresponding obligation to do
so on such date, and no Lender shall be responsible for the failure of any other Lender to
so make its Loan, to purchase its participation or to make its payment under Sections 8.7
and 10.5(c).



56









 






     (e) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute a
representation by any Lender that it has obtained or will obtain the funds for any Loan in
any particular place or manner.



     Section 2.11 Inability to Determine Interest Rate.



     Notwithstanding any other provision of this Agreement, if (a) the Administrative Agent shall
reasonably determine (which determination shall be conclusive and binding absent manifest error)
that, by reason of circumstances affecting the relevant market, reasonable and adequate means do
not exist for ascertaining the LIBOR Rate for such Interest Period, or (b) the Required Lenders
shall reasonably determine (which determination shall be conclusive and binding absent manifest
error) that the LIBOR Rate does not adequately and fairly reflect the cost to such Lenders of
funding LIBOR Rate Loans that the Borrowers have requested be outstanding as a LIBOR Tranche during
such Interest Period, the Administrative Agent shall forthwith give telephone notice of such
determination, confirmed in writing, to the Borrowers and the Lenders at least two (2) Business
Days prior to the first day of such Interest Period. Unless the Borrowers shall have notified the
Administrative Agent upon receipt of such telephone notice that it wishes to rescind or modify its
request regarding such LIBOR Rate Loans, any Loans that were requested to be made as LIBOR Rate
Loans shall be made as Alternate Base Rate Loans and any Loans that were requested to be converted
into or continued as LIBOR Rate Loans shall remain as or be converted into Alternate Base Rate
Loans. Until any such notice has been withdrawn by the Administrative Agent, no further Loans
shall be made as, continued as, or converted into, LIBOR Rate Loans for the Interest Periods so
affected.



     Section 2.12 Yield Protection.




     (a) Increased Costs Generally. If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with or
for the account of, or credit extended or participated in by, any Lender (except any
reserve requirement reflected in the LIBOR Rate);




     (ii) subject any Lender to any tax of any kind whatsoever with respect to this
Agreement or any LIBOR Rate Loan made by it, or change the basis of taxation of
payments to such Lender in respect thereof (except for Indemnified Taxes or Other
Taxes covered by Section 2.14 and the imposition of, or any change in the rate of,
any Excluded Tax payable by such Lender); or




     (iii) impose on any Lender or the London interbank market any other condition,
cost or expense affecting this Agreement or LIBOR Rate Loans made by such Lender;


and the result of any of the foregoing shall be to increase the cost to such Lender of making or
maintaining any LIBOR Rate Loan (or of maintaining its obligation to make any such Loan), or to
reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal,
interest or any other amount), then, upon request of such Lender, the Borrowers will pay to such
Lender, such additional amount or amounts as will compensate such Lender for such additional costs
incurred or reduction suffered.




57









 









     (b) Capital Requirements. If any Lender determines that any Change in Law
affecting such Lender or any lending office of such Lender or such Lender’s holding company,
if any, regarding capital requirements has or would have the effect of reducing the rate of
return on such Lender’s capital or on the capital of such Lender’s holding company, if any,
as a consequence of this Agreement, the Commitments of such Lender or the Loans made by such
Lender, to a level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s policies and
the policies of such Lender’s holding company with respect to capital adequacy), then from
time to time the Borrowers will pay to such Lender such additional amount or amounts as will
compensate such Lender or such Lender’s holding company for any such reduction suffered.




     (c) Certificates for Reimbursement. A certificate of a Lender setting forth
the amount or amounts necessary to compensate such Lender or its holding company, as the
case may be, as specified in paragraph (a) or (b) of this Section and delivered to the
Borrowers shall be conclusive absent manifest error. The Borrowers shall pay such Lender
the amount shown as due on any such certificate within ten (10) days after receipt thereof.




     (d) Delay in Requests. Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such Lender’s right
to demand such compensation.



     The provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 2.13 Indemnity; Eurocurrency Liabilities.




     (a) The Credit Parties hereby agree to indemnify each Lender and to hold such Lender
harmless from any funding loss or expense which each Lender may sustain or incur as a
consequence of (a) the failure by the Borrowers to pay the principal amount of or interest
on any Loan by any Lender in accordance with the terms hereof, (b) the failure by the
Borrowers to accept a borrowing after the Borrowers have given a notice in accordance with
the terms hereof, (c) default by the Borrowers in making any prepayment after the Borrowers
have given a notice in accordance with the terms hereof, and/or (d) the making by the
Borrowers of a prepayment of a Loan, or the conversion thereof, on a day which is not the
last day of the Interest Period with respect thereto, in each case including, but not
limited to, any such loss or expense arising from interest or fees payable by any Lender to
lenders of funds obtained by it in order to maintain its Loans hereunder. A certificate
setting forth in reasonable detail as to any additional amounts payable pursuant to this
Section submitted by any Lender, through the Administrative Agent, to the Borrowers shall be
conclusive in the absence of manifest error. The agreements in this Section shall survive
termination of this Agreement and payment of the Obligations.




     (b) The Borrowers shall pay to each Lender, as long as such Lender shall be required to
maintain reserves under Regulation D with respect to “Eurocurrency liabilities” within the
meaning of Regulation D, or under any similar or successor regulation with respect to
Eurocurrency liabilities or Eurocurrency funding, additional interest on the unpaid
principal amount of each LIBOR Loan equal to the actual costs of such reserves allocated to
such LIBOR Loan by such Lender (as determined by such Lender in good faith, which
determination shall be conclusive), which shall be due and payable on each date on which
interest is payable on such LIBOR Loan, provided the Borrowers shall have received at least
fifteen (15) days prior notice (with a copy to the Administrative Agent) of such additional
interest from such Lender. If a



58









 







Lender fails to give notice fifteen (15) days prior to the relevant Payment Date, such
additional interest shall be due and payable fifteen (15) days from receipt of such notice.



     Section 2.14 Taxes.




     (a) Payments Free of Taxes. Any and all payments by or on account of any
obligation of any Credit Party hereunder or under any other Credit Document shall be made
free and clear of and without reduction or withholding for any Indemnified Taxes or Other
Taxes, provided that if any Credit Party shall be required by Requirements of Law to
deduct any Indemnified Taxes (including any Other Taxes) from such payments, then (i) the
sum payable shall be increased as necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this Section) the
Administrative Agent or any Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) such Credit Party shall make such deductions
and (iii) such Credit Party shall timely pay the full amount deducted to the relevant
Governmental Authority in accordance with Requirements of Law.




     (b) Payment of Other Taxes by the Borrowers. Without limiting the provisions
of paragraph (a) above, the Credit Parties shall timely pay any Other Taxes to the relevant
Governmental Authority in accordance with Requirements of Law.




     (c) Indemnification by the Borrowers. The Credit Parties shall indemnify the
Administrative Agent and each Lender, within ten (10) days after demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this Section) paid by
the Administrative Agent or such Lender and any penalties, interest and reasonable expenses
arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other
Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority.
A certificate as to the amount of such payment or liability delivered to the Borrowers by a
Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.




     (d) Evidence of Payments. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by any Credit Party to a Governmental Authority, the
Borrowers shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.




     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption
from or reduction of withholding tax under the law of the jurisdiction in which any Credit
Party is a resident for tax purposes, or any treaty to which such jurisdiction is a party,
with respect to payments hereunder or under any other Credit Document shall deliver to the
Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by
Requirements of Law or reasonably requested by the Borrowers or the Administrative Agent,
such properly completed and executed documentation prescribed by Requirements of Law as will
permit such payments to be made without withholding or at a reduced rate of withholding. In
addition, any Lender, if requested by the Borrowers or the Administrative Agent, shall
deliver such other documentation prescribed by Requirements of Law or reasonably requested
by the Borrowers or the Administrative Agent as will enable the Borrowers or the
Administrative Agent to determine whether or not such Lender is subject to backup
withholding or information reporting requirements.



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     (f) Foreign Lenders. Without limiting the generality of the foregoing, in the
event that any Credit Party is resident for tax purposes in the United States of America,
any Foreign Lender shall deliver to the Borrowers and the Administrative Agent (in such
number of copies as shall be requested by the recipient) on or prior to the date on which
such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter
upon the request of the Borrowers or the Administrative Agent, but only if such Foreign
Lender is legally entitled to do so), whichever of the following is applicable:




     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States of
America is a party,




     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,




     (iii) in the case of a Foreign Lender claiming the benefits of the exemption
for portfolio interest under section 881(c) of the Code, (i) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of any Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled foreign
corporation” described in section 881(c)(3)(C) of the Code and (ii) duly completed
copies of Internal Revenue Service Form W-8BEN, or




     (iv) any other form prescribed by Requirements of Law as a basis for claiming
exemption from or a reduction in United States Federal withholding tax duly
completed together with such supplementary documentation as may be prescribed by
Requirements of Law to permit the Credit Parties to determine the withholding or
deduction required to be made.




     (g) Treatment of Certain Refunds. If the Administrative Agent or a Lender
determines, in its sole discretion, that it has received a refund of any Taxes or Other
Taxes as to which it has been indemnified by the Borrowers or with respect to which the
Credit Parties have paid additional amounts pursuant to this Section, it shall pay to the
Credit Parties an amount equal to such refund (but only to the extent of indemnity payments
made, or additional amounts paid, by the Credit Parties under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket expenses of
the Administrative Agent or such Lender, as the case may be, and without interest (other
than any interest paid by the relevant Governmental Authority with respect to such refund),
provided that the Credit Parties, upon the request of the Administrative Agent or
such Lender agrees to repay the amount paid over to the Credit Parties (plus any penalties,
interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender, in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This paragraph shall not be
construed to require the Administrative Agent, or any Lender to make available its tax
returns (or any other information relating to its taxes that it deems confidential) to the
Credit Parties or any other Person.



     The provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 2.15 Illegality.



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     Notwithstanding any other provision of this Credit Agreement, if any Change in Law shall make
it unlawful for such Lender or its LIBOR Lending Office to make or maintain LIBOR Rate Loans as
contemplated by this Credit Agreement or to obtain in the interbank eurodollar market through its
LIBOR Lending Office the funds with which to make such Loans, (a) such Lender shall promptly notify
the Administrative Agent and the Borrowers thereof, (b) the commitment of such Lender hereunder to
make LIBOR Rate Loans or continue LIBOR Rate Loans as such shall forthwith be suspended until the
Administrative Agent shall give notice that the condition or situation which gave rise to the
suspension shall no longer exist, and (c) such Lender’s Loans then outstanding as LIBOR Rate Loans,
if any, shall be converted on the last day of the Interest Period for such Loans or within such
earlier period as required by Requirements of Law as Alternate Base Rate Loans. The Borrowers
hereby agree to promptly pay any Lender, upon its demand, any additional amounts necessary to
compensate such Lender for actual and direct costs (but not including anticipated profits)
reasonably incurred by such Lender in making any repayment in accordance with this
Section including, but not limited to, any interest or fees payable by such Lender to lenders of
funds obtained by it in order to make or maintain its LIBOR Rate Loans hereunder. A certificate
(which certificate shall include a description of the basis for the computation) as to any
additional amounts payable pursuant to this Section submitted by such Lender, through the
Administrative Agent, to the Borrowers shall be conclusive in the absence of manifest error. Each
Lender agrees to use reasonable efforts (including reasonable efforts to change its LIBOR Lending
Office) to avoid or to minimize any amounts which may otherwise be payable pursuant to this
Section; provided, however, that such efforts shall not cause the imposition on
such Lender of any additional costs or legal or regulatory burdens deemed by such Lender in its
sole discretion to be material.



     Section 2.16 Obligations Absolute.



     Except as set forth to the contrary in the Credit Documents, all sums payable by the Credit
Parties hereunder or under the Credit 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 Credit Party 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 Credit Party, 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 Credit Document by any trustee or receiver of any Credit Party, 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 Credit Party has or might have against
the Administrative Agent, any Lender and/or any Indemnitee; (f) any default or failure on the part
of the Administrative Agent, any Lender and/or any Indemnitee to perform or comply with any of the
terms hereof, the Credit Documents or of any other agreement with any Credit Party, any Subsidiary
or Affiliate 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 Credit-Party-Related
Obligation; or (i) any other occurrence whatsoever, whether similar or dissimilar to the foregoing,
whether or not any Credit Party or any Affiliate or Subsidiary of the foregoing shall have notice
or knowledge of any of the foregoing.



     Section 2.17 Additional Collateral.



     Notwithstanding anything contained in the Credit Documents to the contrary, to the extent a
Pledged Mortgage Asset does not have an Allocated Revolving Loan Amount, Allocated Term Loan
Amount, Release Amount and/or any particular Loan advanced against such Collateral (including,



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without limitation, the Prime Pledged Mortgage Asset and the A-1 common units for the ESH
Pledged Mortgage Asset), such Pledged Mortgage Assets shall not be released from the Administrative
Agent’s Lien unless (i) consented to in the Administrative Agent’s discretion or (ii) this
Agreement is no longer in effect, all Commitments have terminated, no Note remains outstanding and
unpaid and the Obligations and all other amounts owing to the Administrative Agent or any Lender
hereunder have been paid in full; provided, however, if the Administrative Agent has consented, in
its discretion, to the release of all or any portion of the Series A-1 Preferred Equity Interests
for the ESH Pledged Mortgage Asset, the Administrative Agent will consent to the release of the
corresponding amount of the A-1 common units for the ESH Pledged Mortgage Asset. Notwithstanding
the foregoing, upon payment of the Total ESH Release Amount, and provided no Defaults or Events of
Defaults have occurred and are continuing, and that payments have been made in reduction of the
Working Capital Facility from and after the Restatement Date in the aggregate amount of
$15,256,263, the ESH Pledged Mortgage Asset (including the A-1 common units) shall be released from
the Administrative Agent’s Lien.



ARTICLE III




REPRESENTATIONS AND WARRANTIES




     To induce the Lenders to enter into this Agreement and to make the Extensions of Credit herein
provided for, the Credit Parties hereby represent and warrant, as of the date of this Agreement and
on any date a Loan is made hereunder and at all times while any Credit Document or any Loan is in
full force and effect, to the Administrative Agent and to each Lender that:



     Section 3.1 Financial Condition.




     (a) 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 disclosed in writing, 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.




     (b) 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



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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 any Requirement of Law
relating to insider trading.



     Section 3.2 No Material Adverse Effect; Internal Control Event.



     Since December 31, 2006 (a) (and, in addition, after delivery of annual audited financial
statements in accordance with Section 5.1(a), from the date of the most recently delivered annual
audited financial statements), there has been no development or event which has had or could
reasonably be expected to have a Material Adverse Effect and (b) no Internal Control Event has
occurred.



     Section 3.3 Corporate Existence; Compliance with Law.



     Each of the Credit Parties (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, organization or formation, (b) has the requisite
power and authority and the legal right to own, operate and pledge all its Property, to lease the
Property it operates as lessee and to conduct the business in which it is currently engaged and has
taken all actions necessary to maintain all rights, privileges, licenses and franchises necessary
or required in the normal conduct of its business, (c) is duly qualified to conduct business and in
good standing under the laws of (i) the jurisdiction of its organization or formation and (ii) each
other jurisdiction where its ownership, lease or operation of Property or the conduct of its
business requires such qualification and (d) is in compliance with all Requirements of Law
(including, without limitation, all government permit and licensing requirements), Authority
Documents, government permits and government licenses. The jurisdictions in which the Credit
Parties are organized and qualified to do business are described on Schedule 3.3. The
Borrowers shall update Schedule 3.3 from time to time, in accordance with Section 5.2, to
update information and to add Additional Credit Parties.



     Section 3.4 Corporate Power; Authorization; Enforceable Obligations.



     Each of the Credit Parties has full power and authority and the legal right to make, deliver
and perform the Credit Documents to which it is party and has taken all necessary limited liability
company, partnership or corporate action to authorize the execution, delivery and performance by it
of the Credit Documents to which it is party. Each Credit Document to which it is a party has been
duly executed and delivered on behalf of each Credit Party. Each Credit Document to which it is a
party constitutes a legal, valid and binding obligation of each Credit Party, enforceable against
such Credit Party in accordance with its terms, except as enforceability may be limited by
applicable Insolvency Laws and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).



     Section 3.5 No Legal Bar; No Default.



     The execution, delivery and performance by each Credit Party of the Credit Documents to which
such Credit Party is a party, the borrowing of Loans hereunder, pledge of Collateral under the
Credit Documents and the use of the proceeds of the Loans (a) will not violate any Requirement of
Law, (b) will not conflict with, result in a breach of or constitute a default under Authority
Documents of the Credit Parties or any Contractual Obligation, Indebtedness or Guarantee
Obligations of any Credit Party (except those as to which waivers or consents were obtained) or any
material approval or material consent from any Governmental Authority relating to such Credit
Party, and (c) will not result in, or require, the creation or imposition of any Lien on any Credit
Party’s Properties or revenues pursuant to any Requirement of Law, Contractual Obligations,
Indebtedness or Guarantee Obligations other than the Liens arising under or contemplated in
connection with the Credit Documents or Permitted Liens. No



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Credit Party is in default under or with respect to any of its Contractual Obligation,
Indebtedness or Guarantee Obligations in any material respect. No Default or Event of Default has
occurred and is continuing.



     Section 3.6 No Material Litigation.



     No litigation, investigation, claim, criminal prosecution, civil investigative demand,
imposition of criminal or civil fines and penalties, or any other proceeding of or before any
arbitrator or Governmental Authority is pending or, to the best knowledge of the Credit Parties,
threatened by or against any Credit Party or any of its Subsidiaries or Affiliates or against any
of its or their respective Properties or revenues (a) with respect to the Credit Documents, any
Extension of Credit, any Collateral or any of the transactions contemplated hereby, or (b) which
could reasonably be expected to have a Material Adverse Effect. No permanent injunction, temporary
restraining order or similar decree has been issued against any Credit Party or any of its
Subsidiaries or Affiliates, which could reasonably be expected to have a Material Adverse Effect.



     Section 3.7 Investment Company Act; Federal Power Act; Interstate Commerce Act; and
Federal and State Statutes and Regulations.



     No Credit Party is an “investment company”, or a company “controlled” by an “investment
company”, within the meaning of the 40 Act. No Credit Party is subject to regulation under the
Federal Power Act, the Interstate Commerce Act, or any federal or state statute or regulation
limiting its ability to incur the Obligations.



     Section 3.8 Margin Regulations.



     No part of the proceeds of any Extension of Credit hereunder will be used directly or
indirectly for any purpose that violates, or that would require any Lender to make any filings in
accordance with, the provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System as now and from time to time hereafter in effect. The Credit Parties and their
Subsidiaries and Affiliates (a) are not engaged, principally or as one of their important
activities, in the business of extending credit for the purpose of “purchasing” or “carrying”
“margin stock” within the respective meanings of each of such terms under Regulation U and
(b) taken as a group do not own “margin stock”. No Borrower is subject to any Requirement of Law
that purports to restrict or regulate its ability to borrow money. No portion of the proceeds of
any Extension of Credit will be used to repurchase any Equity Interests in, or to fund dividends or
distributions by, any Credit Party or any Subsidiary or Affiliate.



     Section 3.9 ERISA.



     Neither a Reportable Event nor an “accumulated funding deficiency” (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the five-year period prior to
the date on which this representation is made or deemed made with respect to any Plan, and each
Plan has complied in all material respects with the applicable provisions of ERISA and the Code.
No termination of a Single Employer Plan has occurred resulting in any liability that has remained
underfunded, and no Lien in favor of the PBGC or a Plan has arisen, during such five-year period.
The present value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation date prior to the
date on which this representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits. Neither any Credit Party nor any Commonly Controlled
Entity is currently subject to any liability for a complete or partial withdrawal from a
Multiemployer Plan.



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     Section 3.10 Environmental Matters.



     Except as could not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect:




     (a) The Properties owned, leased or operated by the Credit Parties or any of their
Subsidiaries do not contain any Materials of Environmental Concern in amounts or
concentrations which (i) constitute a violation of, or (ii) could give rise to liability on
behalf of any Credit Party under, any Environmental Law.




     (b) The Properties and all operations of the Credit Parties and/or their Subsidiaries
at the Properties are in compliance, and have in the last five years been in compliance, in
all material respects with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties or violation of any Environmental Law with respect to the
Properties.




     (c) Neither the Credit Parties nor their Subsidiaries have received any written or
actual notice of violation, alleged violation, non-compliance, liability or potential
liability on behalf of any Credit Party with respect to environmental matters or
Environmental Laws regarding any of the Properties, nor do the Credit Parties or their
Subsidiaries have knowledge or reason to believe that any such notice will be received or is
being threatened.




     (d) Materials of Environmental Concern have not been transported or disposed of from
the Properties in violation of, or in a manner or to a location that could give rise to
liability on behalf of any Credit Party under any Environmental Law, and no Materials of
Environmental Concern have been generated, treated, stored or disposed of at, on or under
any of the Properties in violation of, or in a manner that could give rise to liability on
behalf of any Credit Party under, any applicable Environmental Law.




     (e) No judicial proceeding or governmental or administrative action is pending or, to
the knowledge of the Credit Parties and their Subsidiaries, threatened, under any
Environmental Law to which any Credit Party or any Subsidiary is or will be named as a party
with respect to the Properties, nor are there any consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the Properties.




     (f) There has been no release or threat of release of Materials of Environmental
Concern at or from the Properties, or arising from or related to the operations of any
Credit Party or any Subsidiary in connection with the Properties, in violation of or in
amounts or in a manner that could give rise to liability on behalf of any Credit Party under
Environmental Laws.



     Section 3.11 Use of Proceeds.



     The proceeds of the Extensions of Credit shall be used by the Borrowers solely to acquire or
finance Eligible Assets.



     Section 3.12 Subsidiaries; Joint Ventures; Partnerships.



     The organizational chart attached as Schedule 3.12 sets forth the name of each
Consolidated Subsidiary of each Credit Party.



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     Section 3.13 Ownership.



