Document:

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                                                                   Exhibit 10.25

                        PURCHASE AND PLACEMENT AGREEMENT

          This Purchase and Placement Agreement (this "Agreement") is made as of
the 14th day of December, 2006, by and among Arbor Realty Mortgage Securities
Series 2006-1, Ltd., a Cayman Islands exempted company with limited liability
(the "Issuer"), Arbor Realty Mortgage Securities Series 2006-1 LLC, a Delaware
limited liability company (the "Co-Issuer" and, together with the Issuer, the
"Co-Issuers"), Wachovia Capital Markets, LLC ("Wachovia Securities" or the
"Initial Purchaser") and Credit Suisse Securities (USA) LLC ("Credit Suisse"
and, together with Wachovia Securities, the "Dealers").

                                   WITNESSETH:

          WHEREAS, the Issuer and the Co-Issuer intend to co-issue (a) the U.S.
$230,000,000 Class A-1A Senior Secured Floating Rate Term Notes, Due 2042 (the
"Class A-1A Notes"), (b) the up to U.S.$100,000,000 Class A-1AR Revolving Senior
Secured Floating Rate Term Notes, Due 2042 (the "Class A-1AR Notes" and,
together with the Class A-1A Notes, the "Class A-1 Notes"), (c) the
U.S.$72,900,000 Class A-2 Second Priority Senior Secured Floating Rate Term
Notes, Due 2042 (the "Class A-2 Notes" and, together with the Class A-1 Notes,
the "Class A Notes"), (d) the U.S.$41,100,000 Class B Third Priority Floating
Rate Term Notes, Due 2042 (the "Class B Notes"), (e) the U.S.$31,200,000 Class C
Fourth Priority Floating Rate Capitalized Interest Term Notes, Due 2042 (the
"Class C Notes"), (f) the U.S.$13,350,000 Class D Fifth Priority Floating Rate
Capitalized Interest Term Notes, Due 2042 (the "Class D Notes"), (g) the
U.S.$14,250,000 Class E Sixth Priority Floating Rate Capitalized Interest Term
Notes, Due 2042 (the "Class E Notes"), (h) the U.S.$13,650,000 Class F Seventh
Priority Floating Rate Capitalized Interest Term Notes, Due 2042 (the "Class F
Notes"), (i) the U.S.$16,950,000 Class G Eighth Priority Floating Rate
Capitalized Interest Term Notes, Due 2042 (the "Class G Notes"), and (j) the
U.S.$14,100,000 Class H Ninth Priority Floating Rate Capitalized Interest Term
Notes, Due 2042 (the "Class H Notes" and, together with the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes and the Class G Notes, the "Notes") pursuant to an indenture,
dated as of December 14, 2006 (the "Indenture"), by and among the Issuer, the
Co-Issuer, Wells Fargo Bank, National Association, as trustee (in such capacity,
the "Trustee"), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar, and Arbor
Realty SR, Inc., as advancing agent (the "Advancing Agent");

          WHEREAS, the Issuer intends to issue 52,500,000 preferred shares, with
a par value of U.S.$0.0001 per share and a notional amount of U.S.$1.00 per
share (the "Preferred Shares" and, together with the Notes, the "Securities")
pursuant to the Governing Documents (as defined in the Indenture) of the Issuer,
certain resolutions of the board of directors of the Issuer passed prior to the
issuance of the Preferred Shares and the Preferred Shares Paying Agency
Agreement, dated as of December 14, 2006 (the "Preferred Shares Paying Agency
Agreement"), among the Issuer, Wells Fargo Bank, National Association, as
preferred shares paying agent (the "Preferred Shares Paying Agent"), and Maples
Finance Limited, as share registrar;

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          WHEREAS, each Dealer is a securities firm engaged in the business of
selling securities directly to purchasers or through other securities dealers;

          WHEREAS, each Dealer may, but is not required to, make a market in the
Notes (other than the Class A-1AR Notes);

          WHEREAS, Arbor Realty Collateral Management, LLC ("ARCM") shall act as
collateral manager (the "Collateral Manager") of the Issuer's assets in
accordance with the terms of a collateral management agreement, dated as of
December 14, 2006 (the "Collateral Management Agreement"), between the
Collateral Manager and the Issuer;

          WHEREAS, on the Closing Date, the Issuer will purchase or will have
committed to purchase a portion of the Collateral Debt Securities from Arbor
Realty SR, Inc., Arbor Realty Funding LLC and Arbor Realty Limited Partnership
(collectively, the "Sellers"); and

          WHEREAS, each Dealer hereby acknowledges that it has received good and
valuable consideration hereunder.

          NOW, THEREFORE, the parties agree as follows:

          1. Defined Terms. All capitalized terms used and not otherwise defined
herein shall have the same meanings ascribed to such terms in the Indenture.

          2. Sale and Purchase of the Purchased Notes; Market-Making; Placement
of the Class A-1AR Notes.

          (a) Subject to the terms and conditions herein, on the Closing Date,
each of the Issuer and the Co-Issuer hereby agrees to sell all of the Class A-1A
Notes, the Class A-2 Notes, the Class B Notes, the Class C Notes, the Class D
Notes, the Class E Notes, the Class F Notes, the Class G Notes and the Class H
Notes (collectively, the "Purchased Notes") to the Initial Purchaser as provided
hereinafter, and the Initial Purchaser agrees to purchase from the Issuer and
Co-Issuer, as applicable, the Purchased Notes in the amount set forth on
Schedule A hereto at the price set forth opposite the respective Classes of
Purchased Notes.

          (b) The purchase price of the Purchased Notes shall be payable by the
Initial Purchaser to the Issuer as it directs by wire transfer in United States
Dollars in immediately available funds on the Closing Date.

          (c) Prior to or at the time that the Notes are first issued or
delivered, the conditions precedent in Section 7 herein shall have been
satisfied.

          (d) The Dealers may, but are not required to, make a market in the
Purchased Notes and may cease any such activity at any time.

          (e) Each of the Issuer and the Co-Issuer hereby agrees to make
available on the Closing Date for placement by Wachovia Securities, as placement
agent (in such capacity, the "Placement Agent"), on a reasonable best efforts
basis, the Class A-1AR Notes, as provided

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hereinafter, in the amount set forth on Schedule A hereto (the "Class A-1AR
Placement Amount") at the price set forth opposite the Class A-1AR Notes.

          (f) The Placement Agent agrees to place on behalf of the Co-Issuers,
on a reasonable best efforts basis, the Class A-1AR Notes in an amount equal to
the Class A-R Placement Amount at the purchase price of the Class A-1AR Notes on
the Closing Date.

          (g) Each of the Co-Issuers and the Placement Agent agree that the
Class A-1AR Notes will be issued in fully registered, certificated form without
interest coupons, registered in the name of the legal and beneficial owner
thereof, except as otherwise required by the Issuer at the time of issuance.

          3. Offer and Placement of the Notes. Each of the Issuer and the
Co-Issuer understands that the Initial Purchaser intends to offer the Purchased
Notes and the Placement Agent intends place the Class A-1AR Notes as soon after
this Agreement has become effective as is advisable in the judgment of the
Initial Purchaser and the Placement Agent. The Issuer and Co-Issuer confirm that
they have authorized the Dealers, subject to the restrictions set forth below,
to distribute copies of the offering memorandum dated December 12, 2006, as
supplemented by the Supplement to Offering Memorandum, dated December 13, 2006
(together, the "Offering Memorandum") in connection with the offering of the
Notes or making a market in the Purchased Notes, as applicable.

          4. Representations, Warranties and Covenants of each of the
Co-Issuers. Each of the Issuer or the Co-Issuer, as applicable, represents and
warrants (with respect to itself only) to the Dealers as of the Closing Date,
and agrees with the Dealers that:

          (a) it has not, directly or indirectly, solicited any offer to buy or
offered to sell, and shall not, directly or indirectly, solicit any offer to buy
or offer to sell, in the United States or to any United States citizen or
resident, any security which is or would be integrated with the sale of the
Securities in a manner that would require the Securities to be registered under
the Securities Act of 1933, as amended (the "Securities Act");

          (b) the Notes are eligible for resale pursuant to Rule 144A under the
Securities Act and shall not be, on the Closing Date, of the same class as
securities listed on a national securities exchange registered under Section 6
of the United States Securities Exchange Act, as amended (the "Exchange Act"),
or quoted in a United States automated interdealer quotation system;