     Each of the Credit Parties and its Subsidiaries is the owner of, and has good and marketable
title to or a valid leasehold interest in, all of its respective Properties, which, together with
Properties leased or licensed by the Credit Parties and their Subsidiaries, represents all
Properties in the aggregate material to the conduct of the business of the Credit Parties and their
Subsidiaries and, after giving effect to the Transactions, none of such Properties included in the
Collateral is subject to any Lien other than Permitted Liens. Each Credit Party and its
Subsidiaries enjoys peaceful and undisturbed possession under all of its leases and all such leases
are valid and subsisting and in full force and effect.



     Section 3.14 Indebtedness.



     Except as otherwise permitted under Section 6.1, the Borrowers (other than Arbor Realty and
ARSR) have no Indebtedness or Guarantee Obligations. To each Credit Party’s knowledge, no material
defaults or events of default exist under the Indebtedness and Guarantee Obligations permitted
under Section 6.1.



     Section 3.15 Taxes.



     Each of the Credit Parties and its Subsidiaries has filed, or caused to be filed, all income
tax returns and all other material tax returns (federal, state, local and foreign) required to be
filed and paid (a) all amounts of taxes shown thereon to be due (including interest and penalties)
and (b) all other taxes, fees, assessments and other governmental charges (including mortgage
recording taxes, documentary stamp taxes and intangibles taxes) owing by it, except for such taxes
(i) that are not yet delinquent or (ii) that are being contested in good faith and by proper
proceedings, and against which adequate reserves are being maintained in accordance with GAAP.
None of the Credit Parties or their Subsidiaries is aware of any proposed tax assessments against
it or any of its Subsidiaries.



     Section 3.16 Solvency.



     No Credit Party is the subject of any Insolvency Proceeding or Insolvency Event. The Loans
under this Agreement and any other Credit Document do not and will not render any Credit Party not
Solvent. The Credit Parties are not entering into the Credit Documents or any Extension of Credit
with the intent to hinder, delay or defraud any creditor of the Credit Parties or any Subsidiary
and the Credit Parties have received or will receive reasonably equivalent value for the Credit
Documents and each Extension of Credit.



     Section 3.17 Repurchase of Debt.



     The Borrowers and the Guarantors are in full compliance with the covenants set forth in
Subsections 5.26 and 6.5 of this Agreement.



     Section 3.18 Location.



     Each Credit Parties’ location (within the meaning of Article 9 of the UCC) is set forth on
Schedule 3.18. The office where each Credit Party keeps all the records (within the
meaning of Article 9 of the UCC) is at the address set forth on Schedule 3.18 to this
Agreement (or at such other locations as to which the notice and other requirements specified in
Section 10.2 shall have been satisfied). Each Credit Party’s organizational identification number
and tax identification number is set forth in the Closing Officer’s Certificate.



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     Section 3.19 No Burdensome Restrictions.



     None of the Credit Parties or their Subsidiaries or Affiliates is a party to any agreement or
instrument or subject to any other obligation or any charter or corporate restriction or any
provision of any Requirement of Law, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect.



     Section 3.20 Brokers’ Fees.



     None of the Credit Parties or their Subsidiaries or Affiliates has any obligation to any
Person in respect of any finder’s, broker’s, investment banking or other similar fee in connection
with any of the transactions contemplated under the Credit Documents other than the closing and
other fees payable pursuant to this Agreement and as set forth in the Fee Letter.



     Section 3.21 Labor Matters.



     There are no collective bargaining agreements or Multiemployer Plans covering the employees of
the Credit Parties or any of their Subsidiaries, other than as set forth in Schedule 3.21
hereto, and none of the Credit Parties or their Subsidiaries (a) has suffered any strikes,
walkouts, work stoppages or other material labor difficulty within the last five years, other than
as set forth in Schedule 3.21 hereto, or (b) has knowledge of any potential or pending
strike, walkout or work stoppage. Other than as set forth on Schedule 3.21, no unfair
labor practice complaint is pending against any Credit Party or any of its Subsidiaries. There
are no strikes, walkouts, work stoppages or other material labor difficulty pending or threatened
against any Credit Party or their Subsidiaries or Affiliates.



     Section 3.22 Accuracy and Completeness of Information.



     To each Credit Parties’ actual knowledge, the information, reports, certificates, documents,
financial statements, books, records, files, exhibits and schedules furnished in writing by or on
behalf of each Credit Party to the Administrative Agent in connection with the negotiation,
preparation or delivery of this Agreement and the other Credit 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 Credit Party to the
Administrative Agent and the Lenders in connection with this Agreement and the other Credit
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 Credit Party, 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 Credit Party to the Administrative Agent were prepared and presented in
good faith by or on behalf of each Credit Party.



     Section 3.23 Material Contracts.



     Schedule 3.23 sets forth a complete and accurate list of all Material Contracts of the
Credit Parties and their Subsidiaries. Each Material Contract is, and after giving effect to the
Transactions will be, in full force and effect in accordance with the terms thereof. To the extent
requested by the Administrative Agent, the Credit Parties have delivered to the Administrative
Agent a true and complete copy of each requested Material Contract. Schedule 3.23 shall be
updated from time to time, in



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accordance with Section 5.2 by the Borrowers to include new Material Contracts by giving
written notice thereof to the Administrative Agent.



     Section 3.24 Insurance.



     Each Credit Party has and maintains, with respect to its Properties and business, insurance
that meets the requirements of Section 5.5.



     Section 3.25 Security Documents.



     The Security Documents create valid security interests in, and Liens on, the Collateral
purported to be covered thereby. Except as set forth in the Security Documents, such security
interests and Liens are currently (or will be, upon (a) the filing of appropriate financing
statements with the Secretary of State of the state of incorporation or organization for each
Credit Party, in each case in favor of the Administrative Agent, on behalf of the Secured Parties,
and (b) the Administrative Agent obtaining control or possession over those items of Collateral in
which a security interest is perfected through control or possession) perfected security interests
and Liens, prior to all other Liens other than Permitted Liens. None of the Collateral is subject
to any Lien other than Permitted Liens. None of the Credit Parties nor any Person claiming through
or under any Credit Party shall have any claim to or interest in the Collection Account or the
Homewood Interest Reserve, except for the interest of the Borrowers in such property as a debtor
for purposes of the UCC.



     Section 3.26 Anti-Terrorism Laws.



     Neither any Credit Party nor any of its Subsidiaries or Affiliates is an “enemy” or an “ally
of the enemy” within the meaning of Section 2 of the Trading with the Enemy Act of the United
States of America (50 U.S.C. App. §§ 1 et seq.), as amended. None of the Credit Parties nor any of
their Subsidiaries or Affiliates is in violation of (a) the Trading with the Enemy Act, as amended,
(b) any of the foreign assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto
or (c) the Patriot Act. None of the Credit Parties nor any Subsidiary or Affiliate of any Credit
Party (i) is a blocked person described in Section 1 of the Anti-Terrorism Order or (ii) to the
best of its knowledge, engages in any dealings or transactions, or is otherwise associated, with
any such blocked person.



     Section 3.27 Compliance with OFAC Rules and Regulations.




     (a) None of the Credit Parties or their Subsidiaries or their respective Affiliates is
in violation of and shall not violate any of the country or list based economic and trade
sanctions administered and enforced by OFAC that are described or referenced at
http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published from time to
time.




     (b) None of the Credit Parties or their Subsidiaries or their respective Affiliates
(i) is a Sanctioned Person or a Sanctioned Entity, (ii) has a more than 10% of its assets
located in Sanctioned Entities, or (iii) derives more than 10% of its operating income from
investments in, or transactions with Sanctioned Persons or Sanctioned Entities. The
proceeds of any Loan will not be used and have not been used to fund any operations in,
finance any investments or activities in or make any payments to, a Sanctioned Person or a
Sanctioned Entity.



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     Section 3.28 Compliance with FCPA.



     Each of the Credit Parties and their Subsidiaries and Affiliates 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 Credit Parties or their Subsidiaries or Affiliates 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 Credit Party or its Subsidiary, its Affiliates or to any other Person,
in violation of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq.



     Section 3.29 Consent; Governmental Authorizations.



     No approval, consent or authorization of, filing with, notice to or other act by or in respect
of, any Governmental Authority or any other Person is required in connection with acceptance of
Extensions of Credit by the Borrowers or the making of the Guaranty or with the execution, delivery
or performance of any Credit Document by the Credit Parties (other than those which have been
obtained) or with the validity or enforceability of any Credit Document against the Credit Parties
(except such filings as are necessary in connection with the perfection of the Liens created by
such Credit Documents).



     Section 3.30 Bulk Sales.



     The execution, delivery and performance of this Agreement, the Credit Documents and the
transactions contemplated hereby do not require compliance with any “bulk sales” act or similar law
by any Credit Party.



     Section 3.31 Income and Required Payments.



     Each Credit Party acknowledges that all Income and Required Payments received, after the
Closing Date, by it or its Affiliates or its Subsidiaries or 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.



     Section 3.32 Full Payment.



     No Credit Party has any knowledge of any fact that should lead it to expect that each Loan
will not be paid in full.



     Section 3.33 Irrevocable Instructions.



     The Borrowers have delivered each Irrevocable Instruction required to be delivered by the
terms of this Agreement. The Credit Parties 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. No
Irrevocable Instruction violates any Requirement of 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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     Section 3.34 Compliance with Covenants.



     ART and its Consolidated Subsidiaries are in full compliance with the Financial Covenants and
all Credit Parties are in full compliance with all other applicable covenants, duties and
agreements contained in the Credit Documents.



     Section 3.35 Collateral Agreements.



     The Credit Parties have delivered to the Administrative Agent or the Custodian all documents
and agreements related to, governing or affecting the Collateral, including, without limitation,
the Mortgage Loan Documents, the Servicer Agreements and the Pooling and Servicing Agreements, and,
to the best of the Borrowers’ knowledge, no material default or event of default exists thereunder.



     Section 3.36 No Reliance.



     Each Credit Party has made its own independent decisions to enter into the Credit 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 Credit Party 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.



     Section 3.37 Collateral.



     (a) 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 Credit Party’s actions or
inactions; (b) there are no agreements on the part of any Credit Party to issue, sell or distribute
the Collateral, other than this Agreement and the Credit Documents; and (c) no Credit Party has any
obligation (contingent or otherwise) to purchase, redeem or otherwise acquire any securities or any
interest therein or to pay any dividend or make any distribution in respect of the Collateral,
except, in the case of (a) and (b), for purchase rights that may be contained in any applicable
intercreditor agreement included in the Mortgage Asset File.



     Section 3.38 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.



     Section 3.39 Insider.



     No Credit Party 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



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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.



     Section 3.40 No Defenses.



     There are no defenses, offsets, counterclaims, abatements, rights of rescission or other
claims, legal or equitable, available to any Credit Party with respect to this Agreement, the
Credit Documents, the Collateral or any other instrument, document and/or agreement described
herein or in the other Credit Documents, or with respect to the obligation of the Credit Parties to
repay the Obligations or any other obligation under the Credit Documents.



     Section 3.41 Eligible Subordinated Debt.



     All of the Trust Preferred Debt (a) has subordination provisions substantially the same as
those contained in the indentures for other transactions listed in clause (a) of the definition of
“Eligible Subordinated Debt,” (b) has enforceable subordination provisions, and (c) has a maturity
no earlier than the date that is six (6) months following the 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.



     Section 3.42 Selection Procedures.



     No procedures believed by any Credit Party to be adverse to the interests of the
Administrative Agent or the Lenders were utilized by any Credit Party in identifying and/or
selecting the Collateral. In addition, each Mortgage Asset shall have been underwritten in
accordance with and satisfy any applicable standards that have been established by the Credit
Parties and any of their Subsidiaries or Affiliates and are then in effect.



     Section 3.43 Value Given.



     To the extent a Borrower acquired Mortgage Assets, such Borrower shall have given reasonably
equivalent value to each transferor in consideration for such transfer to such Borrower, no such
transfer shall have been made for or on account of an antecedent debt owed by the transferor
thereunder to such Borrower, and no such transfer is or may be voidable or subject to avoidance
under any section of the Bankruptcy Code.



     Section 3.44 Separateness.



     Each Borrower (other than Arbor Realty and ARSR) is in compliance with the requirements of
Section 5.24.



     Section 3.45 Qualified Transferees.



     With respect to each Mortgage Asset, each Borrower and the Administrative Agent are “qualified
transferees”, “qualified institutional lenders” or “qualified lenders” (however such terms are
phrased or denominated) under the terms of the applicable Mortgage Loan Documents with respect to
each party’s ability to hold and/or to be a pledgee and/or transferee of each such Mortgage Asset.
The Assignments and the pledge of the Mortgage Assets to the Administrative Agent, on behalf of the
Secured Parties, do not violate any provisions of the underlying Mortgage Loan Documents.



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     Section 3.46 Eligibility of Mortgage Assets.



     With respect to each Mortgage Asset, each representation and warranty set forth in
Schedule 1.1(c) applicable thereto is true and correct. Each of the representations and
warranties contained in the Mortgage Loan Documents and in any statement, affirmation or
certification made or any information, document, report, notice or agreement provided to the
Administrative Agent relating to any Mortgage Asset is true and correct in all material respects.



     Section 3.47 Ability to Perform.



     None of the Credit Parties believes, or has any reason or cause to believe, that it cannot
perform each and every agreement, duty, obligation and covenant contained in the Credit Documents
applicable to it and to which it is a party. None of the Credit Parties is subject to any
restriction that would unduly burden its ability to timely and fully perform each and every
applicable covenant, duty, obligation and agreement contained in the Credit Documents and/or the
Mortgage Loan Documents. None of the Credit Parties is a party to any agreement or instrument or
subject to any restriction, which could reasonably be expected to have a Material Adverse Effect.



     Section 3.48 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 1.60114). 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 Borrowers acknowledge and agree 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 301.61121, and the Administrative Agent and the Lenders will maintain the lists
and other records required by such Treasury Regulation.



     Section 3.49 Set-Off, etc.



     No Collateral has been compromised, adjusted, extended, satisfied, subordinated, rescinded,
set-off or modified by the Credit Parties 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 Credit Parties or any
obligor with respect thereto.



     Section 3.50 Warrant Agreements, Etc.



     ART hereby represents and warrants that (a) the issued and outstanding common equity
securities of ART, as well as the total authorized options under ART’s stock option plan and the
issued and outstanding preferred equity securities are set forth on Schedule 3.50 to this
Agreement; (b) except as set forth on Schedule 3.50, ART has not issued any other shares of its
common stock and there are no further subscriptions, contracts or agreements for the issuance or
purchase of any other or additional common equity securities in ART, either in the form of options,
agreements, warrants, calls, convertible securities or other similar rights, other than the Warrant
Agreements; (c) the Warrant Agreements and all of the outstanding shares of common stock under the
Warrant Agreements, when issued and paid for upon exercise of the Warrant Agreements in accordance
with the terms thereof, will have been duly and validly



72









 







authorized and issued and will be fully paid and nonassessable and will have been offered, issued,
sold and delivered to the holder in compliance with applicable Securities Laws; (d) the number of
shares of ART’s common stock reserved for issuance as set forth on Schedule 3.50 is not subject to
adjustment by reason of the issuance of the Warrant Agreements or the common stock issuable upon
the exercise thereof; (e) the offer and sale of the Warrant Agreements and the common stock to be
issued to the holder upon exercise of the Warrant Agreements in accordance with the terms thereof,
are not required to be registered pursuant to Section 5 of the Securities Act or any other
Securities Laws; (f) neither ART nor any agent on its behalf has solicited or will solicit any
offers to sell or has offered to sell or will offer to sell all or any part of the Warrant
Agreements (or the common stock to be issued upon exercise of the Warrant Agreements) so as to
bring the issuance of the Warrant Agreements within the registration provisions of the Securities
Act or any other Securities Laws; and (g) all prior offerings and sales of securities of ART were
in compliance with all applicable Securities Laws.



     Section 3.51 Representations and Warranties.



     The representations and warranties contained herein, required by or identified in this
Agreement and the other Credit Documents and the review and inquiries made on behalf of the Credit
Parties in connection therewith have all been made by Persons having the requisite expertise,
knowledge and background to provide such representations and warranties. On the Borrowing Date for
each Extension of Credit and on each day that Collateral remains subject to this Agreement and the
Credit Documents, the Credit Parties shall be deemed to restate and make each of the
representations and warranties made by it in this Article III and in Schedule 1.1(c) of
this Agreement.



ARTICLE IV




CONDITIONS PRECEDENT




     Section 4.1 Conditions to Restatement Date.



     This Agreement shall become effective upon, and the obligation of each Lender to make the Term
Loans and the initial Revolving Loans (if any) on the Restatement Date, is subject to, the
satisfaction of the following conditions precedent:




     (a) Execution of Credit Agreement; Credit Documents and Lender Consents. The
Administrative Agent shall have received (i) counterparts of this Agreement, executed by a
duly authorized officer of each party hereto, (ii) for the account of each Revolving Lender
requesting a promissory note, a Revolving Note, (iii) for the account of each Term Loan
Lender requesting a promissory note, a Term Loan Note, (iv) counterparts of the Security
Documents, in each case conforming to the requirements of this Agreement and executed by
duly authorized officers of the Credit Parties or other Person, as applicable,
(vi) counterparts of any other Credit Document, executed by the duly authorized officers of
the parties thereto and (vii) executed consents, in the form of Exhibit 4.1(a), from
each Lender authorizing the Administrative Agent to enter this Credit Agreement on their
behalf.




     (b) Authority Documents. The Administrative Agent shall have received the
following:




     (i) Authority Documents. Original certified Authority Documents of
each Credit Party certified (A) by a Responsible Officer of such Credit Party
(pursuant to the Closing Officer’s Certificate) as of the Restatement Date to be
true and correct and in



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force and effect as of such date, and (B) in the case of the articles of
incorporation, certificates of formation or other Authority Documents filed with a
Governmental Authority, to be true and complete as of a recent date by the
appropriate Governmental Authority of the state of its incorporation or
organization, as applicable.




     (ii) Resolutions. Copies of resolutions of the board of directors or
comparable managing body of each Credit Party approving and adopting the Credit
Documents, the transactions contemplated therein and authorizing execution and
delivery thereof, certified by a Responsible Officer of such Credit Party (pursuant
to the Closing Officer’s Certificate) as of the Restatement Date to be true and
correct and in force and effect as of such date.




     (iii) Good Standing. Original certificates of good standing, existence
or its equivalent with respect to each Credit Party certified as of a recent date by
the appropriate Governmental Authorities of the state of incorporation or
organization.




     (iv) Incumbency. An incumbency certificate of each Credit Party
certified by a Responsible Officer (pursuant to the Closing Officer’s Certificate)
to be true and correct as of the Restatement Date.




     (c) Legal Opinion of Counsel. The Administrative Agent shall have received one
(1) or more Opinions of Counsel (including, if requested by the Administrative Agent, local
counsel opinions) of counsel for the Credit Parties, dated the Restatement Date and
addressed to the Administrative Agent and the Lenders, in form and substance acceptable to
the Administrative Agent (which shall include, without limitation, opinions with respect to
the due organization and valid existence of each Credit Party, opinions as to perfection of
the Liens granted to the Administrative Agent pursuant to the Security Documents and
opinions as to the non-contravention of the Credit Parties’ organizational documents and
Material Contracts).




     (d) Personal Property Collateral. The Administrative Agent shall have
received, in form and substance satisfactory to the Administrative Agent:




     (i) (A) searches of UCC filings in the jurisdiction of incorporation or
formation, as applicable, of each Credit Party, copies of the financing statements
on file in such jurisdictions and evidence that no Liens exist (or the same have
been appropriately terminated) other than Permitted Liens and (B) tax lien,
bankruptcy, judgment and pending litigation searches, the results of which shall be
acceptable to the Administrative Agent in its discretion;




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




     (iii) stock or membership certificates, if any, evidencing the Equity Interests
pledged to the Administrative Agent pursuant to the Pledge Agreements and duly
executed in blank undated stock or transfer powers;




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



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     (v) all Instruments and chattel paper in the possession of any of the Credit
Parties, together with allonges or assignments as may be necessary or appropriate to
perfect the Administrative Agent’s and the Lenders’ security interest in the
Collateral;




     (vi) the Account Control Agreement and the Homewood Account Control Agreement;
and




     (vii) if applicable, executed control agreements necessary to perfect any
Collateral where the perfection thereof is by control.




     (e) Liability, Casualty, Property and Business Interruption Insurance. The
Administrative Agent shall have received, to the extent requested, copies of insurance
policies or certificates and endorsements of insurance evidencing liability, casualty,
property and business interruption insurance meeting the requirements set forth herein or in
the Security Documents.




     (f) Account Designation Notice. The Administrative Agent shall have received
the executed Account Designation Notice in the form of Exhibit 1.1(a) hereto.




     (g) Notice of Borrowing. The Administrative Agent shall have received a Notice
of Borrowing with respect to the Loans to be made on the Restatement Date, together with all
other documents, agreements or instruments required by Section 4.2.




     (h) Consents. The Administrative Agent shall have received evidence that all
boards of directors, governmental, shareholder and material third party consents and
approvals necessary in connection with the Transactions have been obtained and all
applicable waiting periods have expired without any action being taken by any authority that
could restrain, prevent or impose any material adverse conditions on such transactions or
that could seek or threaten any of the foregoing.




     (i) Compliance with Laws. The financings and other Transactions contemplated
hereby shall be in compliance with all Requirements of Law (including all applicable
Securities Laws and banking laws, rules and regulations).




     (j) Bankruptcy. There shall be no Insolvency Proceedings pending with respect
to any Credit Party or any Affiliate or Subsidiary thereof.




     (k) [Reserved].




     (l) Financial Statements. The Administrative Agent and the Lenders shall have
received copies of the financial statements referred to in Section 3.1, each in form and
substance satisfactory to it.




     (m) No Material Adverse Change. No Material Adverse Effect shall have
occurred.