          (c) the Offering Memorandum, the marketing materials dated December
12, 2006 and the related asset summaries (collectively, the "Offering
Materials") have been prepared by the Issuer and the Co-Issuer, as applicable,
in connection with the offering of the Notes. The Offering Materials and any
amendments or supplements thereto did not and shall not, as of their respective
dates and, in the case of the Offering Memorandum, as of the Closing Date,
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading except that the representations and
warranties set forth in this Section 4(c) do not apply to statements or
omissions that are made in reliance upon and in conformity with information

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relating to the Dealers furnished to the Issuer by the Dealers expressly for use
in the Offering Materials or any amendment or supplement thereto. It is hereby
acknowledged that (x) the statements set forth on the cover page in the first
sentence of each of the fourth and fifth paragraphs and the first sentence and
third sentence of the first paragraph, the second paragraph, the third
paragraph, the fourth paragraph and the first sentence of the fifth paragraph
under the caption "Subscription and Sale" constitute the only written
information furnished to the Issuer by Wachovia Securities expressly for use in
the Offering Memorandum (or any amendment or supplement thereto) (the "Wachovia
Securities Information") and (y) the statements set forth in the third paragraph
under the caption "Subscription and Sale" constitute the only written
information furnished to the Issuer by Credit Suisse expressly for use in the
Offering Memorandum (or any amendment or supplement thereto) (the "Credit Suisse
Information" and, together with the Wachovia Securities Information, the "Dealer
Information").

          (d) since the respective dates as of which information is given in the
Offering Materials, except as contemplated or set forth in the Offering
Memorandum, it has not carried on any business other than as described in the
Offering Materials relating to the issue of the Securities;

          (e) the Issuer does not have any subsidiaries and the Co-Issuer does
not have any subsidiaries;

          (f) the Issuer (1) is an exempted company incorporated with limited
liability that has been duly and validly incorporated and is existing and in
good standing under the laws of the Cayman Islands; (2) is duly licensed and
duly qualified to do business as a foreign limited liability company and is in
good standing in all jurisdictions in which the ownership of its assets or in
which the conduct of its business requires or shall require such qualification;
and (3) has full power and authority to own its assets and conduct its business
as described in the Offering Materials and to enter into and perform its
obligations under this Agreement, the Securities Account Control Agreement, the
Indenture, the Preferred Shares Paying Agency Agreement, the Servicing
Agreement, each Collateral Debt Securities Purchase Agreement, each Hedge
Agreement, the Collateral Management Agreement, and any note purchase agreement
relating to the Class A-1AR Notes (the "Class A-1AR Note Purchase Agreement")
and to enter into and consummate all the transactions in connection therewith as
contemplated by such agreements and in the Offering Materials;

          (g) the Co-Issuer (1) is a limited liability company that is in
good-standing under the laws of the State of Delaware and is duly licensed and
duly qualified to do business as a limited liability company and is in good
standing in all jurisdictions in which the ownership of its assets or in which
the conduct of its business requires or shall require such qualification; and
(2) has full power and authority to own its assets and conduct its business as
described in the Offering Materials and to enter into and perform its
obligations under this Agreement, the Class A-1AR Note Purchase Agreement and
the Indenture and to enter into and consummate all the transactions in
connection therewith as contemplated by such agreements and in the Offering
Materials;

          (h) the Issuer has the authorized share capital as set forth in the
Offering Memorandum and all of the issued Preferred Shares of the Issuer will
have been duly and validly

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authorized and issued and are fully paid and nonassessable, and all of the
issued ordinary shares of the Issuer shall be held by ARMS 2006-1 Equity
Holdings LLC ("ARMS Equity");

          (i) the Co-Issuer has the authorized capitalization as set forth in
the Offering Memorandum and all of the issued membership interests of the
Co-Issuer have been duly and validly authorized and issued and all of the issued
membership interests of the Co-Issuer shall be held by Arbor Realty SR, Inc.;

          (j) the Notes have been duly authorized by the Co-Issuer, and when
issued and delivered and when appropriate entries have been made in the Notes
Register pursuant to this Agreement and the Indenture against payment therefor,
shall have been duly executed, authenticated, issued and delivered and shall
constitute valid and legally binding obligations of the Co-Issuer, enforceable
against the Co-Issuer in accordance with their terms and entitled to the
benefits provided by the Indenture, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles;

          (k) the Notes have been duly authorized by the Issuer and, when
issued, authenticated and delivered and when appropriate entries have been made
in the Notes Register pursuant to this Agreement and the Indenture against
payment therefor, shall have been duly executed, authenticated, issued and
delivered and shall constitute valid and legally binding obligations of the
Issuer, enforceable against the Issuer in accordance with their terms and
entitled to the benefits provided by the Indenture, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles;

          (l) each of the Indenture, the Class A-1AR Note Purchase Agreement and
this Agreement has been duly authorized by the Co-Issuer and, when executed and
delivered by the parties thereto and hereto, shall constitute a valid and
legally binding instrument, enforceable in accordance with its respective terms,
under the laws of the State of New York and all other relevant laws, subject, as
to enforcement, to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;

          (m) each of the Indenture, the Class A-1AR Note Purchase Agreement,
the Preferred Shares Paying Agency Agreement, the Servicing Agreement, the
Collateral Management Agreement, the Securities Account Control Agreement, this
Agreement, each Collateral Debt Securities Purchase Agreement and each Hedge
Agreement has been duly authorized by the Issuer and, when executed and
delivered by the parties thereto and hereto, shall constitute a valid and
legally binding instrument, enforceable in accordance with its terms under the
laws of the State of New York and all other relevant laws, subject, as to
enforcement, to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles;

          (n) except as may be required under state securities laws, no filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the performance by the Co-

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Issuer of its obligations hereunder, in connection with the offering, issuance,
placement or sale of the Notes hereunder or the consummation of the transactions
contemplated by or for the due execution, delivery or performance of this
Agreement, the Indenture, the Class A-1AR Note Purchase Agreement, the Notes or
any other agreement or instrument entered into or issued or to be entered into
or issued by the Co-Issuer in connection with the consummation of the
transactions contemplated herein and in the Offering Materials (including the
issuance and sale of the Securities and the use of the proceeds from the sale of
the Securities as described in the Offering Memorandum under the caption "Use of
Proceeds");

          (o) except as may be required under state securities laws, no filing
with, or authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency is
necessary or required for the performance by the Issuer of its obligations
hereunder, in connection with the offering, issuance or sale of the Notes
hereunder or the consummation of the transactions contemplated by or for the due
execution, delivery or performance of this Agreement, the Indenture, the Class
A-1AR Note Purchase Agreement, the Preferred Shares Paying Agency Agreement, the
Securities Account Control Agreement, the Securities, each Collateral Debt
Securities Purchase Agreement, the Servicing Agreement, the Collateral
Management Agreement, each Hedge Agreement or any other agreement or instrument
entered into or issued or to be entered into or issued by the Issuer in
connection with the consummation of the transactions contemplated herein and in
the Offering Materials (including the issuance and sale of the Securities and
the use of the proceeds from the sale of the Securities as described in the
Offering Memorandum under the caption "Use of Proceeds");

          (p) the statements set forth in the Offering Memorandum under the
captions "Description of the Securities," "Security for the Notes," "The
Collateral Management Agreement," "Hedge Agreements," "The Issuer" and "The
Co-Issuer" insofar as they purport to constitute a description of the Issuer or
the Co-Issuer or a summary of the terms of the Securities, the Indenture, the
Class A-1AR Note Purchase Agreement, each Hedge Agreement, the Preferred Shares
Paying Agency Agreement, the Securities Account Control Agreement, the Servicing
Agreement, each Collateral Debt Securities Purchase Agreement and the Collateral
Management Agreement and under the captions "Certain U.S. Federal Income Tax
Considerations," "Cayman Islands Tax Considerations," "Certain ERISA
Considerations" and "Subscription and Sale," insofar as they purport to describe
the provisions of the laws and documents referred to therein, are correct in all
material respects;

          (q) the issue and sale of the Purchased Notes and the Preferred
Shares, the issue and placement of the Class A-1AR Notes and the compliance by
the Issuer and the Co-Issuer, as applicable, with all of the provisions of the
Indenture, the Class A-1AR Note Purchase Agreement, the Preferred Shares Paying
Agency Agreement, the Securities Account Control Agreement, each Collateral Debt
Securities Purchase Agreement, the Securities, each Hedge Agreement, the
Servicing Agreement, the Collateral Management Agreement and this Agreement and
the consummation of the transactions herein and therein contemplated shall not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any other agreement or instrument
to which the Issuer or the Co-Issuer is a party or by which the Issuer or the
Co-Issuer is bound, nor shall such action result in any violation of the
provisions of the Governing Documents of each of the Issuer or the Co-Issuer or
any statute or any order, rule or regulation of any court or governmental agency
or body having jurisdiction