     (n) Closing Officer’s Certificate. The Administrative Agent shall have
received a Closing Officer’s Certificate executed by a Responsible Officer of each of the
Credit Parties as of the Restatement Date, substantially in the form of
Exhibit 4.1(n) stating, among other things, that (i) there does not exist any
pending or ongoing, action, suit, investigation, litigation or proceeding in any court or
before any other Governmental Authority (A) affecting this Agreement or the other Credit
Documents, that has not been settled, dismissed, vacated, discharged or terminated prior to
the Restatement Date or (B) that purports to affect any Credit Party or any of its



75









 







Subsidiaries or Affiliates, or any transaction contemplated by the Credit Documents,
which action, suit, investigation, litigation or proceeding could reasonably be expected to
have a Material Adverse Effect, that has not been settled, dismissed, vacated, discharged or
terminated prior to the Restatement Date, (ii) immediately after giving effect to this
Agreement, the other Credit Documents, and all the Transactions contemplated to occur on
such date, (A) no Default or Event of Default exists, (B) all representations and warranties
contained herein and in the other Credit Documents and in any other document, agreement,
statement, affirmation, certificate, notice, report or financial or other statement
delivered in connection therewith are true and correct, and (C) ART is in compliance with
each of the Financial Covenants set forth in Section 5.9, (iii) each of the other conditions
precedent in Sections 4.1 and 4.2 have been satisfied, except to the extent the satisfaction
of any such condition is subject to the judgment or discretion of the Administrative Agent
or any Lender and (iv) each of the Borrowers is Solvent before and after giving effect to
the initial borrowings under the Credit Documents.




     (o) Patriot Act Certificate. At least five (5) Business Days prior to the
Restatement Date, the Administrative Agent shall have received a certificate satisfactory
thereto, substantially in the form of Exhibit 4.1(o), for benefit of itself and the
Lenders, provided by the Credit Parties that sets forth information required by the Patriot
Act including, without limitation, the identity of the Credit Parties, the name and address
of the Credit Parties and other information that will allow the Administrative Agent or any
Lender, as applicable, to identify the Credit Parties in accordance with the Patriot Act.




     (p) Material Contracts. To the extent requested by the Administrative Agent,
the Administrative Agent shall have received true and complete copies, certified, in the
Closing Officer’s Certificate, as true and complete, of all requested Material Contracts,
together with all exhibits and schedules.




     (q) Power of Attorney. The Administrative Agent shall have received duly
executed powers of attorney in the form attached as Exhibit 4.1(q)(i) and
Exhibit 4.1(q)(ii), as applicable, from each Borrower and each pledgor under a
Pledge Agreement.




     (r) Fees and Expenses. The Administrative Agent and the Lenders shall have
received all fees and expenses, if any, owing pursuant to the Fee Letter and Section 2.3.




     (s) Additional Matters. All other documents and legal matters in connection
with the transactions contemplated by this Agreement and the other Credit Documents shall be
reasonably satisfactory in form and substance to the Administrative Agent and its counsel.



     Section 4.2 Conditions to All Extensions of Credit.



     The obligation of each Lender to make any Extension of Credit hereunder, including the
obligation of each Lender to make the Term Loan on the Funding Date and the pledge by any Borrower
of any Collateral, in each case is subject to the following conditions:




     (a) Representations and Warranties. The representations and warranties made by
the Credit Parties herein, in the Credit Documents, in any schedule to the Credit Documents,
in the Mortgage Documents and which are contained in any certificate, document, report or
notice furnished at any time under or in connection herewith or the other Credit Documents
shall (i) with respect to representations and warranties that contain a materiality
qualification, be true and correct and (ii) with respect to representations and warranties
that do not contain a materiality



76









 







qualification, be true and correct in all material respects, in each case on and as of
the date of such Extension of Credit as if made on and as of such date.




     (b) No Default or Event of Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the Extension of Credit to
be made on such date unless such Default or Event of Default shall have been waived in
accordance with this Agreement.




     (c) Compliance with Commitments. Before and immediately after giving effect to
the making of any such Extension of Credit (and the application of the proceeds thereof),
(i) the sum of the aggregate principal amount of outstanding Revolving Loans shall not
exceed the Revolving Committed Amount then in effect and (ii) the Availability shall not be
negative.




     (d) Additional Conditions to Revolving Loans. If a Revolving Loan is
requested, all requirements and conditions set forth in Section 2.1 or other applicable
Sections of this Agreement shall have been satisfied.




     (e) Requirement of Law. No Requirement of 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 Extension of Credit in accordance with the
provisions hereof or any other transaction contemplated herein.




     (f) Confirmation. The Borrowers shall have delivered a Confirmation, via
Electronic Transmission, in accordance with the procedures set forth in Sections 2.1 and
2.2, and the Administrative Agent shall have determined that the Mortgage Asset described in
such Confirmation is an Eligible Asset, shall have approved in writing in its discretion the
pledge of the related Eligible Asset and the related Loan, if applicable (which approvals
shall be evidenced by the Administrative Agent’s execution of the related Confirmation), and
shall have obtained all necessary internal credit and other approvals for such Extension of
Credit. With respect to requirements for additional Revolving Loans on existing Revolving
Loan Collateral under Section 2.1(b)(iv), all requirements and conditions of such Section
are satisfied.




     (g) Compliance Certificate. The Administrative Agent shall have received a
Compliance Certificate in the form of Exhibit 1.1(i) from a Responsible Officer of
the Credit Parties.




     (h) Due Diligence. Subject to the Administrative Agent’s right to perform one
or more Due Diligence Reviews pursuant to Section 10.27, the Administrative Agent shall have
completed its due diligence review of the Mortgage Asset File and the Underwriting Package
for each Mortgage Asset and such other documents, records, agreements, instruments,
mortgaged properties or information relating to such Mortgage Asset as the Administrative
Agent in its discretion deems appropriate to review and such review shall be satisfactory to
the Administrative Agent in its discretion.




     (i) Servicing Agreements. With respect to any Eligible Asset to be pledged
hereunder on the related Borrowing Date that is not serviced by a Borrower, the applicable
Borrower shall have provided to the Administrative Agent copies of the related Servicing
Agreements and the Pooling and Servicing Agreements, certified as true, correct and complete
copies of the originals, together with Servicer Redirection Notices fully executed by the
applicable Borrower and the Servicer or PSA Servicer, as applicable, or such other evidence
satisfactory to the Administrative Agent in its discretion that the applicable Servicer or
PSA



77









 







Servicer has been instructed to deliver all Income with respect to the Collateral to
the Collection Account, which instructions may not be modified without the Administrative
Agent’s prior written consent.




     (j) Fees and Expenses. The Administrative Agent shall have received all fees
and expenses of the Administrative Agent, the Lenders and counsel to the Administrative
Agent due hereunder and under the Fee Letter and, to the extent the Borrowers are required
hereunder to reimburse the Administrative Agent for such amounts, the Administrative Agent
shall have received the reasonable costs and expenses incurred by them in connection with
the entering into of any Extension of Credit hereunder, including, without limitation, costs
associated with due diligence recording or other administrative expenses necessary or
incidental to the execution of any transaction hereunder, which amounts, at the
Administrative Agent’s option, may be withheld from the sale proceeds of any Extension of
Credit hereunder.




     (k) Material Adverse Change. There shall not 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 and no
Material Adverse Effect shall have occurred.




     (l) Trust Receipt. For each Non–Table Funded Mortgage Asset, the Administrative
Agent shall have received from the Custodian on or before each Borrowing Date a Trust
Receipt (along with a completed Mortgage Asset File Checklist attached thereto) and an Asset
Schedule and Exception Report with respect to the Basic Mortgage Asset Documents for each
Eligible Asset, in each case dated the Borrowing Date, duly completed and, in the case of
the Asset Schedule and Exception Report, with exceptions acceptable to the Administrative
Agent in its discretion in respect of Eligible Assets to be pledged hereunder on such
Business Day. In the case of a Table Funded Mortgage Asset, the Administrative Agent shall
have received on the related Borrowing Date the Table Funded Trust Receipt and all other
items described in the second (2nd) sentence of Subsection 2.1(b)(6), each in form and
substance satisfactory to the Administrative Agent in its discretion, provided that the
Administrative Agent subsequently receives the items described in Subsections 2.1(b)(4) and
(6) and the other delivery requirements under the Custodial Agreement on or before the date
and time specified herein and therein, which items shall be in form and substance
satisfactory to the Administrative Agent in its discretion. In the case of Term Loans, the
Custodian shall have possession of all Mortgage Loan Documents for the Term Loan Collateral
and the Administrative Agent shall be in receipt of Trust Receipts for the Term Loan
Collateral and all other conditions under the Custodial Agreement are satisfied with respect
to such Term Loan Collateral.




     (m) Release Letters. The Administrative Agent shall have received from the
applicable Borrower a Warehouse Lender’s Release Letter (or such other form acceptable to
the Administrative Agent), if applicable, or a Borrower’s Release Letter (or such other form
acceptable to the Administrative Agent) covering each Eligible Asset to be pledged to the
Administrative Agent.




     (n) Covenants and Agreements. On and as of such day, the Credit Parties and
the Custodian shall have performed all of the covenants and agreements and satisfied all
other conditions contained in the Credit Documents to be performed or satisfied by such
Person on or prior to such day.



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     (o) Irrevocable Instruction. The Administrative Agent shall have received
evidence satisfactory to the Administrative Agent that, in connection with any Required
Payment, the payor thereof has been instructed to deliver the Net Cash Proceeds to the
Collection Account, which instructions may not be modified without the prior written consent
of the Administrative Agent.




     (p) Certificates of Good Standing. If applicable and to the extent required
for the Administrative Agent or any Lender to assert its rights with respect to an Eligible
Asset, a certification of good standing for the Borrowers in each jurisdiction where the
Underlying Mortgaged Property is located.




     (q) Power of Attorney. To the extent there are additional Borrowers other than
the initial Borrowers, the additional Borrowers shall each deliver to the Administrative
Agent a duly executed power of attorney in the form attached as Exhibit 4.1(q), a
Joinder Agreement in form and substance satisfactory to the Administrative Agent in its
discretion and all other agreements, documents, certifications, UCC financing statements and
Opinions of Counsel required of the Borrowers hereunder at the Restatement Date or under the
Joinder Agreement.




     (r) Control Agreements. With respect to any Mortgage Asset or collateral for a
Mortgage Asset that is an uncertificated security (as defined in the UCC), securities
entitlement (as defined in the UCC) or is held in a securities account (as defined in the
UCC), the Borrower shall provide to the Administrative Agent a control agreement, which
shall be acceptable to the Administrative Agent in its discretion and shall be delivered to
the Custodian under the Custodial Agreement, executed by the issuer of the Mortgage Asset or
the collateral for the Mortgage Asset or the related securities intermediary (as defined in
the UCC), as applicable, granting control (as defined in the UCC) of such Mortgage Asset or
collateral for such Mortgage Asset to the Administrative Agent and providing that, after an
Event of Default, the Administrative agent shall be entitled to notify the issuer or
securities intermediary, as applicable, that such issuer or securities intermediary shall
comply exclusively with the instructions or entitlement orders (as defined in the UCC), as
applicable, of the Administrative Agent without the consent of the Borrower or any other
Person and no longer follow the instructions or entitlement orders, as applicable, of the
Borrower or any other Person (other than the Administrative Agent).




     (s) Consents. Any and all consents, approvals and waivers applicable to the
Collateral shall have been obtained.




     (t) Custodial Agreement Insurance. The Administrative Agent shall be in
receipt of the evidence of insurance (if any) required by Section 9.1 of the Custodial
Agreement.




     (u) Pledge Provisions. To the extent the Mortgage Loan Documents for the
related Eligible Asset contain notice, cure and other provisions in favor of a pledgee of
the Eligible Asset under a repurchase or warehouse facility, the applicable Borrower shall
provide evidence to the Administrative Agent that the applicable Borrower has given notice
to the applicable Persons of the Administrative Agent’s interest in such Eligible Asset and
otherwise satisfied any other applicable requirements under such pledgee provisions so that
the Administrative Agent is entitled to receive the benefits and exercise the rights of a
pledgee under the terms of such pledgee provisions contained in the related Mortgage Loan
Documents.




     (v) Existing Indebtedness of the Borrowers. All of the existing Indebtedness
for borrowed money of the Borrowers (other than Arbor Realty and ARSR) (other than
Indebtedness



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permitted to exist pursuant to Section 6.1 and the Working Capital Facility) shall be
repaid in full and all security interests related thereto shall be terminated on or prior to
the Restatement Date.




     (w) Notice of Borrowing. The Administrative Agent shall have received a Notice
of Borrowing with respect to the Loans to be made on each Borrowing Date, together with all
other documents, agreements or instruments required by this Section.




     (x) Documents, Reports, Certifications, Etc. The Administrative Agent shall
have received all such other and further documents, reports, certifications, approvals and
opinions of Counsel as the Administrative Agent in its discretion shall reasonably require.



     The failure of any Credit Party, as applicable, to satisfy any of the foregoing conditions
precedent in respect of any Extension of Credit 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 Administrative Agent, which right may be exercised at any time on the demand of the
Administrative Agent, to rescind the related Extension of Credit and direct the Borrowers to pay to
the Administrative Agent as agent for the Secured Parties an amount equal to the outstanding
principal amount of such Extension of Credit, accrued interest and other amounts due in connection
therewith during any such time that any of the foregoing conditions precedent were not satisfied.



     Each request for an Extension of Credit and each acceptance by the Borrowers of any such
Extension of Credit shall be deemed to constitute representations and warranties by the Credit
Parties as of the date of the request and as of the date of such Extension of Credit that the
conditions set forth in Sections 4.1 and 4.2 have been satisfied.



ARTICLE V




AFFIRMATIVE COVENANTS




     Each of the Credit Parties hereby covenants and agrees that on the Restatement Date, and
thereafter (a) for so long as this Agreement is in effect, (b) until the Commitments have
terminated, and (c) until no Note remains outstanding and unpaid and the Obligations and all other
amounts owing to the Administrative Agent or any Lender hereunder are paid in full, such Credit
Party shall, and shall cause each of their Subsidiaries (other than in the case of Sections 5.1 or
5.2 hereof), to:



     Section 5.1 Financial Statements.



     Furnish to the Administrative Agent and each of the Lenders:




     (a) Annual Financial Statements. As soon as available, and in any event within
one hundred twenty (120) calendar 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;



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     (b) Quarterly Financial Statements. 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);




     (c) Annual Operating Budget and Cash Flow. As soon as available, but in any
event not later than one hundred twenty (120) calendar days after the end of each fiscal
year of the Credit Parties, and provided that the disclosure does not violate any
Requirement of Law relating to insider trading, a copy of the projections of the Credit
Parties of the consolidated operating budget and cash flow budget of the Credit Parties, for
the succeeding fiscal 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;




     (d) Obligor Operating Statement and Rent Rolls. With respect to each Mortgage
Asset, if provided to any Borrower or any Servicer or PSA Servicer by the Obligor under any
Mortgage Asset, as soon as available, but in any event not later than forty-five (45)
calendar days after the end of each fiscal quarter of the Borrowers, the operating statement
and rent roll for each Underlying Mortgaged Property; provided, however, the
Administrative Agent reserves the right in its reasonable discretion to request such
information on a monthly basis (to be provided no later than thirty (30) calendar days after
the end of each month);




     (e) Obligor Balance Sheet. With respect to each Mortgage Asset, if provided to
any Borrower, Servicer or PSA Servicer by the Obligor under any Mortgage Asset, as soon as
available, but in any event not later than thirty (30) calendar days after receipt thereof,
the annual balance sheet with respect to such Obligor; and




     (f) Securitization Report. With respect to each Mortgage Asset, as soon as
available but in any event not later than thirty (30) calendar days after receipt thereof,
(A) the related monthly securitization report, if any, and any other reports delivered under
any Servicing Agreement or any Pooling and Servicing Agreements to any Credit Party, if any,
and, (B) within thirty (30) calendar days after the end of each quarter, a copy of the
standard monthly exception report prepared by any Credit Party in the ordinary course of
business in respect of the related Mortgage Assets or Underlying Mortgaged Property;


all such financial statements to be complete and correct in all material respects (subject, in the
case of interim statements, to normal recurring year-end audit adjustments) and to be prepared in
reasonable detail and, in the case of the annual and quarterly financial statements provided in
accordance with subsections (a) and (b) above, in accordance with GAAP applied consistently
throughout the periods reflected therein and further accompanied by a description of, and an
estimation of the effect on the financial statements on account of, a change, if any, in the
application of accounting principles as provided in Section 1.3, provided that any
financial statements delivered with respect to an Obligor under any Mortgage Asset may be delivered
to the Administrative Agent in the form received.




     Notwithstanding the foregoing, financial statements and reports required to be delivered
pursuant to the foregoing provisions of this Section may be delivered by Electronic Transmission
and if so, shall be



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deemed to have been delivered on the date on which the Administrative Agent receives such
reports from the Borrowers through electronic mail; provided that, upon the Administrative
Agent’s request, the Borrowers shall provide paper copies of any documents required hereby to the
Administrative Agent.



     Section 5.2 Certificates; Other Information.




Furnish to the Administrative Agent and each of the Lenders:




     (a) Accountants’ Certificate. Concurrently with the delivery of the financial
statements referred to in Section 5.1(a) above, a certificate of the independent certified
public accountants reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate.




     (b) Compliance Certificate. Concurrently with the delivery of the financial
statements referred to in Sections 5.1(a) and (b) and in connection with the delivery of
each Notice of Borrowing and each Extension of Credit, a Compliance Certificate from a
Responsible Officer of each Credit Party, 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.




     (c) Updated Schedules. Concurrently with or prior to the delivery of the
financial statements referred to in Sections 5.1(a) and 5.1(b) above, (i) an updated copy of
Schedule 3.3 and Schedule 3.12 if the Borrowers or any of their Subsidiaries
have formed or acquired a new Subsidiary since the Restatement Date or since such Schedule
was last updated, as applicable, (ii) an updated copy of Schedule 3.23 if any new
Material Contract has been entered into since the Restatement Date or since
Schedule 3.23 was last updated, as applicable, together with a copy of each new
Material Contract to the extent as requested by the Administrative Agent.




     (d) Calculations. (i) Within ninety (90) days after the end of each fiscal
year of the Credit Parties, a certificate containing information including the amount of all
dividends paid and Equity Issuances that were made or engaged in during the prior fiscal
year and amounts received in connection with any Extraordinary Receipt during the prior
fiscal year, (ii) 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, a Compliance Certificate
regarding compliance with the Availability and the calculation thereof and/or any update
that the Administrative Agent may request with respect to the Compliance Certificate, and
(iii) promptly upon entering into an engagement letter or commitment or otherwise
documenting any proposed Equity Issuance, a notice containing information regarding any
proposed 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.




     (e) Proposed Transactions. (i) Upon request, any and all information,
documents and reports regarding any proposed Trust Preferred Debt as the Administrative
Agent may require in its reasonable discretion, and (ii) as soon as possible and in any
event within thirty (30) days after the closing of any proposed Trust Preferred Debt, fully
executed copies of all loan documentation for any such Permitted Repurchase Facility or
proposed Trust Preferred Debt.




     (f) Collateral. With respect to the Collateral, any future Collateral and the
Required Payments, any and all material documents, certificates, agreements, instruments,
reports or notices received by or available to any Credit Party or any Subsidiary or
Affiliate within three (3)



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Business Days of the receipt or availability thereof, and any information, documents
and reports as the Administrative Agent may require in its discretion.




     (g) Reports. (i) Within forty-five (45) days of the end of each calendar
quarter, the Borrowers shall provide the Administrative Agent with a quarterly report, which
report shall include, among other items, a summary of the Borrowers’ delinquency and loss
experience with respect to Mortgage Assets serviced by any Borrower or any Servicer or PSA
Servicer or any designee of the foregoing, the Borrowers’ internal risk rating, the
borrower’s, any Servicer’s or any PSA Servicer’s surveillance reports on the Mortgage
Assets, and, to the extent provided to any Borrower or any Servicer or PSA Servicer by the
Obligors under any Mortgage Assets, operating statements, the occupancy status of such
Underlying Mortgaged Property and other property level information, and (ii) on a monthly
basis, within ten (10) days of receipt or preparation thereof by any Borrower, any Servicer
or PSA Servicer, any remittance, servicing and/or exception reports with respect to the
servicing of any Mortgage Assets or the Underlying Mortgaged Properties and any other report
delivered under any Servicing Agreement or Pooling and Servicing Agreement, plus any
such additional reports as the Administrative Agent may reasonably request with respect to
any Borrower or any Servicer or PSA Servicer servicing portfolio or pending originations of
Mortgage Assets.




     (h) Mortgage Asset Data Summary. No later than the fifteenth (15th) day of
each month, with respect to each Mortgage Asset, a Mortgage Asset Data Summary,
substantially in the form of Exhibit 5.2(h) (“Mortgage Asset Data Summary”),
shall be properly completed by the Borrowers and delivered to the Administrative Agent.




     (i) Mortgage Assets. The Borrowers shall promptly deliver or cause to be
delivered to the Administrative Agent (i) any report or material notice received by any
Borrower, any Servicer or any PSA Servicer from any Obligor under Collateral promptly
following receipt thereof and (ii) any other such document or information relating to the
Collateral as the Administrative Agent may reasonably request in writing from time to time.




     (j) Underwriting Package. Promptly, any modifications or additions to the
items contained in the Underwriting Package.