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over the Issuer or the Co-Issuer or each of their assets; and, no consent,
approval, authorization, order, registration or qualification of or with any
court or governmental agency or body is required for the issue and sale of the
Securities or the consummation of the transactions by the Issuer and the
Co-Issuer contemplated by this Agreement, the Indenture, the Class A-1AR Note
Purchase Agreement, the Preferred Shares Paying Agency Agreement, each
Collateral Debt Securities Purchase Agreement, each Hedge Agreement or the
Collateral Management Agreement, (other than any governmental or other consents
that have already been obtained by either the Issuer or the Co-Issuer and that
were in full force and effect);

          (r) the Trustee shall have a perfected security interest in the
Pledged Obligations and the Issuer's rights under the Servicing Agreement, the
Collateral Management Agreement, each Hedge Agreement, the Class A-1AR Note
Purchase Agreement and each Collateral Debt Securities Purchase Agreement for
the benefit and security of the holders of the Notes subject to the priorities
set forth in the Indenture;

          (s) there are no legal or governmental proceedings, inquiries or
investigations pending to which the Issuer or the Co-Issuer is a party or of
which any property of the Issuer or Co-Issuer is the subject and no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;

          (t) on the Closing Date, there shall not exist any default by any of
the Issuer or the Co-Issuer or any condition, event or act, which, with notice
or lapse of time or both, would constitute an Event of Default by the Issuer or
the Co-Issuer under the Indenture;

          (u) none of the Issuer, the Co-Issuer or any persons acting on their
behalf (other than the Dealers as to whom the Co-Issuers make no representation)
has engaged or shall engage in any directed selling efforts as defined in Rule
902 of Regulation S under the Securities Act with respect to the Securities, and
none of the foregoing persons has offered, placed or sold any of the Securities,
except for the placement of the Class A-1AR Notes to the Placement Agent
pursuant to this Agreement, the sale of the Purchased Notes to the Initial
Purchaser pursuant to this Agreement and the sale of the Preferred Shares to
ARMS Equity;

          (v) neither the Issuer nor the Co-Issuer has entered into contractual
arrangements with any person with respect to the distribution of (1) the
Purchased Notes, other than the Dealers pursuant to this Agreement, (2) the
Class A-1AR Notes, other than the Placement Agent pursuant to this Agreement and
the Class A-1AR Note Purchase Agreement and (3) the Preferred Shares, other than
pursuant to the Subscription Agreement dated as of the date hereof and signed by
ARMS Equity (the "Subscription Agreement");

          (w) no stamp or other issuance or transfer taxes or duties and no
capital gains, income, withholding or other taxes are payable by or on behalf of
the Initial Purchaser to the government of the Cayman Islands or any political
subdivision or taxing authority thereof or therein in connection with the
issuance, sale and delivery by the Issuer and the Co-Issuer or the sale and
delivery by the Initial Purchaser outside the Cayman Islands of the Notes to the
investors thereof; provided that Cayman Islands stamp duty will be payable if
any of the Notes or Transaction Documents are executed in, or after execution,
brought into the Cayman Islands;

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          (x) neither the Issuer nor the Co-Issuer has offered or sold any
Securities by means of any form of general solicitation or general advertising
and none of the foregoing persons shall offer to sell, offer for sale or sell
the Securities by means of any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising;

          (y) assuming compliance by each Dealer with the offer and sale
restrictions set forth herein, compliance by the purchasers of the Class A-1AR
Notes with the restrictions set forth in the Class A-1AR Note Purchase Agreement
and compliance by ARMS Equity with the restrictions set forth in the Preferred
Shares Paying Agency Agreement, neither the Issuer nor the Co-Issuer is required
to be registered as an "investment company" and neither the Issuer nor the
Co-Issuer shall be required to register as an "investment company" under the
Investment Company Act as a result of the conduct of its business in the manner
contemplated by the Offering Memorandum;

          (z) assuming compliance by each Dealer with the offer and sale
restrictions set forth herein, compliance by the purchasers of the Class A-1AR
Notes with the restrictions set forth in the Class A-1AR Note Purchase Agreement
and ARMS Equity with the restrictions set forth in the Preferred Shares Paying
Agency Agreement, no registration of the Securities under the Securities Act is
required for the offer, placement and sale of the Notes in the manner
contemplated by this Agreement and the Offering Memorandum, the sale of the
Class A-1AR Notes under the Class A-1AR Note Purchase Agreement or the sale of
the Preferred Shares under the Subscription Agreement and no qualification of an
indenture under the Trust Indenture Act of 1939, as amended, is required for the
offer and sale of the Securities in the manner contemplated by this Agreement,
the Class A-1AR Note Purchase Agreement, the Subscription Agreement and the
Offering Memorandum;

          (aa) each of the Issuer and the Co-Issuer shall make available to each
Dealer such number of copies of the Offering Memorandum and any amendment or
supplement thereto as such Dealer shall reasonably request;

          (bb) neither the Issuer nor the Co-Issuer has offered and neither the
Issuer nor the Co-Issuer shall offer (1) the Purchased Notes, except pursuant to
this Agreement, (2) the Class A-1AR Notes, except pursuant to the Class A-1AR
Note Purchase Agreement and (3) the Preferred Shares, except pursuant to the
Subscription Agreement;

          (cc) the Co-Issuers shall offer and sell the Notes and the Issuer
shall offer and sell the Preferred Shares, only to persons (1) who are
"qualified purchasers" as defined in Section 2(a)(51) of the Investment Company
Act ("Qualified Purchasers") that (except with respect to the sale of the
Preferred Shares to ARMS Equity) the Co-Issuers reasonably believe are
"qualified institutional buyers" ("QIBs") as defined in Rule 144A under the
Securities Act ("Rule 144A") and whom the seller has informed that the reoffer,
resale, pledge or other transfer is being made in reliance on Rule 144A or (2)
the Co-Issuers reasonably believe are not "U.S. persons" or U.S. residents for
purposes of the Investment Company Act and that the sale, reoffer, resale,
pledge or other transfer is being made in compliance with Regulation S under the

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Securities Act ("Regulation S"); terms used in this paragraph have the meanings
given to them by Regulation S or Rule 144A, as applicable;

          (dd) each of the Issuer and the Co-Issuer shall immediately notify the
Dealers, and confirm such notice in writing, of (1) any filing made by the
Co-Issuers of information relating to the offering of the Securities with any
securities exchange or any other regulatory body in the United States or any
other jurisdiction, and (2) prior to the completion of the purchase of the
Purchased Notes by the Initial Purchaser and placement of the Class A-1AR Notes
by the Placement Agent, any material changes in or affecting the earnings,
business affairs or business prospects of either the Issuer or the Co-Issuer
which (i) make any statement in the Offering Materials false or misleading in
any material respect or (ii) are not disclosed in the Offering Memorandum. In
such event or if during such time any event shall occur or condition shall exist
as a result of which it is necessary, in the opinion of any of the Issuer, the
Co-Issuer, their counsel, the Dealers or their respective counsel, to amend or
supplement the Offering Materials in order that the final Offering Materials not
include any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein not misleading in the light of
the circumstances then existing, each of the Issuer and the Co-Issuer shall
forthwith amend or supplement the final Offering Materials by preparing and
furnishing to the Dealers an amendment or amendments of, or a supplement or
supplements to, the final Offering Materials (in form and in substance
satisfactory in the opinion of counsel for the Dealers) so that, as so amended
or supplemented, the final Offering Materials shall not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in light of the circumstances existing at the
time it is delivered to an investor, not misleading;

          (ee) each of the Issuer and the Co-Issuer shall advise the Dealers
promptly of any proposal to amend or supplement the Offering Materials and shall
not effect such amendment or supplement without the consent of the Dealers,
which consent shall not be unreasonably withheld or delayed. Neither the consent
of either Dealer to, nor either Dealer's delivery of, any such amendment or
supplement, shall constitute a waiver of any of the conditions set forth in
Section 7 hereof;

          (ff) each of the Issuer and the Co-Issuer agrees that it shall not
make any offer or sale of Securities of any class if, as a result of the
doctrine of "integration" referred to in Rule 502 promulgated under the
Securities Act, such offer or sale would render invalid (for the purpose of (i)
the sale of the Purchased Notes to the Initial Purchaser, (ii) the placement of
the Class A-1AR Notes by the Placement Agent, (iii) the resale of the Notes by
the initial investors to others, (iv) the transfer of the Class A-1AR Notes, or
(v) the initial sale of the Preferred Shares) the exemption from the
registration requirements of the Securities Act provided by Section 4(2) thereof
or by Rule 144A or by Regulation S thereunder or otherwise;