     (k) Reports; SEC Filings; Regulatory Reports; Press Releases; Etc. Promptly
upon their becoming available, (i) copies of all reports (other than those provided pursuant
to Section 5.1 and those which are of a promotional nature) and other financial information
which any Credit Party or any Subsidiary or Affiliate sends to its shareholders, (ii) copies
of all reports and all registration statements and prospectuses, if any, which any Credit
Party or any Subsidiary or Affiliate may make to, or file with, the SEC (or any successor or
analogous Governmental Authority) or any securities exchange or other private regulatory
authority, (iii) all material regulatory reports, (iv) all press releases and other
statements made available by any of the Credit Parties or any Subsidiary or Affiliate to the
public concerning material developments in the business of any of the Credit Parties, (v) to
the extent not prohibited by Requirements of Law, copies of all documents that the Credit
Parties or any Subsidiary or Affiliate thereof are required to file with any regulatory body
in accordance with its regulations, and (vi) any non-routine correspondence or official
notices received by any Credit Party or any Subsidiary or Affiliate of a Credit Party from
any Governmental Authority which regulates the operations of any Credit Party or any
Subsidiary or Affiliate of a Credit Party which is likely to have a Material Adverse Effect.




     (l) Management Letters; Etc. Promptly upon receipt thereof, a copy or summary
of any other report, “management letter” or similar report submitted by independent
accountants to



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any Credit Party or any of their Subsidiaries in connection with any annual, interim or
special audit of the books of such Person.




     (m) Pledged Mortgage Asset Certificate. Within ten (10) days of the end of
each calendar month, the Borrowers shall provide the Administrative Agent with a monthly
report, which report shall include, among other items, all proposed repayments, prepayments
and sales of the Pledged Mortgage Assets, which schedule shall be acceptable to the
Administrative Agent in its discretion.




     (n) General Information. Promptly, such additional financial and other
information as the Administrative Agent or any Lender may from time to time reasonably
request.



     Section 5.3 Payment of Taxes and Other Obligations.



     Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, subject, where applicable, to specified grace periods, (a) all of its taxes
(Federal, state, local and any other Taxes) and (b) all of its other obligations and liabilities of
whatever nature in accordance with industry practice and (c) any additional costs that are imposed
as a result of any failure to so pay, discharge or otherwise satisfy such Taxes, obligations and
liabilities, except when the amount or validity of any such Taxes, obligations and liabilities is
currently being contested in good faith by appropriate proceedings and reserves, if applicable, in
conformity with GAAP with respect thereto have been provided on the books of the Credit Parties.



     Section 5.4 Conduct of Business and Maintenance of Existence.



     Continue to engage in business of the same general type as now conducted by it on the Closing
Date and preserve, renew and keep in full force and effect its corporate or other formative
existence and good standing, take all action to maintain all rights, privileges, licenses and
franchises necessary, required or desirable in the normal conduct of its business and to maintain
its goodwill and comply with all Contractual Obligations and Requirements of Law.



     Section 5.5 Maintenance of Property; Insurance.




     (a) Keep all material Property useful and necessary in its business in good working
order and condition (ordinary wear and tear and obsolescence excepted).




     (b) Maintain with financially sound and reputable insurance companies liability,
casualty, property and business interruption 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 the request of
the Administrative Agent, full information as to the insurance carried.



     Section 5.6 Inspection of Property; Books and Records; Discussions.



     Keep proper books, records and accounts in which full, true and correct entries in conformity
with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to
its businesses and activities; and permit, during regular business hours and upon reasonable notice
by the Administrative Agent or any Lender, the Administrative Agent or any Lender to visit and
inspect any of its properties and examine and make abstracts from any of its books and records at
any reasonable time and as often as may reasonably be desired, and to discuss the business,
operations, properties, financial conditions and other conditions of the Credit Parties and their
Subsidiaries and Affiliates with officers and



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employees of the Credit Parties and their Subsidiaries and Affiliates and with its independent
certified public accountants.



     Section 5.7 Notices.



     Give notice in writing to the Administrative Agent (which shall promptly transmit such notice
to each Lender):




     (a) promptly, but in any event within two (2) Business Days after any Credit Party
knows thereof, the occurrence of any Default or Event of Default;




     (b) promptly, (i) any default or event of default under any Contractual Obligation,
Indebtedness or Guarantee Obligation of any Credit Party or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or involve a monetary claim in excess of $5,000,000, (ii) any material default or
event of default (beyond any applicable notice and cure period) related to any Collateral or
Required Payment or (iii) any default or event of default under any Credit Party-Related
Obligations.




     (c) promptly, any litigation, or any investigation or proceeding known or threatened to
any Credit Party (i) affecting any Credit Party or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a Material Adverse
Effect or involve a monetary claim in excess of $750,000 or involving injunctions or
requesting injunctive relief by or against any Credit Party or any Subsidiary of any Credit
Party, (ii) affecting or with respect to this Agreement, any other Credit Document, any
security interest or Lien created under any Security Document, any Collateral or any
Required Payment, (iii) involving an environmental claim or potential liability under
Environmental Laws which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, or (iv) by any Governmental Authority relating to the
Credit Parties or any Subsidiary thereof and alleging fraud, deception or willful misconduct
by such Person;




     (d) of any labor controversy that has resulted in, or threatens to result in, a strike
or other work action against any Credit Party that could reasonably be expected to have a
Material Adverse Effect;




     (e) of any attachment, judgment, levy or order exceeding $750,000 that may be assessed
against or threatened against any Credit Party, or of any Lien or claim asserted against any
Collateral, other than Permitted Liens;




     (f) as soon as possible and in any event within thirty (30) days after any Credit Party
knows or has reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any required contribution to a
Plan, the creation of any Lien in favor of the PBGC (other than a Permitted Lien) or a Plan
or any withdrawal from, or the termination, Reorganization or Insolvency of, any
Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action
by the PBGC or any Credit Party, any Commonly Controlled Entity or any Multiemployer Plan,
with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of,
any Plan;




     (g) promptly after becoming aware of the occurrence of any Internal Control Event;



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     (h) promptly, any notice of any violation received by any Credit Party from any
Governmental Authority including, without limitation, any notice of violation of
Environmental Laws; and




     (i) promptly upon notice or knowledge thereof, notice of any change in ART’s or ARSR’s
status as a REIT or ART’s membership or good standing on any recognized securities exchange;




     (j) 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 Credit Party or
any Subsidiary whether now owned or hereafter acquired, with the exception of (A) this
Agreement, (B) any Sale of Property by any Credit Party or any Subsidiary 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 or common equity
interests (including, without limitation, any sale under any other repurchase facility or
pledge or collateral assignment under any warehouse facility);




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




     (l) with respect to any Collateral hereunder, promptly upon receipt of notice or
knowledge that the Underlying Mortgaged Property has been damaged by waste, fire, earthquake
or earth movement, flood, tornado or other casualty, or otherwise damaged so as to affect
adversely the Asset Value of such Collateral;




     (m) promptly upon notice or knowledge thereof, provide written notice to the
Administrative Agent of any loss, expected loss or material change in the value of any
Collateral, any Required Payment, any Property or asset of any Credit Party or a Subsidiary
(to the extent that such loss with respect to any such Property or asset could reasonably be
expected to have a Material Adverse Effect), 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 Mortgage Asset included in the Collateral, or (B) in a
material decline in value or cash flow of any Collateral, any Underlying Mortgaged Property
for any Collateral, any Required Payment or any Property or asset of a Credit Party or a
Subsidiary (to the extent that such event or change with respect to any such Property or
asset could reasonably be expected to have a Material Adverse Effect);




     (n) the Borrowers shall provide written notice to the Administrative Agent at least
ten (10) days prior to any Credit Party or any Affiliate or Subsidiary thereof acquiring any
interest that would be senior in priority to any existing Mortgage Asset that is included in
the Collateral; and




     (o) promptly, any other development or event which could reasonably be expected to have
a Material Adverse Effect.


Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer
setting forth details of the occurrence referred to therein and stating what action the Credit
Parties propose to take


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with respect thereto. In the case of any notice of a Default or Event of Default, the Borrowers
shall specify that such notice is a Default or Event of Default notice on the face thereof.




     Section 5.8 Environmental Laws.




     (a) Except as could not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect, comply with, and ensure compliance in all
material respects by all tenants and subtenants, if any, with, all applicable Environmental
Laws and obtain and comply with and maintain, and ensure that all tenants and subtenants
obtain and comply with and maintain, any and all licenses, approvals, notifications,
registrations or permits required by applicable Environmental Laws;




     (b) Except as could not reasonably be expected, either individually or in the
aggregate, to have a Material Adverse Effect, conduct and complete all investigations,
studies, sampling and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply with all lawful orders and directives of all
Governmental Authorities regarding Environmental Laws except to the extent that the same are
being contested in good faith by appropriate proceedings; and




     (c) Defend, indemnify and hold harmless the Administrative Agent and the Lenders, and
their respective employees, agents, officers and directors and affiliates, from and against
any and all claims, demands, penalties, fines, liabilities, settlements, damages, costs and
expenses of whatever kind or nature known or unknown, contingent or otherwise, arising out
of, or in any way relating to the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of the Credit Parties or any of their
Subsidiaries or the Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation, reasonable attorney’s and
consultant’s fees, investigation and laboratory fees, response costs, court costs and
litigation expenses, except to the extent that any of the foregoing arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor. The
provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 5.9 Financial Covenants.




ART shall comply with the following Financial Covenants:




     (a) Maintenance of Liquidity. ART shall not permit, for any calendar quarter,
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.




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




     (c) 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 at any time to be greater than 4:5 to 1:0.




     (d) 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 (o) of the Fee Letter with respect to any New Stock Class, for so long as
(x) the



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Obligations outstanding under this Agreement exceed $210,000,000, (y) the Obligations
outstanding under the Working Capital Facility exceed $30,000,000 and (y) the Liquidity of
ART is less than $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 5.9(d) 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.



     Section 5.10 Additional Credit Parties.




     (a) Additional Borrowers. To the extent any new Borrower is approved by the
Administrative Agent, in its discretion, the Credit Parties shall deliver to the
Administrative Agent, with respect to each new Borrower to the extent applicable,
substantially the same documentation required pursuant to Sections 4.1 and 5.12 and such
other documents or agreements as the Administrative Agent may reasonably request, including
without limitation a Borrower Joinder Agreement.




     (b) Additional Guarantors. To the extent any new Guarantor is approved by the
Administrative Agent, in its discretion, the Credit Parties shall deliver to the
Administrative Agent, with respect to each new Guarantor to the extent applicable,
substantially the same documentation required pursuant to Sections 4.1 and 5.12 and such
other documents or agreements as the Administrative Agent may reasonably request, including
without limitation a Guarantor Joinder Agreement.



     Section 5.11 Compliance with Law.




     (a) Comply with all Requirements of Law (including Environmental Laws and Securities
Laws) and all applicable restrictions imposed by all Governmental Authorities, applicable to
it and the Collateral.




     (b) Comply in all material respects with all Contractual Obligations, all Indebtedness
and all Guarantee Obligations.



     Section 5.12 Pledged Assets.



     With respect to the Collateral, the Credit Parties shall (a) 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, (i) filing and maintaining
effective financing statements against the Borrowers and other Credit Parties, as applicable in all
necessary or appropriate filing offices, and filing continuation statements, amendments or
assignments with respect thereto in such filing offices, (ii) executing or causing to be executed
such other instruments, notices or control agreements as may be necessary or appropriate, and
(iii) to the extent that anyone other than Wachovia is the Administrative Agent, entering into a
new Account Control Agreement and Homewood Account Control Agreement, and (b) taking all 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 Credit Documents in such
Collateral. To the extent any Collateral is created or comes into existence after the Closing
Date, the Credit Parties shall take such actions as the Administrative Agent shall require to
obtain a first priority perfected security interest in such Collateral.



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     Section 5.13 Interest Rate Protection Agreements.



     Each Credit Party shall perform its duties and obligations under and shall otherwise maintain
any existing Interest Rate Protection Agreements to which it is a party.



     Section 5.14 Account Control Agreement.



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



     Section 5.15 Further Assurances.




     (a) Public/Private Designation. The Credit Parties will cooperate with the
Administrative Agent in connection with the publication of certain materials and/or
information provided by or on behalf of the Credit Parties to the Administrative Agent and
Lenders (collectively, “Information Materials”) pursuant to this Article V or the
other Credit Documents and will designate Information Materials (i) that are either
available to the public or not material with respect to the Credit Parties and their
Subsidiaries or any of their respective securities for purposes of applicable Securities
Laws as “Public Information” and (ii) that are not Public Information as
“Private Information”.




     (b) Additional Information. The Credit Parties shall provide such information
regarding the operations, business affairs and financial condition of the Credit Parties or
any of their Subsidiaries or Affiliates as the Administrative Agent or any Lender may
reasonably request.




     (c) Visits and Inspections. The Credit Parties shall permit representatives of
the Administrative Agent or any Lender, from time to time upon prior reasonable notice and
at such times during normal business hours, to visit and inspect its Properties; inspect,
audit and make extracts from its books, records and files, including, but not limited to,
management letters prepared by independent accountants; and discuss with its principal
officers, and its independent accountants, its business, assets, liabilities, financial
condition, results of operations and business prospects. Upon the occurrence and during the
continuance of an Event of Default, the Administrative Agent or any Lender may do any of the
foregoing at any time without advance notice.




     (d) Intercreditor Agreement. The Credit Parties shall acknowledge and agree to
the Intercreditor Agreement to the extent the Administrative Agent deems that such
Intercreditor Agreement is necessary.



     Section 5.16 Performance and Compliance with Collateral.



     The Credit Parties shall, at their expense, timely and fully perform and comply (and shall
cause their Consolidated Subsidiaries, the Servicers and the PSA Servicers 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.



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     Section 5.17 Delivery of Income and Required Payments.



     The Credit Parties shall deposit, and shall cause the other Credit Parties, each of their
Subsidiaries and all other Persons to deposit, all Income, Required Payments and other amounts
payable to the Borrowers in respect of the Collateral or payable to any Credit Party or Subsidiary
or Affiliate in respect of any Required Payment into the Collection Account within two (2) Business
Days of such Person’s receipt thereof. The Borrowers shall deposit, or cause to be deposited, into
the Collection Account, on or before the date required by the Credit Documents, all other amounts
required by the terms of the Credit Documents. The Credit Parties shall provide the Administrative
Agent with fully executed copies of all Irrevocable Instructions required by this Agreement. The
Credit Parties 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 Credit Parties shall not, and shall not permit any
Credit Party or any Subsidiary or Affiliate 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 Homewood Interest Reserve shall be made solely in accordance with the terms, provisions and
conditions of this Agreement, the Account Control Agreement and the Homewood Account Control
Agreement.



     Section 5.18 Exceptions.



     The Borrowers shall promptly correct any and all Exceptions set forth on any Asset Schedule
and Exception Report.



     Section 5.19 Distributions in Respect of Collateral.



     If the Credit Parties or any Subsidiary or Affiliate 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 Credit Parties 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 (other than the Obligor
Reserve Payments) and received by any Credit Party or any Subsidiary or Affiliate, the Credit
Parties 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 Credit Parties, their Subsidiaries and Affiliates and other Persons.



     Section 5.20 REIT Status.



     (a) ART shall at all times continue to be (i) qualified as a REIT as defined in Section 856 of
the Code without giving any effect to any cure or corrective periods or allowances, (ii) 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
(iii) a publicly traded company listed, quoted or traded on and in good standing in respect of any
Stock Exchange and (b) ARSR shall at all times continue



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to be qualified as a REIT, in each case without giving any effect to any cure or corrective
periods or allowances.



     Section 5.21 Equity Issuances.



     The terms and provisions governing Equity Issuances are set forth in the Fee Letter and are
hereby incorporated by reference.



     Section 5.22 Remittance of Prepayments.



     The Borrowers shall remit or cause to be remitted to the Administrative Agent, with sufficient
detail, via Electronic Transmission, to enable the Administrative Agent to appropriately identify
the Collateral to which any amount remitted applies, all full or partial principal prepayments
(regardless of the source of repayment) on any Collateral that a Borrower, a Servicer or a PSA
Servicer has received or that have been deposited into the Collection Account no later than two (2)
Business Days following the date such prepayment was received or deposited.



     Section 5.23 Escrow Imbalance.



     The Borrowers shall (to the extent it is acting as a servicer) or shall cause the Servicer to,
no later than five (5) Business Days after learning (from any source) of any material imbalance in
any reserve or escrow account related to any Collateral, fully and completely correct and eliminate
such imbalance, including, without limitation, depositing its own funds into such account to
eliminate any overdraw or deficit, to the extent required by the applicable Servicing Agreement (in
the case of a Servicer).



     Section 5.24 Separateness.



     Notwithstanding any term contained in this Agreement or the other Credit Documents to the
contrary, each Borrower (other than Arbor Realty and ARSR) shall (a) own no assets, and shall not
engage in any business, other than the assets and transactions specifically contemplated by this
Agreement and the Credit Documents; (b) not incur any Indebtedness or obligation, secured or
unsecured, direct or indirect, absolute or contingent (including guaranteeing any obligation),
other than (i) pursuant hereto and under the agreements and documents evidencing, securing or in
any other way related to the Mortgage Assets and the related Collateral, (ii) customary
representations, warranties, indemnities and other agreements in connection with the origination,
acquisition, servicing, collection, enforcement, financing, participation, securitization, sale or
other disposition of the Mortgage Assets, and (iii) obligations under zoning and other governmental
regulations, rules, prohibitions and ordinances and proposed restrictions, covenants, conditions,
limitations, easements, rights–of–way and other matters existing of public record or proposed to be
recorded or filed in the future governing or affecting mortgaged real Property or that may
otherwise require the consent of or joinder by a mortgagee; (c) not make any loans or advances to
any Affiliate other than loans to a Guarantor which are disclosed in writing to and approved in
writing by the Administrative Agent, and shall not acquire obligations or securities of its
Affiliates; (iv) pay its debts and liabilities (including, as applicable, shared personnel and
overhead expenses) only from its own assets; (d) comply with the provisions of its Authority
Documents; (vi) do all things necessary to observe organizational formalities and to preserve its
existence, and will not amend, modify or otherwise change its Authority Documents without the
consent of the Administrative Agent; (e) maintain all of its books, records, financial statements
and bank accounts separate from those of its Affiliates (except that such financial statements may
be consolidated to the extent consolidation is required under the GAAP consistently applied or as a
matter of the Requirements of Law) and file its own tax returns (except to the extent consolidation
is required or permitted under Requirements of Law); (f) be, and at all times will hold itself out
to the public as, a legal entity separate and distinct from any other



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entity (including any Affiliate), shall correct any known misunderstanding regarding its
status as a separate entity, shall conduct business in its own name, and shall not identify itself
or any of its Affiliates as a division of the other; (g) maintain adequate capital for the normal
obligations reasonably foreseeable in a business of its size and character and in light of its
contemplated business operations; (h) not engage in or suffer any change of ownership, dissolution,
winding up, liquidation, consolidation or merger in whole or in part; (i) not commingle its funds
or other assets with those of any Affiliate or any other Person; (j) maintain its accounts separate
from those of any Affiliate or any other Person; (k) shall not hold itself out to be responsible
for the debts or obligations of any other Person; (l) shall not, without the vote of its
Independent Director, (i) file or consent to the filing of any Insolvency Proceeding with respect
to itself, institute any proceedings under any applicable Insolvency Law or otherwise seek any
relief under any Requirements of Law relating to the relief from debts or the protection of debtors
generally with respect to itself, (ii) seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian or any similar official for itself or a
substantial portion of its properties, or (iii) make any assignment for the benefit of it’s
creditors; (m) shall have at all times at least one (1) Independent Director (or such greater
number as required by the Administrative Agent or the Rating Agencies); (n) shall maintain an arm’s
length relationship with its Affiliates; (o) maintain a sufficient number of employees in light of
contemplated business operations; (p) use separate stationary, invoices and checks; and (q)
allocate fairly and reasonably any overhead for shared office space.



     Section 5.25 Preferred Equity Interests and Equity Assets.



     The Borrowers shall or shall cause each Preferred Equity Grantor and Equity Asset Grantor to
preserve and maintain its legal and valid existence, rights, franchises, privileges and good
standing in the jurisdiction of its formation and will qualify and remain qualified in good
standing in each other jurisdiction where, due to the nature of its business or Property, such
qualification is necessary. The Borrowers shall provide evidence to the Administrative Agent, upon
request, of the Preferred Equity Grantor’s and Equity Asset Grantor’s compliance with the
requirements of this subsection.



     Section 5.26 Pledge of Repurchased Debt.



     To the extent that any Credit Party or any Affiliate of a Credit Party repurchases any
Indebtedness of any Credit Party or an Affiliate of any Credit Party using Liquidity or other cash,
Cash Equivalents or other funds of any Credit Party or an Affiliate of any Credit Party (other than
proceeds of an Equity Issuance), the Borrowers shall notify the Administrative Agent at least
fifteen (15) Business Days in advance thereof, pledge such repurchased Indebtedness to the
Administrative Agent on behalf of the Secured Parties and, to the extent necessary, execute and
deliver any documentation (including, without limitation, amendments to the Credit Documents and
opinions of counsel) as the Administrative Agent may reasonably request in order to perfect the
Administrative Agent’s interest in such additional collateral. Amounts payable under such pledged
repurchased debt shall constitute Income hereunder and shall be applied in accordance with Section
2.9 hereof. The Administrative Agent and the Lenders acknowledge that the Borrowers intend 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 Indebtedness by ARSR.



     Section 5.27 REO Property.



     The terms and provisions governing REO Property are set forth in the Fee Letter and are hereby
incorporated by reference.



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     Section 5.28 Warrant Opinion.



     No later than August 7, 2009, the Borrowers shall deliver an Opinion of Counsel, addressed to
the Administrative Agent and the Lenders, in form and substance acceptable to the Administrative
Agent, which includes opinions addressing the Warrants and the Warrant Shares (each as defined in
the Warrant Agreements) and which shall be substantially of the substance set forth in the e-mail
received from Paul Elenio on July 23, 2009 at 4:32 p.m., with no additional material assumptions or
qualifications.



     Section 5.29 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.



ARTICLE VI




NEGATIVE COVENANTS




     Each of the Credit Parties hereby covenants and agrees that on the Restatement Date, and
thereafter (a) for so long as this Agreement is in effect, (b) until the Commitments have
terminated, (c) until no Note remains outstanding and unpaid and the Obligations and all other
amounts owing to the Administrative Agent or any Lender hereunder are paid in full, that:



     Section 6.1 Indebtedness.



     No Borrower (other than Arbor Realty and ARSR) will, nor will it permit any Subsidiary to,
contract, create, incur, assume or permit to exist any Indebtedness or Guarantee Obligations,
except:




     (a) Indebtedness arising or existing under this Agreement and the other Credit
Documents;




     (b) Indebtedness of the Borrowers (other than Arbor Realty and ARSR) existing as of the
Restatement Date as referenced in the financial statements referenced in Section 3.1 (and
set out more specifically in Schedule 6.1(b) hereto) and any renewals, refinancings
or extensions thereof in a principal amount not in excess of that outstanding as of the date
of such renewal, refinancing or extension; and




     (c) Indebtedness and obligations owing under Interest Rate Protection Agreements or
Derivatives Contract entered into in order to manage existing or anticipated interest rate,
exchange rate or commodity price risks related to the Mortgage Assets and not for
speculative purposes.



     Section 6.2 Liens.



     The Credit Parties and the Subsidiaries and Affiliates 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 Credit
Parties and the Subsidiaries and Affiliates shall not sell, pledge, assign or suffer to exist any
Lien, or any circumstance which, if adversely



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determined, would be reasonably likely to give rise to a Lien, on its interest, if any,
hereunder or under the other Credit Documents. Immediately upon notice to any Credit Party 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 Credit Documents), and the Borrowers shall defend the right, title and
interest of the Credit Parties and their Subsidiaries and Affiliates in and to any of the
Collateral and the Required Payments against the claims and demands of all Persons whomsoever.
Notwithstanding the foregoing, if a Credit Party or any Subsidiary or Affiliate shall grant a Lien
on any of the Collateral or Required Payments in violation of this Section, then it shall be deemed
to have simultaneously granted an equal and ratable Lien on any such Collateral or Required
Payments in favor of the Administrative Agent for the ratable benefit of the Secured Parties to the
extent such Lien has not already been granted to the Administrative Agent.



     Section 6.3 Nature of Business.



     No Credit Party will, nor will it permit any Subsidiary to, alter the character of its
business in any material respect from that conducted as of the Closing Date. The Borrowers shall
not engage in any activity other than activities specifically permitted by this Agreement,
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.



     Section 6.4 Consolidation, Merger, Sale or Purchase of Assets, etc.



     No Credit Party 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 Credit Party may merge or consolidate with (i) any
wholly owned Subsidiary of such Credit Party, or (ii) any other Person if a Credit Party is the
surviving entity; and provided, further, that, if after giving effect thereto, no
Default or Event of Default would exist hereunder.



     Section 6.5 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 Indebtedness 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 (as defined in the Working Capital Facility Loan Agreement)
received by the Credit Parties or their Affiliates in connection with any CDO Issuance for the
previous calendar quarter.



     Section 6.6 Transactions with Affiliates.



     The Credit Parties will not, nor will they permit any Subsidiary to, enter into any
transaction or series of transactions, whether or not in the ordinary course of business, with any
officer, director, shareholder or Affiliate other than on terms and conditions substantially as
favorable as would be obtainable in a comparable arm’s-length transaction with a Person that is not
an officer, director, shareholder or Affiliate.



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     Section 6.7 Ownership of Subsidiaries; Restrictions.



     The Borrowers (other than Arbor Realty and ARSR) shall not create or own Subsidiaries without
the Administrative Agent’s consent in its discretion. The Borrowers (other than Arbor Realty and
ARSR) will not sell, transfer, pledge or otherwise dispose of any Equity Interest or other equity
interests in any of their Subsidiaries, nor will they permit any of their Subsidiaries to issue,
sell, transfer, pledge or otherwise dispose of any of their Equity Interest or other equity
interests, except in a transaction permitted by Section 6.4.



     Section 6.8 Corporate Changes; Material Contracts.



     No Credit Party will, nor will it permit any of its Subsidiaries to, (a) change its fiscal
year, (b) amend, modify or change its Authority Documents in any respect that would impact, impair
or affect the Collateral or any Required Payment or is otherwise adverse to the interests of the
Lenders without the prior written consent of the Administrative Agent; provided that no
Credit Party shall (i)  to the extent permitted under this Agreement, alter its legal existence or,
in one transaction or a series of transactions, merge into or consolidate with any other entity, or
sell all or substantially all of its assets, (ii) change its state of incorporation or
organization, or (iii) change its registered legal name, without providing thirty (30) days prior
written notice to the Administrative Agent and without filing (or confirming that the
Administrative Agent has filed) such financing statements and amendments to any previously filed
financing statements as the Administrative Agent may require, (c) except as provided in Section
6.15, amend, modify, cancel or terminate or fail to renew or extend or permit the amendment,
modification, cancellation or termination of any of its Material Contracts in any respect adverse
to the interests of the Lenders without the prior written consent of the Required Lenders,
(d) change its state of incorporation, organization or formation without the consent of the
Administrative Agent or have more than one state of incorporation, organization or formation or
(e) change its accounting method (except in accordance with GAAP) in any manner adverse to the
interests of the Lenders without the prior written consent of the Required Lenders.



     Section 6.9 Limitation on Restricted Actions.



     The Borrowers (other than Arbor Realty and ARSR) will not, nor will they permit any Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or become effective any
Lien or restriction on the ability of any such Person to (a) pay dividends or make any other
distributions to any Credit Party on its Equity Interest or with respect to any other interest or
participation in, or measured by, its profits, (b) pay any Indebtedness or other obligation owed to
any Credit Party, (c) make loans or advances to any Credit Party, (d) sell, lease or transfer any
of its Properties to any Credit Party, or (e) act as a Borrower or Guarantor, to obtain loans or to
pledge its assets pursuant to the Credit Documents or any renewals, refinancings, exchanges,
refundings or extension thereof, except (in respect of any of the matters referred to in
clauses (a)-(d) above) for such Liens or restrictions existing under or by reason of (i) this
Agreement and the other Credit Documents, (ii) Requirements of Law, or (iii) the Working Capital
Facility.



     Section 6.10 Restricted Payments.



     Except as otherwise required or permitted by the Credit Documents, no Credit Party 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 Credit Party 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 Credit Party, except that a Credit Party may (i) declare and pay dividends in an amount
necessary to maintain its status as a REIT



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and, (ii) so long as no Default or Event of Default shall have occurred and the Financial
Covenants are satisfied, (a) in the case of ART only, ART may declare and pay dividends in the
amounts permitted by but subject to the terms and conditions of Section 5.9(d), (b) the Credit
Parties may distribute funds among the Credit Parties and their Consolidated Subsidiaries, (c) in
the case of Arbor Realty only, Arbor Realty may make distributions, in the ordinary course of
business, to Arbor Commercial Mortgage, LLC in respect of the limited partnership interest of Arbor
Realty which Arbor Commercial Mortgage, LLC holds, and (d) ART may redeem Equity Interests held by
Arbor Commercial Mortgage, LLC for stock in ART (but not for cash), and (e) the Credit Parties may
declare and pay dividends with respect to Equity Issuances as permitted in the Fee Letter.



     Section 6.11 [Reserved].



     Section 6.12 No Further Negative Pledges.



     None of the Borrowers (other than Arbor Realty and ARSR) or any of their 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 (other than Arbor Realty and ARSR) or their
Consolidated Subsidiaries; provided, however, that the foregoing shall not apply to
(i) the negative pledge contained in Section 6.18, (ii) Indebtedness identified on Schedule
6.1(b) or (iii) any other negative pledge or grant of any Lien or other encumbrance approved by
the Administrative Agent in its discretion.



     Section 6.13 Collateral Not to be Evidenced by Instruments.



     No Credit Party 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.



     Section 6.14 Deposits.



     The Credit Parties will not deposit or otherwise credit, or cause or permit to be so deposited
or credited, to the Collection Account or Homewood Interest Reserve cash or cash proceeds other
than (i) in the case of the Collection Account, Income in respect of Collateral, Cash Collateral
and other payments required to be deposited therein under the Credit Documents, and (ii) in the
case of the Homewood Interest Reserve, the interest reserve amounts for the Homewood Mortgage
Asset.



     Section 6.15 Servicing Agreements.



     The Credit Parties will not materially amend, modify, waive or terminate any provision of any
Servicing Agreement or Pooling and Servicing Agreement without the prior written consent of the
Administrative Agent. Notwithstanding the foregoing, but subject to the Administrative Agent’s
rights under Article IX, the Borrowers shall have the right to terminate any of the foregoing upon
the occurrence of a material default (beyond any applicable notice and cure period) of the other
party thereto.



     Section 6.16 Extension or Amendment of Collateral.



     Except as provided in Section 9.7, the Borrowers will not extend, amend, waive or otherwise
modify, or permit any Servicer or PSA Servicer (except as provided in a Pooling and Servicing
Agreement) to extend, amend, waive or otherwise modify the material terms of any Collateral or the
Mortgage Loan Documents related thereto or to exercise the material rights of a holder of said
Collateral, provided that the foregoing shall not prohibit the Borrowers, a Servicer or a PSA
Servicer from



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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 discretion, the Borrowers, the Servicers and the PSA Servicers (except as provided in a
Pooling and Servicing Agreement) shall have no right to waive, amend, modify or alter the material
terms of any Collateral or the related Mortgage Loan Documents thereto or otherwise exercise any
material right of the holder of any Collateral.



     Section 6.17 Stock Repurchase.



     Except as set forth in the Fee Letter, no Credit Party shall repurchase any outstanding common
stock or operating partnership units of any Credit Party prior to the later of (a) the Maturity
Date and (b) the payment in full of the Obligations.



     Section 6.18 No Future Liens.



     No Borrower shall grant or permit, or suffer to be granted or permitted, any Lien on, or any
encumbrances upon, any of the assets or Properties of any Borrower, whether owned now or hereafter
acquired, which shall include, without limitation, but, in the case of Arbor Realty, shall be
limited to, any Collateral and any Required Payment, in favor of any Person, other than Liens in
favor of the Administrative Agent as agent for the Secured Parties.



     Section 6.19 Eligible Subordinated Debt.



     The Credit Parties shall not, nor shall they permit any Subsidiary to, issue any Trust
Preferred Debt that (a) does not have subordination provisions substantially the same as those in
the indentures for the transactions listed in clause (a) of the definition of “Eligible
Subordinated Debt,” (b) does not have enforceable subordination provisions, (c) has a maturity date
earlier than the date that is six (6) months following the Maturity Date or (d) that is not
approved by the Administrative Agent in its discretion. The Credit Parties shall deliver an
Opinion of Counsel from the counsel to the applicable Credit Party or the applicable Subsidiary of
a Credit Party 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.



     Section 6.20 Senior and Pari Passu Interests.



     No Credit Party shall acquire or maintain any right or interest in any Mortgage Asset (or,
directly or indirectly, the Underlying Mortgaged Property with respect thereto) that is senior to
or pari passu with the rights and interests of the Administrative Agent therein under this
Agreement and the Credit Documents unless such interest is also part of the Collateral.



     Section 6.21 [Reserved].



     Section 6.22 Inconsistent Agreements.



     The Credit Parties shall not directly or indirectly, enter into any agreement containing any
provision that would be violated or breached by any transaction, Loan or pledge of Collateral under
the Credit Documents or by the performance by any Credit Party of its duties, covenants or
obligations under any Credit Document.



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     Section 6.23 Margin Regulations.



     No part of the proceeds of any Loan shall be used for any purpose that violates or would be
inconsistent with the provisions of Regulation T, U or X.



ARTICLE VII




EVENTS OF DEFAULT




     Section 7.1 Events of Default.



     An Event of Default shall exist upon the occurrence of any of the following specified events
(each an “Event of Default”):




     (a) Payment. (i) The Borrowers shall fail to pay any principal or interest on
any Loan or Note when due (whether at maturity, by reason of mandatory or optional
prepayment, by reason of acceleration or otherwise) in accordance with the terms hereof or
thereof; or (ii) the Borrowers shall fail to pay any fee or other amount payable hereunder
or under the Credit Documents when due (whether at maturity, by reason of mandatory or
optional prepayment, by reason of acceleration or otherwise) in accordance with the terms
hereof and such failure shall continue unremedied for two (2) Business Days after written
notice from the Administrative Agent; or (iii) or any Guarantor shall fail to pay on the
Guaranty in respect of any of the foregoing or in respect of any other Obligations under the
Credit Documents (after giving effect to the grace period in clause (ii) above; or (iv) any
other Credit Party shall fail to pay any amounts owed by it under the Credit Documents to
which it is a party (after giving effect to the grace period in clause (ii) above); or




     (b) Misrepresentation. Any representation or warranty made or deemed made
herein, in the Security Documents or in any of the other Credit Documents or which is
contained in any certificate, document or financial or other statement furnished at any time
under or in connection with this Agreement or the Credit Documents (in each case other than
the representations and warranties contained in Schedule 1.1(c) to this Agreement
unless any Borrower shall have affirmed or confirmed any such eligibility criteria with
actual knowledge that it was not satisfied in any material respect) shall prove to have been
incorrect, false or misleading on or as of the date made or deemed made and 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 Credit Parties by the Administrative Agent, and (ii) the date on
which the Credit Parties become aware thereof; or




     (c) Covenant Default. (i) Any Credit Party shall fail to perform, comply with
or observe any term, covenant or agreement applicable to it contained in Section 5.9 hereof;
or (ii) any Credit Party shall fail to comply with any other covenant contained in this
Agreement or the other Credit Documents or any other agreement, document or instrument among
any Credit Party, the Administrative Agent and the Lenders or executed by any Credit Party
in favor of the Administrative Agent or the Lenders (other than as described in
Sections 7.1(a) or 7.1(b) above), and such breach or failure to comply is not cured within
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 Credit Parties by the
Administrative Agent, and (ii) the date on which the Credit Parties become aware thereof
(provided, however, in the case of a failure which is capable



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of cure but cannot reasonably be cured within such twenty (20) day period (other than
the payment of money), and provided the Credit Parties 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




     (d) Indebtedness Cross-Default. (i) Any Credit Party or any Affiliate or
Subsidiary of a Credit Party shall default in any payment of principal of or interest on any
Indebtedness (other than the Loans and the Guaranty) in a principal amount outstanding of at
least $5,000,000 in the aggregate beyond any applicable grace period (not to exceed
thirty (30) days), if any, provided in the instrument or agreement under which such
Indebtedness was created, in each case regardless of whether the default has been or is
waived; or (ii) any Credit Party or any Affiliate or Subsidiary of a Credit Party shall
default in the observance or performance of any other agreement or condition relating to any
Indebtedness (other than the Loans and the Guaranty) in a principal amount outstanding of at
least $5,000,000 in the aggregate or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition exist, the effect
of which default or other event or condition is to cause, or to permit the holder or holders
of such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a trustee or
agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to become due prior to its stated
maturity or to be repurchased, prepaid, deferred or redeemed (automatically or otherwise),
in each case regardless of whether such default has been or is waived; or (iii) shall fail
to make a payment due with respect to, be in default under or an event or condition that
exists or has occurred that would permit the acceleration of (regardless of whether any of
the foregoing have been or are waived) any Credit Party-Related Obligation; or




     (e) Other Cross-Defaults. Other than as described in Section 7.1(d), the
Credit Parties or any of their Subsidiaries or Affiliate shall default in (i) the payment
when due under any Material Contract or (ii) the performance or observance, of any
obligation or condition of any Material Contract and such failure to perform or observe such
other obligation or condition continues unremedied for a period of thirty (30) days after
notice of the occurrence of such default unless, but only as long as, the existence of any
such default is being contested by the Credit Parties in good faith by appropriate
proceedings and adequate reserves in respect thereof have been established on the books of
the Credit Parties to the extent required by GAAP; or




     (f) Bankruptcy Default. (i) A Credit Party or any of its Subsidiaries or
Affiliates shall commence any case, proceeding or other action (A) under any existing or
future Requirements of Law of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order for relief entered
with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking
reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or a Credit Party or any of its Subsidiaries or Affiliates
shall make a general assignment for the benefit of its creditors; or (ii) there shall be
commenced against a Credit Party or any of its Subsidiaries or Affiliates any case,
proceeding or other action of a nature referred to in clause (i) above which (A) results in
the entry of an order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall
be commenced against a Credit Party or any of its Subsidiaries or Affiliates any case,
proceeding or other action seeking issuance of a warrant of attachment, execution, distraint
or similar process against all or any substantial part of their assets which results in the
entry of an order for any such relief which



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shall not have been vacated, discharged, or stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or (iv) a Credit Party or any of its Subsidiaries or
Affiliates shall take any action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or
(v) a Credit Party or any of its Subsidiaries or Affiliates shall generally not, or shall be
unable to, or shall admit in writing their inability to, pay its debts as they become due;
or




     (g) Judgment Default. One or more final judgments or decrees shall be entered
against a Credit Party or any of its Subsidiaries or Affiliates involving in the aggregate a
liability (to the extent not covered by insurance) of $1,000,000 or more and all such
judgments or decrees shall not have been paid and satisfied, vacated, discharged, stayed or
bonded pending appeal within ten (10) Business Days from the entry thereof or any
injunction, temporary restraining order or similar decree shall be issued against a Credit
Party or any of its Subsidiaries or Affiliates that, individually or in the aggregate, could
result in a Material Adverse Effect; or




     (h) ERISA Default. (i) Any Person shall engage in any “prohibited transaction”
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan,
(ii) any “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
(other than a Permitted Lien) shall arise on the assets of the Credit Parties or any
Commonly Controlled Entity, (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 Single Employer 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 Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) a Credit Party, any of its Subsidiaries or any Commonly Controlled Entity 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, any
Multiemployer Plan or (vi) any other similar event or condition shall occur or exist with
respect to a Plan; or




     (i) Change of Control. There shall occur a Change of Control, unless waived by
the Administrative Agent in its discretion; or




     (j) Invalidity of Credit Documents. (i) Any Credit 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, be declared null and void, cease to be in full
force and effect or cease to be the legally valid, binding and/or enforceable obligation of
any Credit Party, as applicable, (ii) any Credit Party or any other Person shall, directly
or indirectly, contest in any manner the effectiveness, validity, binding nature or
enforceability of any Credit Document or any Lien or security interest thereunder or deny or
disaffirm such Person’s obligations under any Credit Document, (iii) the Liens contemplated
under the Credit 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, (iv) any Credit Party shall grant, or permit or suffer
to exist, any Lien on any Collateral except Permitted Liens, or (v) any Credit Party or any
Subsidiary or Affiliate of the foregoing shall grant, or permit or suffer to exist, any Lien
on any Required Payment; or




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



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     (l) Equity Ownership. (i) ARSR shall cease to own 100% of the issued and
outstanding Equity Interests of Arbor Realty Funding, (ii) ART shall cease to indirectly own
not less than 80% of the issued and outstanding Equity Interests of Arbor Realty, (iii) ARSR
TRS Holding LLC shall cease to own 100% of the Class A membership interest in ARSR Tahoe,
LLC, (iv) Arbor Realty and/or ARSR shall cease to own 100% of the issued and outstanding
Capital Stock of ART 450, (v) Arbor Realty shall cease to own 99% of the issued and
outstanding Equity Interests of ARSR, and/or (vi) Arbor ESH Holdings LLC shall cease to own
100% of the membership interests in Arbor ESH; or




     (m) 40 Act. Any Credit Party shall become required to register as an
“investment company” within the meaning of the 40 Act or the arrangements contemplated by
the Credit Documents shall require registration as an “investment company” within the
meaning of the 40 Act; or




     (n) Material Adverse Effect. There shall exist any event or occurrence that
has caused a Material Adverse Effect; or




     (o) IRS Lien. 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 Credit
Party, and such Lien shall not have been released within five (5) Business Days; or




     (p) Cooperation. Any Credit Party fails, within three (3) Business Days, to
pledge Collateral required to be pledged under this Agreement or the other Credit Documents
or fails, within three (3) Business Days, to cooperate with the Administrative Agent as
required by this Agreement or the other Credit Documents to ensure that the Administrative
Agent has or obtains a perfected first priority security interest in all existing and future
Collateral; or




     (q) Irrevocable Instructions. Any Credit Party’s failure to deliver any
Irrevocable Instruction required under this Agreement or any Person’s attempt to disavow,
revoke or act contrary to, the failure of any Person to abide by or perform, or any Credit
Party’s failure to enforce, the terms of any Irrevocable Instruction; or




     (r) Solvency. Any Credit Party is not Solvent or shall admit its inability to,
or its intentions not to, perform its obligations, covenants, duties or agreements under any
Credit Document, any Obligation or any Credit Party-Related Document; or




     (s) REIT. Unless waived by the Administrative Agent in its discretion, 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




     (t) Commitment. The aggregate principal amount of all Revolving Loans
outstanding on any day exceeds the Revolving Commitment and the same continues unremedied
for two (2) Business Days after notice from the Administrative Agent; provided,
however, during the period of time that such event remains unremedied, no additional
Revolving Loans will be made under this Agreement; or




     (u) Servicer Default. A Servicer Default occurs and is continuing; or



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     (v) Income. Any Credit Party’s, any Subsidiary or Affiliate thereof, any
Servicer’s or any PSA Servicer’s failure to deposit to the Collection Account all Income and
other Cash Collateral as required by this Agreement; or




     (w) Working Capital Facility. 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) of the Working Capital Facility Loan Agreement; or




     (x) Consent. Any Credit Party engages in any conduct or action where the
Administrative Agent’s and/or any Lender’s prior written consent is required by the terms of
this Agreement or the other Credit Documents and any Credit Party fails to obtain such
consent; or




     (y) Merger. Unless waived by the Administrative Agent, to the extent merger or
consolidation is permitted under the Credit Documents, any Credit Party shall merge or
consolidate into any entity and such entity is, in the Administrative Agent’s determination
in its discretion, materially weaker in its financial condition (in the aggregate) than such
Person pre-merger or consolidation; or




     (z) Other Defaults. Any event or occurrence under this Agreement or any of the
other Credit Documents that, by the express terms of this Agreement or the other Credit
Documents, is deemed to constitute an Event of Default; or




     (aa) Instructions; Notices. Any Credit Party shall have failed to give
instructions (including, without limitation, Irrevocable Instructions) or any notice to the
Administrative Agent or any Lender as required by this Agreement or the other Credit
Documents, 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 or the other Credit Documents 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 any Credit Party by the Administrative Agent and (ii) the date on which any Credit
Party becomes aware thereof.



     In making a determination as to whether an Event of Default has occurred, the Administrative
Agent and the Lenders shall be entitled to rely on reports published or broadcast by media sources
believed by the Administrative Agent and/or any Lender 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 and/or the Lender reasonably and in good faith believes such information to be
accurate and has taken such steps as may be reasonable in the circumstances to attempt to verify
such information. Notwithstanding anything contained in the Credit Documents to the contrary,
unless waived by the Administrative Agent in its discretion, neither the Credit Parties nor any
other Person shall be permitted to cure an Event of Default after the acceleration of any of the
Obligations.



     Section 7.2 Acceleration; Remedies.



     Upon the occurrence and during the continuance of an Event of Default, then, and in any such
event, (a) if such event is a Bankruptcy Event of Default, automatically the Commitments shall
immediately terminate and the Loans (with accrued interest thereon), and all Obligations and other
amounts under the Credit Documents shall immediately become due and payable, and (b) if such event
is any other Event of Default, any or all of the following actions may be taken: (i) with the
written consent of the Required Lenders, the Administrative Agent may, or upon the written request
of the Required Lenders, the Administrative Agent shall, declare the Commitments to be terminated
forthwith, whereupon



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the Commitments shall immediately terminate; (ii) the Administrative Agent may, or upon the
written request of the Required Lenders, the Administrative Agent shall, declare the Loans (with
accrued interest thereon) and all Obligations and other amounts owing under this the Credit
Documents to be due and payable forthwith, whereupon the same shall immediately become due and
payable; and/or (iii) with the written consent of the Required Lenders, the Administrative Agent
may, or upon the written request of the Required Lenders, the Administrative Agent shall, exercise
such other rights and remedies as provided under the Credit Documents and under Requirements of
Law.



ARTICLE VIII




THE ADMINISTRATIVE AGENT




     Section 8.1 Appointment and Authority.



     Each of the Lenders hereby irrevocably appoints Wachovia to act on its behalf as the
Administrative Agent hereunder and under the other Credit Documents and authorizes the
Administrative Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms hereof or thereof, together with such actions
and powers as are reasonably incidental thereto. The provisions of this Article are solely for the
benefit of the Administrative Agent and the Lenders, and neither the Borrowers nor any other Credit
Party shall have rights as a third party beneficiary of any of such provisions.



     Section 8.2 Nature of Duties.



     Anything herein to the contrary notwithstanding, none of the bookrunners, Arrangers or other
agents listed on the cover page hereof shall have any powers, duties or responsibilities under this
Agreement or any of the other Credit Documents, except in its capacity, as applicable, as the
Administrative Agent or a Lender. 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 other Lenders or
other Persons so identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.



     The Administrative Agent may perform any and all of its duties and exercise its rights and
powers hereunder or under any other Credit Document by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform
any and all of its duties and exercise its rights and powers by or through their respective Related
Parties. The exculpatory provisions of this Article shall apply to any such sub-agent and to the
Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their
respective activities in connection with the syndication of the credit facilities provided for
herein as well as activities as Administrative Agent.



     Section 8.3 Exculpatory Provisions.



     The Administrative Agent shall not have any duties or obligations except those expressly set
forth herein and in the other Credit Documents. Without limiting the generality of the foregoing,
the Administrative Agent:




     (a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;



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     (b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly contemplated hereby
or by the other Credit Documents that the Administrative Agent is required to exercise as
directed in writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be expressly provided for herein or in the other Credit Documents),
provided that the Administrative Agent shall not be required to take any action
that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to
liability or that is contrary to any Credit Document or Requirements of Law; and




     (c) shall not, except as expressly set forth herein and in the other Credit Documents,
have any duty to disclose, and shall not be liable for the failure to disclose, any
information relating to the Borrowers or any of their Affiliates that is communicated to or
obtained by the Person serving as the Administrative Agent or any of its Affiliates in any
capacity.



     The Administrative Agent shall not be liable for any action taken or not taken by it (i) with
the consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.1 and 7.2) or (ii) in the absence of
its own gross negligence or willful misconduct.



     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire
into (i) any statement, warranty or representation made in or in connection with this Agreement or
any other Credit Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Credit Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article IV or elsewhere herein,
other than to confirm receipt of items expressly required to be delivered to the Administrative
Agent.



     Section 8.4 Reliance by Administrative Agent.



     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, internet or intranet website posting or other
distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated
by the proper Person. The Administrative Agent also may rely upon any statement made to it orally
or by telephone and believed by it to have been made by the proper Person, and shall not incur any
liability for relying thereon. In determining compliance with any condition hereunder to the
making of a Loan, which by its terms must be fulfilled to the satisfaction of a Lender, the
Administrative Agent may presume that such condition is satisfactory to such Lender unless the
Administrative Agent shall have received notice to the contrary from such Lender prior to the
making of such Loan. The Administrative Agent may consult with legal counsel (who may be counsel
for the Borrowers), independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.



     Section 8.5 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 hereunder unless the Administrative Agent has received written
notice from a Lender or one of the Borrowers referring to this Agreement, describing such Default
or Event of



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Default and stating that such notice is a “notice of default”. In the event that the
Administrative Agent receives such a 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 Required 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 Required Lenders, or all of the Lenders, as the case may be.



     Section 8.6 Non-Reliance on Administrative Agent and Other Lenders.



     Each Lender expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or 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 any Credit Party, shall be deemed to constitute any representation or
warranty by the Administrative Agent to any Lender. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any other Lender or any of the
Related Parties of the foregoing and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the Administrative Agent,
any other Lender or any of the Related Parties of the foregoing and based on such documents and
information as it shall from time to time deem appropriate, continue to make its own decisions in
taking or not taking action under or based upon this Agreement, any other Credit Document or any
related agreement or any document furnished hereunder or thereunder.



     Section 8.7 Indemnification.



     The Lenders agree to indemnify the Administrative Agent in its capacity hereunder and its
Affiliates and its respective officers, directors, agents and employees (to the extent not
reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), pro
rata based on the portion of the Obligations owed to each Lender on the date on which
indemnification is sought under this Section, 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 Obligations) be imposed on, incurred by or asserted against any
such indemnitee in any way relating to or arising out of any Credit 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 any such indemnitee 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 such indemnitee’s gross negligence or
willful misconduct, as determined by a court of competent jurisdiction. The provisions of this
Section shall survive the termination of this Agreement and the payment in full of the Obligations.



     Section 8.8 Administrative Agent in Its Individual Capacity.



     The Person serving as the Administrative Agent hereunder shall have the same rights and powers
in its capacity as a Lender and may exercise the same as though it were not the Administrative
Agent and the term “Lender” and “Lenders” shall, unless otherwise expressly indicated or unless the
context otherwise requires, include the Person serving as the Administrative Agent hereunder in its
individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act
as the financial advisor or in any other advisory capacity for and generally engage in any kind of
business with the



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Borrowers or any Subsidiary or other Affiliate thereof as if such Person were not the
Administrative Agent hereunder and without any duty to account therefor to the Lenders.



     Section 8.9 Successor Administrative Agent.



     The Administrative Agent may at any time give notice of its resignation to the Lenders and the
Borrowers. Upon receipt of any such notice of resignation, the Required Lenders shall have the
right, in consultation with the Borrowers, to appoint a successor, or an Affiliate of any such
bank. If no such successor shall have been so appointed by the Required Lenders and shall have
accepted such appointment within thirty (30) days after the retiring Administrative Agent gives
notice of its resignation, then the retiring Administrative Agent may on behalf of the Secured
Parties, appoint a successor Administrative Agent meeting the qualifications set forth above
provided that if the Administrative Agent shall notify the Borrowers and the Lenders that no
qualifying Person has accepted such appointment, then such resignation shall nonetheless become
effective in accordance with such notice and (a) the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Credit Documents (except
that in the case of any Collateral held by the Administrative Agent on behalf of the Secured
Parties under any of the Credit Documents, the retiring Administrative Agent shall continue to hold
such Collateral until such time as a successor Administrative Agent is appointed) and (b) all
payments, communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender directly, until such time as the
Required Lenders appoint a successor Administrative Agent as provided for above in this paragraph.
Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, such successor
shall succeed to and become vested with all of the rights, powers, privileges and duties of the
retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be
discharged from all of its duties and obligations hereunder or under the other Credit Documents (if
not already discharged therefrom as provided above in this paragraph). The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrowers and such successor. After the retiring
Administrative Agent’s resignation hereunder and under the other Credit Documents, the provisions
of this Article and Section 10.5 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as
Administrative Agent.



     Section 8.10 Collateral and Guaranty Matters.




     (a) The Lenders irrevocably authorize and direct the Administrative Agent:




     (i) to release any Lien on any Collateral granted to or held by the
Administrative Agent under any Credit Document (A) upon termination of the Revolving
Commitments and payment in full of all Obligations (other than contingent
indemnification obligations for which no claim has been made or cannot be reasonably
identified by an Indemnitee based on the then-known facts and circumstances), (B)
subject to Section 10.1, if approved, authorized or ratified in writing by the
Required Lenders or (C) subject to Sections 2.5(b), 2.5(d) and 2.17, and other
restrictions on releases of Collateral, upon a prepayment in full of all amounts
owed under the Credit Documents with respect to a Pledged Mortgage Asset by the
Borrowers pursuant to Section 2.5(b); provided there is no Default, no Event
of Default and no mandatory prepayment is due or will become due upon such release
or upon the expiration of the applicable time period under Section 2.5.



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     (ii) to subordinate any Lien on any Collateral granted to or held by the
Administrative Agent under any Credit Document to the holder of any Lien on such
Collateral that is permitted by Section 6.2; and




     (iii) to release any Guarantor from its obligations under the applicable
Guaranty if such Person ceases to be a Guarantor because of a transaction permitted
hereunder.




     (d) In connection with a termination or release pursuant to this Section, the
Administrative Agent shall promptly execute and deliver to the applicable Credit Party, at
the Borrowers’ expense, all documents that the applicable Credit Party shall reasonably
request to evidence such termination or release. Upon request by the Administrative Agent
at any time, the Required Lenders will confirm in writing the Administrative Agent’s
authority to release or subordinate its interest in particular types or items of Collateral,
or to release any Guarantor from its obligations under the Guaranty pursuant to this
Section.



ARTICLE IX




ADMINISTRATION AND SERVICING




     Section 9.1 Servicing.




     (a) The Administrative Agent hereby appoints each of the Borrowers as its agent to
service the Collateral and enforce its rights in and under such Collateral. The Borrowers
hereby accept such appointment and agree to perform the duties and obligations with respect
thereto as set forth herein.




     (b) The Borrowers covenants to maintain or cause the servicing of the Collateral to be
maintained in conformity with Accepted Servicing Practices and in a manner at least equal in
quality to the servicing Borrowers provides for Mortgage Assets that it owns. In the event
that the preceding language is interpreted as constituting one or more servicing contracts,
each such servicing contract shall terminate automatically upon the earliest of (i) an Event
of Default, (ii) the date on which this Agreement terminates or the Administrative Agent
releases its Lien with respect to the related item of Collateral or (iii) the transfer of
servicing approved in writing by the Administrative Agent.



     Section 9.2 Borrowers as Servicer.



     If the Collateral is serviced by the Borrowers, the Borrowers agree that, until the item of
Collateral is released from the Administrative Agent’s Lien, the Administrative Agent is the owner
of all servicing records for the period that the Administrative Agent has a Lien on the Collateral,
including, but not limited to, any and all servicing agreements, files, documents, records, data
bases, computer tapes, copies of computer tapes, computer programs, proof of insurance coverage,
insurance policies, appraisals, other closing documentation, payment history records, and any other
records relating to or evidencing the servicing of such Collateral (the “Servicing
Records”). The Borrowers covenant to safeguard such Servicing Records and to deliver them
promptly to Administrative Agent or its designee (including the Custodian) at the Administrative
Agent’s request.



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     Section 9.3 Third Party Servicer.



     The Borrowers shall not cause the Collateral to be serviced by a third party other than
pursuant to the Servicing Agreements or the Pooling and Servicing Agreements or, if not serviced
thereunder, by any Servicer other than a Servicer expressly approved in writing by the
Administrative Agent, which approval shall be deemed granted by the Administrative Agent with
respect to each Servicer listed on Schedule 9.3 attached hereto, as such schedule may be
amended or supplemented from time to time, after the execution of this Agreement. If the
Collateral is serviced by a Servicer or a PSA Servicer pursuant to a Servicing Agreement or Pooling
and Servicing Agreement, as applicable, the Borrowers (i) shall, in accordance with Section 4.2,
provide to the Administrative Agent (subject to the last sentence of this Section) a copy of each
Servicing Agreement and Pooling and Servicing Agreement, which agreements shall be in form and
substance acceptable to the Administrative Agent, and a Servicer Redirection Notice, fully executed
by the Borrowers and the related Servicer or PSA Servicer, and (ii) hereby irrevocably assigns to
the Administrative Agent and the Administrative Agent’s successors and assigns all right, title and
interest of the Borrowers in, to and under, and the benefits of (but not the obligations of), each
Servicing Agreement and each Pooling and Servicing Agreement with respect to the Collateral.
Notwithstanding the fact that the Borrowers have contracted with the Servicers or PSA Servicers to
service the Collateral, the Borrowers shall remain liable to the Administrative Agent for the acts
of the Servicers and PSA Servicers and for the performance of the duties and obligations set forth
herein. The Borrowers agree that no Person shall assume the servicing obligations with respect to
the Collateral as successor to a Servicer or PSA Servicer unless such successor is approved in
writing by the Administrative Agent prior to such assumption of servicing obligations. The
Administrative Agent hereby approves Arbor Commercial Mortgage LLC as a Servicer. Unless otherwise
approved in writing by the Administrative Agent, if the Collateral is serviced by a Servicer or PSA
Servicer, such servicing shall be performed pursuant to a written Servicing Agreement or Pooling
and Servicing Agreement approved by the Administrative Agent.



     Section 9.4 Duties of the Borrowers.




     (a) Duties. The Borrowers shall take or cause to be taken all such actions as
may be necessary or advisable to collect all Income and other amounts due or recoverable
with respect to the Collateral from time to time, all in accordance with Requirements of
Laws, with reasonable care and diligence, and in accordance with the standard set forth in
Section 9.1(b).




     (b) Administrative Agent’s Rights. Notwithstanding anything to the contrary
contained herein, the exercise by the Administrative Agent of its rights hereunder shall not
release the Borrowers from any of its duties or responsibilities with respect to the
Collateral. The Administrative Agent shall not have any obligation or liability with
respect to any Collateral, nor shall any of them be obligated to perform any of the
obligations of the Borrowers hereunder.




     (c) Servicing Programs. In the event that the Borrowers or the Servicers use
any software program in servicing the Collateral that is licensed from a third party, the
Borrowers shall use their best reasonable efforts to obtain, either before the Restatement
Date or as soon as possible thereafter, whatever licenses or approvals are necessary to
allow the Administrative Agent to use such programs.



     Section 9.5 Authorization of the Borrowers.




     (a) The Administrative Agent hereby authorizes the Borrowers (including any successor
thereto) to take any and all reasonable steps in its name and on its behalf necessary or
desirable and not inconsistent with the pledge of the Collateral to the Administrative Agent
to collect all amounts due under any and all Collateral, including, without limitation,
endorsing any



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checks and other instruments representing Income, executing and delivering any and all
instruments of satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Collateral and, after the delinquency
of any Collateral and to the extent permitted under and in compliance with Requirements of
Law, to commence proceedings with respect to enforcing payment thereof, to the same extent
as the Borrowers could have done if it had continued to own such Collateral free of the Lien
of the Administrative Agent. The Administrative Agent shall furnish the Borrowers (and any
successors thereto) with any powers of attorney and other documents necessary or appropriate
to enable the Borrowers to carry out their servicing and administrative duties hereunder and
shall cooperate with the Borrowers to the fullest extent in order to ensure the
collectability of the Collateral. In no event shall the Borrowers be entitled to make the
Administrative Agent a party to any litigation without the Administrative Agent’s express
prior written consent.




     (b) Subject to all other rights of the Administrative Agent contained herein, after an
Event of Default has occurred and is continuing, at the direction of the Administrative
Agent, the Borrowers shall take such action as the Administrative Agent may deem necessary
or advisable to enforce collection of the Collateral; provided, however,
subject to all other rights of the Administrative Agent contained herein, the Administrative
Agent may, at any time that an Event of Default or Default has occurred and is continuing,
notify any Obligor with respect to any Collateral of the assignment of such Collateral to
the Administrative Agent and direct that payments of all amounts due or to become due be
made directly to the Administrative Agent or any servicer, collection agent or lock–box or
other account designated by the Administrative Agent and, upon such notification and at the
expense of the Borrowers, the Administrative Agent may enforce collection of any such
Collateral and adjust, settle or compromise the amount or payment thereof.



     Section 9.6 Event of Default.



     If the servicer of the Collateral is any Borrower, upon the occurrence of an Event of Default,
the Administrative Agent shall have the right to terminate the Borrowers as the servicer of the
Collateral and transfer servicing to its designee, at no cost or expense to the Administrative
Agent, at any time thereafter. If the servicer of the Collateral is not any of the Borrowers, the
Administrative Agent shall have the right, as contemplated in the applicable Servicer Redirection
Notice, upon the occurrence of an Event of Default, to terminate any Servicer and any applicable
Servicing Agreement and any PSA Servicer and any applicable Pooling and Servicing Agreement to the
extent a PSA Servicer signed a Servicer Redirection Notice and, in each case, to transfer servicing
to its designee, at no cost or expense to the Administrative Agent, it being agreed that the
Borrowers will pay any and all fees required to terminate each such Servicer, PSA Servicer,
Servicing Agreement and Pooling and Servicing Agreement and to effectuate the transfer of servicing
to the designee of the Administrative Agent. The Borrowers shall cooperate fully and shall cause
all Servicers and applicable PSA Servicers to cooperate fully with the Administrative Agent in
transferring the servicing of the Collateral to the Administrative Agent’s designee.



     Section 9.7 Modification.



     Unless otherwise agreed to by the Administrative Agent in its discretion until the
Administrative Agent releases its Lien on any item of Collateral, neither the Borrowers, the
Servicers, PSA Servicer (unless otherwise provided in a Pooling and Servicing Agreement) nor any
other Person acting on behalf of the foregoing shall have any right without the Administrative
Agent’s prior written consent in its discretion to (i) waive, amend, modify or alter the material
terms of any item or Collateral (including, without limitation, the related Mortgage Loan
Documents), the Servicing Agreements or the Pooling and



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Servicing Agreements or (ii) exercise any material rights of a holder of any item of
Collateral under any document or agreement governing or relating to such Collateral.



     Section 9.8 Inspection.



     In the event the Borrowers or their Affiliates are servicing the Collateral, the Borrowers
shall permit the Administrative Agent to inspect the Borrowers’ and any of their Affiliates’
servicing facilities, books and records and related documents and information, as the case may be,
for the purpose of satisfying the Administrative Agent that that Borrowers or their Affiliates, as
the case may be, have the ability to service and are servicing the Collateral as provided in this
Agreement. If a Servicer or PSA Servicer is servicing any Collateral, the Borrowers shall
cooperate with the Administrative Agent in causing each Servicer and PSA Servicer to permit
inspections of the Servicer’s and PSA Servicer’s facilities, books and records and related
documents and information relating to the Collateral.



     Section 9.9 Servicing Compensation.



     As compensation for their servicing activities hereunder and reimbursement for its expenses,
the Borrowers shall be entitled to receive a servicing fee to the extent of funds available
therefor in the aggregate amount of 25 basis points per annum calculated on the outstanding
principal amount of the Loans (the “Servicing Fee”), which, prior to an Event of Default,
may be netted from the Income prior to the same being deposited into the Collection Account.



     Section 9.10 Payment of Certain Expenses by Servicer.



     The Borrowers and any Servicer will be required to pay all expenses incurred by them in
connection with their activities under this Agreement and the other Credit Documents, including
fees and disbursements of independent accountants, Taxes imposed on the Borrowers or the Servicers,
expenses incurred in connection with payments and reports pursuant to this Agreement and the other
Credit Documents, and all other fees and expenses under this Agreement and the other Credit
Documents for the account of the Borrowers. The Borrowers shall be required to pay all reasonable
fees and expenses owing to any bank or trust company in connection with the maintenance of the
Collection Account and all other collection, reserve or lock–box accounts related to the
Collateral. The Borrowers shall be required to pay such expenses for their own account and shall
not be entitled to any payment therefor other than the Servicing Fee.



     Section 9.11 Pooling and Servicing Agreements.



     Notwithstanding the provisions of this Article IX, to the extent the Collateral (or portions
thereof) are serviced by a PSA Servicer (other than the Borrowers or any Servicer) under a Pooling
and Servicing Agreement, (a) the standards for servicing such items of Collateral shall be those
set forth in the applicable Pooling and Servicing Agreement, to the extent of the items covered
therein, and otherwise as provided in this Agreement, (b) the Borrowers shall enforce its rights
and interests under such agreements for and on behalf of the Administrative Agent, (c) the
Borrowers shall instruct the applicable PSA Servicer to deposit all Income received in respect of
the Collateral into the Collection Account in accordance with Section 5.17 of this Agreement,
(d) the Borrowers shall not take any action or fail to take any action or consent to any action or
inaction under any Pooling and Servicing Agreement where the effect of such action or inaction
would prejudice or adversely affect the interests of the Administrative Agent, (e) the
Administrative Agent shall be entitled to exercise any and all rights of the Borrowers or the
holder of any such item of Collateral under such Pooling and Servicing Agreements as such rights
relate to the Collateral, and (f) the Borrowers shall not consent to any amendment or modification
to any



110









 







Pooling and Servicing Agreement without the prior written consent of the Administrative Agent
in its discretion.



     Section 9.12 Servicer Default.



     Any material breach by the Borrowers, any of their Servicers or any of the PSA Servicers of
the obligations contained in this Article IX or in Sections 2.9(a) and 5.17 shall constitute a
“Servicer Default”.



ARTICLE X




MISCELLANEOUS




     Section 10.1 Amendments, Waivers and Release of Collateral.



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




     (i) reduce the amount or extend the scheduled date of maturity of any Loan or
Note or any installment thereon (except in accordance with Section 2.1(g) or Section
2.2(e)), 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 set forth
in Section 2.6 which shall be determined by a vote of the Required Lenders) or
extend the scheduled date of any payment thereof or increase the amount or extend
the expiration date of any Lender’s Commitment, in each case without the written
consent of each Lender directly affected thereby; provided that, it is
understood and agreed that (A) no waiver, reduction or deferral of a mandatory
prepayment required pursuant to Section 2.5(b), nor any amendment of Section 2.5(b)
or the definitions of Asset Value or Extraordinary Receipt, shall constitute a
reduction of the amount of, or an extension of the scheduled date of, the scheduled
date of maturity of, or any installment of, any Loan or Note, (B) any reduction in
the stated rate of interest on Revolving Loans shall only require the written
consent of each Lender holding a Revolving Commitment and (C) any reduction in the
stated rate of interest on the Term Loan shall only require the written consent of
each Lender holding a portion of the outstanding Term Loan; or




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



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     (iii) release any Borrower or all or substantially all of the Guarantors from
obligations under the Guaranty, without the written consent of all of the Lenders;
or




     (iv) release all or substantially all of the Collateral without the written
consent of all of the Lenders; or




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




     (vi) permit any Borrower to assign or transfer any of its rights or obligations
under this Agreement or other Credit Documents without the written consent of all of
the Lenders; or




     (vii) amend, modify or waive any provision of the Credit Documents requiring
consent, approval or request of the Required Lenders or all Lenders without the
written consent of the Required Lenders or all the Lenders as appropriate; or




     (viii) without the consent of Revolving Lenders holding in the aggregate more
than 50% of the outstanding Revolving Commitments (or if the Revolving Commitments
have been terminated, the aggregate principal amount of outstanding Revolving
Loans), amend, modify or waive any provision in Section 4.2 or waive any Default or
Event of Default (or amend any Credit Document to effectively waive any Default or
Event of Default) if the effect of such amendment, modification or waiver is that
the Revolving Lenders shall be required to fund Revolving Loans when such Lenders
would otherwise not be required to do so; or




     (ix) amend, modify or waive the order in which Obligations are paid or in a
manner that would alter the pro rata sharing of payments by and among the Lenders in
Section 2.9 without the written consent of each Lender directly affected thereby; or




     (x) amend, modify or waive any provision of Article VIII without the written
consent of the then Administrative Agent; or




     (xi) amend, modify or waive any provision in Sections 3.3 through 3.6 without
the written consent of the Custodian; or




     (xii) amend or modify the definition of Obligations to delete or exclude any
obligation or liability described therein without the written consent of each Lender
directly affected thereby;


provided, further, that no amendment, waiver or consent affecting the rights or
duties of the Administrative Agent under any Credit Document shall in any event be effective,
unless in writing and signed by the Administrative Agent, in addition to the Lenders required
hereinabove to take such action. Unless otherwise expressly provided herein, waivers shall be
effective only in the specific instance and for the specific purpose for which given.




     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 other Credit
Parties, the Lenders, the Administrative Agent and all future holders of the Notes. In the case of
any waiver, the Borrowers, the other Credit Parties, the Lenders and the Administrative Agent shall
be restored to their former position and rights hereunder and under the outstanding Loans and Notes
and other Credit



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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.



     Notwithstanding any of the foregoing to the contrary, the consent of the Borrowers and the
other Credit Parties shall not be required for any amendment, modification or waiver of the
provisions of Article VIII (other than the provisions of Section 8.9).



     Notwithstanding the fact that the consent of all the Lenders is required in certain
circumstances as set forth above, (a) 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 supersedes the unanimous consent provisions
set forth herein and (b) the Required Lenders may consent to allow a Credit Party to use cash
collateral in the context of a bankruptcy or insolvency proceeding.



     For the avoidance of doubt and notwithstanding any provision to the contrary contained in this
Section 10.1, this Agreement may be amended (or amended and restated) with the written consent of
the Credit Parties and the Required Lenders (i) to increase the aggregate Commitments of the
Lenders (provided that no Lender shall be required to increase its commitment without its consent),
(ii) to add one or more additional borrowing Tranches to this Agreement and to provide for the
ratable sharing of the benefits of this Agreement and the other Credit Documents with the other
then outstanding Obligations in respect of the extensions of credit from time to time outstanding
under such additional borrowing Tranche(s) and the accrued interest and fees in respect thereof and
(iii) to include appropriately the lenders under such additional borrowing Tranches in any
determination of the Required Lenders and/or to provide consent rights to such lenders under
subsections (ix) and/or (x) of Section 10.1 corresponding to the consent rights of the other
Lenders thereunder.



     Section 10.2 Notices.




     (a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in paragraph (b)
below), all notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or registered
mail or sent by telecopier as follows:



	 	 	 	 	 	 	 
	 	 	(i)	 	If to the Borrowers or any other Credit Party:
	 	 
	 	 	 	 	c/o Arbor Commercial Mortgage LLC
	 	 	 	 	333 Earle Ovington Boulevard
	 	 	 	 	Uniondale, New York 11553
	 

	 	 	 	Attention:
	 	Guy Milone, Esq.
	 

	 	 	 	Phone No.:
	 	(516) 832–7431
	 

	 	 	 	Facsimile No.:
	 	(516) 832–6431
	 
	 	 	 	 	 	 
	 

	 	 	 	With a copy to:	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Arbor Commercial Mortgage LLC
	 	 	 	 	333 Earle Ovington Boulevard
	 	 	 	 	Uniondale, New York 11553
	 

	 	 	 	Attention:
	 	John Natalone
	 

	 	 	 	Phone No.:
	 	(516) 832–7409






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	 	 	 	Facsimile No.:
	 	(516) 832-6409
	 
	 	 	 	 	 	 
	 	 	(ii)	 	If to the Administrative Agent:
	 
	 	 	 	 	 	 
	 	 	 	 	Wachovia Bank, National Association
	 	 	 	 	One Wachovia Center, NC0166
	 	 	 	 	301 South College Street
	 	 	 	 	Charlotte, North Carolina 28288
	 

	 	 	 	Attention:
	 	John Nelson
	 

	 	 	 	Phone No.:
	 	(704) 383–8238
	 

	 	 	 	Facsimile No.:
	 	(704) 715–0066







     (iii) if to a Lender, to it at its address (or telecopier number) set forth in
its Administrative Questionnaire.



     Notices sent by hand or overnight courier service, or mailed by certified or registered mail,
shall be deemed to have been given when received; notices sent by telecopier shall be deemed to
have been given when sent (except that, if not given during normal business hours for the
recipient, shall be deemed to have been given at the opening of business on the next Business Day
for the recipient). Notices delivered through electronic communications to the extent provided in
paragraph (b) below, shall be effective as provided in said paragraph (b).




     (b) Electronic Communications. Notices and other communications to the Lenders
hereunder may be delivered or furnished by electronic communication (including e-mail and
internet or intranet websites) pursuant to procedures approved by the Administrative Agent,
provided that the foregoing shall not apply to notices to any Lender pursuant to
Article II if such Lender has notified the Administrative Agent that it is incapable of
receiving notices under such Article by electronic communication. The Administrative Agent
or the Borrowers may, in its discretion, agree to accept notices and other communications to
it hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices or
communications.



     Unless the Administrative Agent otherwise prescribes, (i) notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement
from the intended recipient (such as by the “return receipt requested” function, as available,
return e-mail or other written acknowledgement), provided that if such notice or other
communication is not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on the next Business Day
for the recipient, and (ii) notices or communications posted to an internet or intranet website
shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as
described in the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.




     (c) Change of Address, Etc. Any party hereto may change its address or
telecopier number for notices and other communications hereunder by notice to the other
parties hereto.



     Section 10.3 No Waiver; Cumulative Remedies.



     No failure to exercise and no delay in exercising, on the part of the Administrative Agent or
any Lender, any right, remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies,



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powers and privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by Requirements of Law.



     Section 10.4 Survival of Representations and Warranties.



     All representations and warranties made hereunder and in any document, certificate or
statement delivered pursuant hereto or in connection herewith shall survive the execution and
delivery of this Agreement and the Notes and the making of the Loans; provided that all
such representations and warranties shall terminate on the date upon which the Commitments have
been terminated and all Obligations owing under any Notes or the other Credit Documents have been
paid in full.



     Section 10.5 Payment of Expenses and Taxes; Indemnity.




     (a) Costs and Expenses. The Borrowers shall pay (i) all reasonable
out-of-pocket expenses incurred by the Administrative Agent and its Affiliates (including
the reasonable fees, charges and disbursements of counsel for the Administrative Agent) in
connection with the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Credit Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby
shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the
Administrative Agent or any Lender, (including the fees, charges and disbursements of any
counsel for the Administrative Agent or any Lender) in connection with the enforcement or
protection of its rights (A) in connection with this Agreement and the other Credit
Documents, including its rights under this Section, or (B) in connection with the Loans
made, including all such reasonable out-of-pocket expenses incurred during any workout,
restructuring or negotiations in respect of such Loans, (iii) 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 Credit Documents or the other documents to be delivered hereunder or thereunder or the
funding or maintenance of Loans hereunder and (iv) all reasonable due diligence, inspection,
audit, testing, review, recording, travel, lodging or other administrative expenses and
costs incurred by the Administrative Agent or any Lender in connection with the review,
consideration, pledge or proposed pledge of any Mortgage Asset or other Collateral or
proposed Collateral (including any costs necessary or incidental to the pledge of the
Mortgage Assets or other Collateral or the making of any Loan in connection therewith). The
provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.




     (b) Indemnification by the Borrowers.




     (i) The Borrowers shall indemnify the Administrative Agent (and any sub-agent
thereof), each Lender and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee
harmless from, any and all losses, claims, penalties, fines, damages, liabilities
and related reasonable expenses (including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or
asserted against any Indemnitee by any third party or by the Borrowers or any other
Credit Party (collectively, the “Indemnified Amounts”) arising out of, in
connection with, or as a result of (A) this Agreement, the Credit Documents, any
Loan, any Collateral, the Mortgage Loan Documents, any transaction or Extension of
Credit contemplated hereby or thereby, or any amendment, supplement, extension or
modification of, or any waiver or consent under or in respect of this Agreement, the
Credit Documents, any Loan, any Collateral,



115









 







the Mortgage Loan Documents or any transaction or Extension of Credit
contemplated hereby or thereby, (B) any Mortgage Asset or any other Collateral under
the Credit Documents, (C) any violation or alleged violation of, non–compliance with
or liability under any Requirement of Law (including, without limitation, violation
of Securities Laws and Environmental Laws), (D) ownership of, Liens on, security
interests in or the exercise of rights and/or remedies under the Credit Documents,
the Mortgage Loan Documents, the Collateral, any other collateral under the Credit
Documents, the Underlying Mortgaged Property, any other related Property or
collateral or any part thereof or any interest therein or receipt of any Income or
rents, (E) any accident, injury to or death of any person or loss of or damage to
Property occurring in, on or about any Underlying Mortgaged Property, any other
related Property or collateral or any part thereof, the related Collateral or on the
adjoining sidewalks, curbs, parking areas, streets or ways, (F) any use, nonuse or
condition in, on or about, or possession, alteration, repair, operation, maintenance
or management of, any Underlying Mortgaged Property, any other related Property or
collateral or any part thereof or on the adjoining sidewalks, curbs, parking areas,
streets or ways, (G) any failure on the part of the Credit Parties to perform or
comply with any of the terms of the Mortgage Loan Documents, the Credit Documents,
the Collateral or any other collateral under the Credit Documents, (H) performance
of any labor or services or the furnishing of any materials or other Property in
respect of the Underlying Mortgaged Property, any other related Property or
collateral, the Collateral or any part thereof, (I) any claim by brokers, finders or
similar Persons claiming to be entitled to a commission in connection with any lease
or other transaction involving any Underlying Mortgaged Property, any other related
Property or collateral, the Collateral or any part thereof or the Credit Documents,
(J) any Taxes including, without limitation, any Taxes attributable to the
execution, delivery, filing or recording of any Credit Document, any Mortgage Loan
Document or any memorandum of any of the foregoing, (K) any Lien or claim arising on
or against the Underlying Mortgaged Property, any other related Property or
collateral, the Collateral or any part thereof under any Requirement of Law or any
liability asserted against the Administrative Agent or any Lender with respect
thereto, (L) the claims of any lessee or any Person acting through or under any
lessee or otherwise arising under or as a consequence of any leases with respect to
any Underlying Mortgaged Property, related Property or collateral, or any claims of
an Obligor, (M) any civil penalty or fine assessed by OFAC against, and all
reasonable costs and expenses (including counsel fees and disbursements) incurred in
connection with the defense thereof, by any Indemnitee as a result of conduct of any
Credit Party that violates any sanction enforced by OFAC, (N) 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 other Credit
Party or any Obligor, (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 Credit Party or any Obligor 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



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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 Credit Party or any Obligor, (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 Credit 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 (O) any Credit Party’s
conduct, activities, actions and/or inactions in connection with, relating to or
arising out of any of the foregoing clauses of this Section that, in each case,
results from anything other than any Indemnitee’s gross negligence or willful
misconduct. In any suit, proceeding or action brought by an Indemnitee in
connection with any Collateral or any other collateral under the Credit Documents
for any sum owing thereunder, or to enforce any provisions of any Collateral or any
other collateral under the Credit Documents, the Credit Parties shall save,
indemnify and hold such Indemnitee 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, obligor or Obligor
thereunder arising out of a breach by any Credit Party 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, obligor or Obligor or its successors from any
Credit Party. Each of the Credit Parties also agrees to reimburse an Indemnitee as
and when billed by such Indemnitee for all such Indemnitee’s costs, expenses and
fees incurred in connection with the enforcement or the preservation of such
Indemnitee’s rights under this Agreement, the Credit Documents, the Mortgage Loan
Documents and any transaction or Extension of Credit contemplated hereby or thereby,
including, without limitation, the reasonable fees and disbursements of its counsel.
In the case of an investigation, litigation or other proceeding to which the
indemnity in this Section applies, such indemnity shall be effective whether or not
such investigation, litigation or proceeding is brought by any Credit Party and/or
any of their officers, directors, shareholders, employees or creditors, an
Indemnitee or any other Person or any Indemnitee is otherwise a party thereto and
whether or not any transaction contemplated hereby is consummated.




     (ii) Any amounts subject to the indemnification provisions of this Section
shall be paid by the Credit Parties to the Indemnitee within five (5) Business Days
following such Person’s demand therefor. For the avoidance of doubt, an Indemnitee
may seek payment of any Indemnified Amount at any time and regardless of whether a
Default or an Event of Default then exists or is continuing.




     (iii) If for any reason the indemnification provided in this Section is
unavailable to the Indemnitee or is insufficient to hold an Indemnitee harmless,
then the Credit Parties shall contribute to the amount paid or payable by such
Indemnitee as a result of such loss, claim, damage or liability in such proportion
as is appropriate to reflect not only the relative benefits received by such
Indemnitee on the one hand and the Credit Parties on the other hand but also the
relative fault of such Indemnitee as well as any other relevant equitable
considerations.




     (iv) The obligations of the Credit Parties under this Article X are joint and
several and shall survive the termination of this Agreement.



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     (v) Indemnification under this Section shall be in an amount necessary to make
the Indemnitee whole after taking into account any tax consequences to the
Indemnitee 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 Indemnitee.




     (c) Reimbursement by Lenders. To the extent that the Borrowers for any reason
fail to indefeasibly pay any amount required under paragraph (a) or (b) of this Section to
be paid by it to the Administrative Agent (or any sub-agent thereof), or any Related Party
of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or
any such sub-agent), or such Related Party, as the case may be, such Lender’s Commitment
Percentage (determined as of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount, provided that the unreimbursed expense or
indemnified loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against the Administrative Agent (or any such sub-agent) in its
capacity as such, or against any Related Party of any of the foregoing acting for the
Administrative Agent (or any such sub-agent) in connection with such capacity.




     (d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
Requirements of Law, the Credit Parties shall not assert, and hereby waive, any claim
against any Indemnitee, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement, any other Credit Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or
the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) above shall be
liable for any damages arising from the use by unintended recipients of any information or
other materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the other Credit
Documents or the transactions contemplated hereby or thereby. The provisions of this
Section shall survive the termination of this Agreement and the payment in full of the
Obligations.



     Section 10.6 Successors and Assigns; Participations.




     (a) Successors and Assigns Generally. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that neither the Borrowers nor any other
Credit Party may assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an
assignee in accordance with the provisions of paragraph (b) of this Section, (ii) by way of
participation in accordance with the provisions of paragraph (d) of this Section or (iii) by
way of pledge or assignment of a security interest subject to the restrictions of
paragraph (f) of this Section (and any other attempted assignment or transfer by any party
hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their respective
successors and assigns permitted hereby, Participants to the extent provided in paragraph
(d) of this Section and, to the extent expressly contemplated hereby, the Related Parties of
each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.



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     (b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement (including all
or a portion of its Commitment and the Loans at the time owing to it); provided that
any such assignment shall be subject to the following conditions:




     (i) Minimum Amounts.




     (A) in the case of an assignment of the entire remaining amount of the
assigning Lender’s Commitment and the Loans at the time owing to it or in
the case of an assignment to a Lender, an Affiliate of a Lender or an
Approved Fund, no minimum amount need be assigned; and




     (B) in any case not described in paragraph (b)(i)(A) of this Section,
the aggregate principal amount of the Commitment (which for this purpose
includes Loans outstanding thereunder) or, if the applicable Commitment is
not then in effect, the principal outstanding balance of the Loans of the
assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect to such assignment is delivered
to the Administrative Agent or, if “Trade Date” is specified in the
Assignment and Assumption, as of the Trade Date) shall not be less than
$1,000,000, in the case of any assignment in respect of a revolving
facility, or $1,000,000, in the case of any assignment in respect of a term
facility (provided, however, that simultaneous assignments
shall be aggregated in respect of a Lender and its Approved Funds) unless
the Administrative Agent consents.




     (ii) Proportionate Amounts. Each partial assignment shall be made as
an assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loan or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from assigning
all or a portion of its rights and obligations among separate Tranches on a non-pro
rata basis.




     (iii) Required Consents. No consent shall be required for any
assignment except to the extent required by paragraph (b)(i)(B) of this Section and,
in addition:




     (A) the consent of the Borrowers (such consent not to be unreasonably
conditioned, withheld or delayed) shall be required unless (x) a Default or
an Event of Default has occurred and is continuing at the time of such
assignment or (y) such assignment is to an Eligible Assignee; and




     (B) the consent of the Administrative Agent (such consent not to be
unreasonably withheld, conditioned or delayed) shall be required for
assignments in respect of (i) a Revolving Commitment if such assignment is
to a Person that is not a Lender with a Commitment in respect of such
facility, an Affiliate of such Lender or an Approved Fund with respect to
such Lender or (ii) a Term Loan Commitment to a Person who is not an
Eligible Assignee.




     (iv) Assignment and Assumption. The parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Assumption,
together with a processing and recordation fee of $3,500 and the assignee, if it is
not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.



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     (v) No Assignment to Credit Parties. No such assignment shall be made
to any Credit Party or any of the Credit Parties’ Affiliates or Subsidiaries of a
Credit Party.




     (vi) No Assignment to Natural Persons. No such assignment shall be
made to a natural person.




     Subject to acceptance and recording thereof by the Administrative Agent pursuant to
paragraph (c) of this Section, from and after the effective date specified in each
Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and,
to the extent of the interest assigned by such Assignment and Assumption, have the rights
and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall,
to the extent of the interest assigned by such Assignment and Assumption, be released from
its obligations under this Agreement (and, in the case of an Assignment and Assumption
covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits
of Sections 2.12 and 10.5 with respect to facts and circumstances occurring prior to the
effective date of such assignment. Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in such rights
and obligations in accordance with paragraph (d) of this Section.




     (c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrowers, shall maintain at one of its offices in Charlotte, North Carolina a
copy of each Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal amounts of the
Loans owing to, each Lender pursuant to the terms hereof from time to time (the
“Register”). The entries in the Register shall be conclusive, and the Borrowers,
the Administrative Agent and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of this
Agreement, notwithstanding notice to the contrary. The Register shall be available for
inspection by the Borrowers and any Lender, at any reasonable time and from time to time
upon reasonable prior notice.




     (d) Participations. With the consent of the Administrative Agent, any Lender
may at any time, without the consent of, or notice to, the Borrowers, sell participations to
any Person (other than a natural person or the Credit Parties or any of the Credit Parties’
Affiliates or Subsidiaries of a Credit Party) (each, a “Participant”) in all or a
portion of such Lender’s rights and/or obligations under this Agreement (including all or a
portion of its Commitment and/or the Loans owing to it); provided that (i) such
Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such
obligations and (iii) the Borrowers, the Administrative Agent and the Lenders, shall
continue to deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement.




     Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to
approve any amendment, modification or waiver of any provision of this Agreement;
provided that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver that
affects such Participant. Subject to paragraph (e) of this Section, the Borrowers agree
that each Participant shall be entitled to the benefits of Sections 2.12 and 2.13 to the
same extent as if it were a Lender and had acquired its interest by assignment pursuant to
paragraph (b) of this Section. To the extent permitted by Requirements of Law, each
Participant also shall be entitled to the benefits of



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Section 10.7 as though it were a Lender, provided such Participant agrees to be subject
to Section 2.9 as though it were a Lender.




     (e) Limitations upon Participant Rights. A Participant shall not be entitled
to receive any greater payment under Sections 2.12 and 2.14 than the applicable Lender would
have been entitled to receive with respect to the participation sold to such Participant,
unless the sale of the participation to such Participant is made with the Borrowers’ prior
written consent. A Participant that would be a Foreign Lender if it were a Lender shall not
be entitled to the benefits of Section 2.14 unless the Borrowers are notified of the
participation sold to such Participant and such Participant agrees, for the benefit of the
Borrowers, to comply with Section 2.14 as though it were a Lender.




     (f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure obligations of
such Lender, including any pledge or assignment to secure obligations to a Federal Reserve
Bank; provided that no such pledge or assignment shall release such Lender from any
of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a
party hereto.



     Section 10.7 Right of Set-off; Sharing of Payments.




     (a) If an Event of Default shall have occurred and be continuing, each Lender, and each
of their respective Affiliates is hereby authorized at any time and from time to time, to
the fullest extent permitted by Requirements of Law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final, in whatever currency) at
any time held and other obligations (in whatever currency) at any time owing by such Lender
or any such Affiliate to or for the credit or the account of the Borrowers or any other
Credit Party against any and all of the obligations of the Borrowers or such Credit Party
now or hereafter existing under this Agreement or any other Credit Document to such Lender,
irrespective of whether or not such Lender shall have made any demand under this Agreement
or any other Credit Document and although such obligations of the Borrowers or such Credit
Party may be contingent or unmatured or are owed to a branch or office of such Lender
different from the branch or office holding such deposit or obligated on such indebtedness.
The foregoing right shall not apply to Excluded Accounts. The rights of each Lender and its
respective Affiliates under this Section are in addition to other rights and remedies
(including other rights of setoff) that such Lender or its respective Affiliates may have.
Each Lender agrees to notify the Borrowers and the Administrative Agent promptly after any
such setoff and application, provided that the failure to give such notice shall not
affect the validity of such setoff and application.




     (b) If any Lender shall, by exercising any right of setoff or counterclaim or
otherwise, obtain payment in respect of any principal of or interest on any of its Loans or
other obligations hereunder resulting in such Lender’s receiving payment of a proportion of
the aggregate principal amount of its Loans and accrued interest thereon or other such
obligations greater than its pro rata share thereof as provided herein, then
the Lender receiving such greater proportion shall (i) notify the Administrative Agent of
such fact, and (ii) purchase (for cash at face value) participations in the Loans and such
other obligations of the other Lenders, or make such other adjustments as shall be
equitable, so that the benefit of all such payments shall be shared by the Lenders ratably
in accordance with the aggregate amount of principal of and accrued interest on their
respective Loans and other amounts owing them, provided that:



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     (i) if any such participations are purchased and all or any portion of the
payment giving rise thereto is recovered, such participations shall be rescinded and
the purchase price restored to the extent of such recovery, without interest; and




     (ii) the provisions of this paragraph shall not be construed to apply to
(A) any payment made by the Borrowers pursuant to and in accordance with the express
terms of this Agreement or (B) any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Credit Parties or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply).




     (c) Each Credit Party consents to the foregoing and agrees, to the extent it may
effectively do so under Requirements of Law, that any Lender acquiring a participation
pursuant to the foregoing arrangements may exercise against each Credit Party rights of
setoff and counterclaim with respect to such participation as fully as if such Lender were a
direct creditor of each Credit Party in the amount of such participation.



     Section 10.8 Table of Contents and Section Headings.



     The table of contents and the Section and subsection headings herein are intended for
convenience only and shall be ignored in construing this Agreement.



     Section 10.9 Counterparts; Integration; Effectiveness; Electronic Execution.




     (a) Counterparts; Integration; Effectiveness. This Agreement may be executed
in counterparts (and by different parties hereto in different counterparts), each of which
shall constitute an original, but all of which when taken together shall constitute a single
contract. This Agreement and the other Credit Documents, and any separate letter agreements
with respect to fees payable to the Administrative Agent, constitute the entire contract
among the parties relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter hereof.
Except as provided in Section 4.1, this Agreement shall become effective when it shall have
been executed by the Administrative Agent and when the Administrative Agent shall have
received counterparts hereof that, when taken together, bear the signatures of each of the
other parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or email shall be effective as delivery of a manually executed
counterpart of this Agreement.




     (b) Electronic Execution of Assignments. The words “execution,” “signed,”
“signature,” and words of like import in any Assignment and Assumption shall be deemed to
include electronic signatures or the keeping of records in electronic form, each of which
shall be of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be, to the
extent and as provided for in any Requirement of Law, including the Federal Electronic
Signatures in Global and National Commerce Act, the New York State Electronic Signatures and
Records Act, or any other similar state laws based on the Uniform Electronic Transactions
Act.



     Section 10.10 Severability.



     Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without



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invalidating the remaining provisions hereof, and any such prohibition or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction.



     Section 10.11 Integration.



     This Agreement and the other Credit Documents represent the agreement of the Borrowers, the
other Credit Parties, the Administrative Agent and the Lenders with respect to the subject matter
hereof, and there are no promises, undertakings, representations or warranties by the
Administrative Agent, the Borrowers, the other Credit Parties, or any Lender relative to the
subject matter hereof not expressly set forth or referred to herein or therein.



     Section 10.12 Governing Law.



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



     Section 10.13 Consent to Jurisdiction; Service of Process and Venue.




     (a) Consent to Jurisdiction. Each of the Borrowers and each other Credit Party
irrevocably and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the courts of the State of New York and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Agreement or any
other Credit Document, or for recognition or enforcement of any judgment, and each of the
parties hereto irrevocably and unconditionally agrees that all claims in respect of any such
action or proceeding may be heard and determined in such New York sitting State court or, to
the fullest extent permitted by Requirements of Law, in such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by Requirements of Law. Nothing in this Agreement or in any other
Credit Document shall affect any right that the Administrative Agent or any Lender may
otherwise have to bring any action or proceeding relating to this Agreement or any other
Credit Document against the Borrowers or any other Credit Party or its properties in the
courts of any jurisdiction.




     (b) Service of Process. Each party hereto irrevocably consents to service of
process in the manner provided for notices in Section 10.2. Nothing in this Agreement will
affect the right of any party hereto to serve process in any other manner permitted by
Requirements of Law.




     (c) Venue. The Borrowers and each other Credit Party irrevocably and
unconditionally waives, to the fullest extent permitted by Requirements of Law, any
objection that it may now or hereafter have to the laying of venue of any action or
proceeding arising out of or relating to this Agreement or any other Credit Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto hereby
irrevocably waives, to the fullest extent permitted by Requirements of Law, the defense of
an inconvenient forum to the maintenance of such action or proceeding in any such court.



     The provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



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     Section 10.14 Confidentiality.



     Each of the Administrative Agent and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to its Affiliates and
to its and its Affiliates’ respective partners, directors, officers, employees, agents, advisors
and other representatives (it being understood that the Persons to whom such disclosure is made
will be informed of the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory authority purporting to
have jurisdiction over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by Requirements of Law or by
any subpoena or similar legal process, (d) to any other party hereto, (e) in connection with the
exercise of any remedies hereunder, under any other Credit Document or any action or proceeding
relating to this Agreement, any other Credit Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the same as those of
this Section, to any assignee of or Participant in, or any prospective assignee of or Participant
in, any of its rights or obligations under this Agreement and/or the other Credit Documents,
(g) (i) any actual or prospective counterparty (or its advisors) to any swap or derivative
transaction relating to the Credit Parties and their obligations, (ii) an investor or prospective
investor in securities issued by an Approved Fund that also agrees that Information shall be used
solely for the purpose of evaluating an investment in such securities issued by the Approved Fund,
(iii) a trustee, collateral manager, custodian, servicer, backup servicer, noteholder or secured
party in connection with the administration, servicing and reporting on the assets serving as
collateral for securities issued by an Approved Fund, or (iv) a nationally recognized rating agency
that requires access to information regarding the Credit Parties, the Loans and Credit Documents in
connection with ratings issued in respect of securities issued by an Approved Fund (in each case,
it being understood that the Persons to whom such disclosure is made will be informed of the
confidential nature of such information and instructed to keep such information confidential),
(h) with the consent of the applicable Credit Parties or (i) to the extent such Information
(x) becomes publicly available other than as a result of a breach of this Section or (y) becomes
available to the Administrative Agent, any Lender or any of their respective Affiliates on a
nonconfidential basis from a source other than the Credit Parties.



     For purposes of this Section, “Information” means all information received from the
Credit Parties or any of their Subsidiaries relating to the Credit Parties or any of their
Subsidiaries or any of their respective businesses, other than any such information that is
available to the Administrative Agent or any Lender on a nonconfidential basis prior to disclosure
by the Credit Parties or any of their Subsidiaries, provided that, in the case of
information received from the Credit Parties or any of their Subsidiaries after the date hereof,
such information is clearly identified at the time of delivery as confidential. Any Person
required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to
its own confidential information.



     The provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 10.15 Acknowledgments.



     The Borrowers and the other Credit Parties each hereby acknowledge that:




     (a) it has been advised by counsel in the negotiation, execution and delivery of each
Credit Document;



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     (b) neither the Administrative Agent nor any Lender has any fiduciary relationship with
or duty to the Borrowers or any other Credit Party arising out of or in connection with this
Agreement and the relationship between the Administrative Agent and the Lenders, on one
hand, and the Borrowers and the other Credit Parties, on the other hand, in connection
herewith is solely that of debtor and creditor; and




     (c) no joint venture exists among the Lenders or among the Borrowers or the other
Credit Parties, the Lenders and the Administrative Agent.



     Section 10.16 Waivers of Jury Trial.



     EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY REQUIREMENTS
OF LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     The provisions of this Section shall survive the termination of this Agreement and the payment
in full of the Obligations.



     Section 10.17 Patriot Act Notice.



     Each Lender and the Administrative Agent (for itself and not on behalf of any other party)
hereby notifies the Borrowers that, pursuant to the requirements of the Patriot Act, it is required
to obtain, verify and record information that identifies the Borrowers and the other Credit
Parties, which information includes the name and address of the Borrowers and the other Credit
Parties and other information that will allow such Lender or the Administrative Agent, as
applicable, to identify the Borrowers and the other Credit Parties in accordance with the Patriot
Act.



     Section 10.18 Resolution of Drafting Ambiguities.



     Each Credit Party acknowledges and agrees that it was represented by counsel in connection
with the execution and delivery of this Agreement and the other Credit 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 10.19 Continuing Agreement.



     This Credit Agreement shall be a continuing agreement and shall remain in full force and
effect until all Loans, interest, fees and other Obligations (other than those obligations that
expressly survive the termination of this Credit Agreement) have been paid in full and all
Commitments have been terminated. Upon termination, the Credit Parties shall have no further
obligations (other than those obligations that expressly survive the termination of this Credit
Agreement) under the Credit Documents and the



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Administrative Agent shall, at the request and expense of the Borrowers, deliver all the
Collateral in its possession to the Borrowers and release all Liens on the Collateral;
provided that should any payment, in whole or in part, of the Obligations be rescinded or
otherwise required to be restored or returned by the Administrative Agent or any Lender, whether as
a result of any proceedings in bankruptcy or reorganization or otherwise, then the Credit Documents
shall automatically be reinstated and all Liens of the Administrative Agent shall reattach to the
Collateral and all amounts required to be restored or returned and all costs and expenses incurred
by the Administrative Agent or any Lender in connection therewith shall be deemed included as part
of the Obligations.



     Section 10.20 Lender Consent.



     Each Person signing a Lender Consent (a) approves of this Agreement and the other Credit
Documents, (b) authorizes and appoints the Administrative Agent as its agent in accordance with the
terms of Article VIII, (c) authorizes the Administrative Agent to execute and deliver this
Agreement on its behalf, and (d) is a Lender hereunder and therefore shall have all the rights and
obligations of a Lender under this Agreement as if such Person had directly executed and delivered
a signature page to this Agreement.



     Section 10.21 Appointment of the Administrative Borrower.



     Each of the Borrowers hereby appoint the Administrative Borrower to act as its agent for all
purposes under this Agreement (including, without limitation, with respect to all matters related
to the borrowing and repayment of Loans) and agree that (a) the Administrative Borrower may execute
such documents on behalf of such Borrower as the Administrative Borrower deems appropriate in its
sole discretion and each Borrower shall be obligated by all of the terms of any such document
executed on its behalf, (b) any notice or communication delivered by the Administrative Agent or
the Lender to the Administrative Borrower shall be deemed delivered to each Borrower and (c) the
Administrative Agent or the Lenders may accept, and be permitted to rely on, any document,
instrument or agreement executed by the Administrative Borrower on behalf of each Borrower.



     Section 10.22 Counterclaims.



     The Credit Parties 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 or any of the Affiliates or agents of the
foregoing. The provisions of this Section shall survive the termination of this Agreement and the
payment in full of the Obligations.



     Section 10.23 Legal Matters.



     In the event of any conflict between the terms of this Agreement, any other Credit Document or
any Confirmation with respect to any 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 Credit Documents shall prevail.



     Section 10.24 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, or the Credit Parties, as contained in this Agreement, the Credit Documents or any other
agreement, instrument or document entered into by the Administrative Agent, the Lenders, the Credit
Parties or any such party pursuant hereto or thereto or in connection herewith or therewith shall
be had against any



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administrator of the Administrative Agent, the Lenders, or the Credit Parties or any
incorporator, Affiliate (direct or indirect), owner, member, partner, stockholder, officer,
director, employee, agent or attorney of the Administrative Agent, the Lenders, or the Credit
Parties 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 or the Credit Parties
contained in this Agreement, the Credit Documents and all of the other agreements, 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 or the
Credit Parties and that no personal liability whatsoever shall attach to or be incurred by any
administrator of the Administrative Agent, the Lenders or the Credit Parties or any incorporator,
owner, member, partner, stockholder, Affiliate (direct or indirect), officer, director, employee,
agent or attorney of the Administrative Agent, the Lenders or the Credit Parties 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 or the Credit Parties contained in
this Agreement, the Credit 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 or the Credit Parties and each incorporator, owner, member,
partner, stockholder, Affiliate (direct or indirect), officer, director, employee, agent or
attorney of the Administrative Agent, the Lenders, the Credit Parties or of any such administrator,
or any of them, for breaches by the Administrative Agent, the Lenders, or the Credit Parties 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 shall survive
the termination of this Agreement and the payment in full of the Obligations.




	 	 	Section 10.25 Protection of Right, Title and Interest in the Collateral; Further Action
Evidencing Loans.






     (a) The Credit Parties 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 Requirements of Law fully to preserve and protect the right, title and
interest of the Administrative Agent (on behalf of the Secured Parties) hereunder to all
Property comprising the Collateral. The Credit Parties 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 Credit Parties shall execute any and all documents reasonably required to
fulfill the intent of this Section.




     (b) The Credit Parties 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 Credit Document.




     (c) If the Credit Parties 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 Credit Parties irrevocably appoint the
Administrative Agent as their attorney-in-fact and authorize the Administrative Agent to act
on behalf of the Credit Parties (i) to execute on behalf of the Credit Parties as debtor and
to file financing



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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 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 Credit Parties 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 Section 4.1(d)
or any other financing statement filed pursuant to this Agreement, the Credit Documents or
in connection with any Loan hereunder, unless this Agreement has terminated in accordance
with the provisions hereof:




     (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 Counsel
for the Credit Parties, confirming and updating the opinion delivered pursuant to Section
4.1(c) 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 10.26 Credit Parties’ Waiver of Setoff.



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



     Section 10.27 Periodic Due Diligence Review.



     Each Credit Party acknowledges that the Administrative Agent and each Lender has the right to
perform continuing due diligence reviews with respect to the Collateral (including, but not limited
to, appraisals of the Underlying Mortgaged Property) and the Credit Parties 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 Credit
Party agrees that upon reasonable (but no less than three (3) Business Day) prior notice, unless an
Event of Default shall have occurred, in which case no notice is required, to the Credit Parties,
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 Credit Parties and the Consolidated Subsidiaries of the foregoing in the
possession or under the control of any Credit Party. Each Credit Party also shall make available
to the Administrative Agent a knowledgeable financial or accounting officer for the purpose of
answering questions respecting the Collateral, the Credit Parties and the Consolidated Subsidiaries
of the foregoing. Each Credit Party shall also make available to the Administrative Agent and the
Lenders any accountants or auditors of any Credit Party to answer any questions or provide any
documents as the Administrative Agent or the Lenders may require. The Borrowers shall pay all
reasonable 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
(“Due Diligence Costs”); provided however, that the Borrowers’ obligations to pay for any
appraisals of the Underlying Mortgaged Property shall be limited to the cost of two appraisals per
Underlying Property in



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any three year period. The Credit Parties acknowledge that the Administrative Agent has the
right at any time to review all aspects of the Collateral and the Asset Value thereof, which review
shall occur no less than quarterly and such reviews may result in mandatory prepayments under
Section 2.5.



     Section 10.28 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 10.29 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 and the Lenders to the maximum extent permitted
by the Requirements of Law for all representations, warranties, covenants, duties and
indemnities of the Borrowers, arising under this Agreement and the other Credit Documents,
as applicable, and the Obligations, (ii) such Borrower has consented to the Administrative
Borrower delivering all Notices of Borrowing on behalf of all Borrowers and any such Notice
of Borrowing delivered by the Administrative Borrower 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 Obligations 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 Credit Parties 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 Credit Party under this Agreement or any Credit
Document, (2) the failure to give notice to the Credit Parties of the occurrence of an Event
of Default under any of the Credit 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 Credit Parties 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 Requirements of Law, any
other event, occurrence, action or circumstance that would, in the absence of this Section,
result in the release or discharge of any or all of the Borrowers from the performance or
observance of any obligation, covenant or agreement contained in this Agreement or the
Credit Documents, (iv) the Administrative Agent shall not be required first to initiate any
suit or to exhaust its remedies against the Credit Parties or any other Person to become
liable, or against any of the Collateral, in order to enforce this Agreement or the Credit
Documents and the Credit Parties 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 Credit 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



129









 







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 Section shall in no respect limit the obligations and liabilities of
each Borrower to the Administrative Agent and the Lenders 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 or the Lenders, the
paying Borrower shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or the Lenders against any other Borrowers or any collateral security
or guarantee or right of offset held by the Administrative Agent or the Lenders, 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 and the Lenders by the Borrowers under the Credit
Documents 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
Credit Documents 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) in such order as the
Administrative Agent may determine in its discretion.




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



     Section 10.30 Amendment and Restatement.



     This Agreement amends, restates and supersedes in its entirety the Existing Agreement.
Notwithstanding the amendment and restatement of the Existing Agreement by this Agreement:
(a) unless modified by the express terms of this Agreement, the other Credit Documents or the
Confirmations delivered in connection with this Agreement, each Loan outstanding on the date hereof
under the Existing 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 Existing
Agreement hereby and (b) the Existing Borrower shall continue to be liable to the Lenders for
(i) all



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“Obligations” (under and as defined in the Existing Agreement) accrued to the date hereof
under the Existing Agreement and (ii) all agreements on the part of the Existing Borrower under the
Existing Agreement to indemnify the Lenders or any Secured Party 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 10.5 thereof. This Agreement is given
in substitution for the Existing 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 Existing
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 Existing Agreement in any
other Credit 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 Existing Agreement, including, without limitation, the eligibility
of Collateral financed under the Existing Agreement and any settlements to be made with respect
thereto.



     Section 10.31 Modification of Other Credit Documents.



     The amendments and modifications to this Agreement shall amend and modify the other Credit
Documents to the extent such other Credit Documents are not separately amended or modified on the
Restatement Date. The Credit Parties agree that all other Credit 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.



[Signature Pages Follow]




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     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and
delivered by its proper and duly authorized officers as of the day and year first above written.



	 	 	 	 	 
	BORROWERS:	 	ARBOR REALTY FUNDING, LLC, a Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/  John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARSR TAHOE, LLC, a Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/  John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARBOR REALTY LIMITED PARTNERSHIP, a Delaware limited
partnership
	 
	 	 	 	 
	 

	 	By:
	 	/s/  John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ART 450 LLC, a Delaware limited liability company
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARBOR REALTY SR, INC., a Maryland corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARBOR ESH II 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]




First Amended and Restated Credit Agreement





S-1









 








	 	 	 	 	 
	GUARANTORS:	 	ARBOR REALTY TRUST, INC,

a Maryland corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARBOR REALTY LIMITED PARTNERSHIP,

a Delaware limited partnership
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President
	 
	 	 	 	 
	 	 	ARBOR REALTY SR, INC.,

a Maryland corporation
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Natalone, Executive Vice President
	 

	 	 	 	 
	 

	 	Name:
	 	John Natalone
	 

	 	Title:
	 	Executive Vice President






[Signatures Continued on the Following Page]




First Amended and Restated Credit Agreement




S-2









 





	 	 	 	 	 
	ADMINISTRATIVE AGENT:	 	WACHOVIA BANK, NATIONAL
	 	 	ASSOCIATION, as Administrative Agent on behalf of the
Secured Parties
	 
	 	 	 	 
	 

	 	By:
	 	/s/ John Nelson, Managing Director
	 

	 	 	 	 
	 

	 	Name:
	 	John Nelson
	 

	 	Title:
	 	Managing Director






[Signatures Continued on the Following Page]




First Amended and Restated Credit Agreement





S-3









 








	 	 	 	 	 	 	 
	LENDER:	 	WACHOVIA BANK, NATIONAL	 	 
	 	 	ASSOCIATION, as Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ John Nelson, Managing Director
 

John Nelson
	 	 
	 

	 	Title:
	 	Managing Director	 	 






First Amended and Restated Credit Agreement





S-4