          (gg) each of the Issuer and the Co-Issuer agrees that, in order to
render the Notes eligible for resale pursuant to Rule 144A under the Securities
Act, while any of the Notes remain outstanding, they shall make available, upon
request, to any Holder of the Notes or prospective purchasers of the Notes
designated by any Holder the information specified in Rule 144A(d)(4), unless
each of the Issuer and the Co-Issuer furnishes information to the United States
Securities and Exchange Commission (the "Commission") pursuant to Section 13 or
15(d)

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<PAGE>

of the Exchange Act (such information, whether made available to Holders or
prospective purchasers or furnished to the Commission, is hereinafter referred
to as "Additional Information");

          (hh) until the expiration of two years after the original issuance of
the Securities, each of the Issuer and the Co-Issuer shall not resell any
Securities which are "restricted securities" (as such term is defined under Rule
144(a)(3) under the Securities Act) that have been re-acquired by any of them
and shall immediately upon any purchase of any such Securities submit such
Securities to the Trustee or the Preferred Shares Paying Agency, as applicable,
for cancellation;

          (ii) each of the Issuer and the Co-Issuer shall use the net proceeds
received by them from the sale of the Securities in the manner specified in the
Offering Memorandum under "Use of Proceeds";

          (jj) during a period of 180 days from the date of the Offering
Memorandum, neither the Issuer nor the Co-Issuer shall, directly or indirectly,
issue, sell, offer to sell, grant any option for the sale of, or otherwise
dispose of, any debt securities or guarantees of debt securities of the Issuer
or the Co-Issuer, as applicable, or any securities convertible or exchangeable
into or exercisable for any debt securities or guarantees of debt securities of
the Issuer or the Co-Issuer, as applicable, or any securities convertible or
exchangeable into or exercisable for any debt security or guarantee of debt
securities of the Issuer or Co-Issuer, except as described in the Offering
Memorandum;

          (kk) the Co-Issuers shall use all reasonable efforts in cooperation
with the Initial Purchaser to permit the Purchased Notes to be eligible for
clearance and settlement through DTC;

          (ll) each certificate representing a Note shall bear the legend
contained in the Indenture for the time period and upon the other terms stated
in the Indenture;

          (mm) each certificate representing a Preferred Share shall bear the
legend contained in the Preferred Shares Paying Agency Agreement for the time
period and upon the other terms stated in the Preferred Shares Paying Agency
Agreement;

          (nn) the Co-Issuers shall have no debt other than as indicated in or
contemplated by the Offering Memorandum (including, without limitation, expenses
incurred in connection with the offering of the Notes);

          (oo) the application of the proceeds of the sale of the Securities
shall not be in violation of Regulations T, U or X of the Board of Governors of
the Federal Reserve System, as amended and in effect on the Closing Date;

          (pp) the Co-Issuers have taken all necessary steps to ensure that any
Bloomberg screen containing information about the Notes represented by Rule 144A
Global Securities includes the following (or similar) language:

                                      -10-

<PAGE>

          (i) the "Note Box" on the bottom of the "Security Display" page
     describing the Rule 144A Global Securities shall state: "Iss'd Under
     144A/3c7";

          (ii) the "Security Display" page shall have flashing red indicator
     "See Other Available Information"; and

          (iii) the indicator shall link to the "Additional Security
     Information" page, which shall state that the securities "are being offered
     in reliance on the exemption from registration under Rule 144A of the
     Securities Act to persons who are both (i) qualified institutional buyers
     (as defined in Rule 144A under the Securities Act) and (ii) qualified
     purchasers (as defined under Section 3(c)(7) under the 1940 Act)."

          (qq) the Co-Issuers shall instruct The Depository Trust Company
("DTC") to take these or similar steps with respect to the Notes represented by
Rule 144A Global Securities:

          (i) the DTC 20-character security descriptor and 48-character
     additional descriptor shall indicate with marker "3c7" that sales are
     limited to Qualified Institutional Buyers/Qualified Purchasers;

          (ii) where the DTC deliver order ticket sent to purchasers by DTC
     after settlement is physical, it shall have the 20-character security
     descriptor printed on it. Where the DTC deliver order ticket is electronic,
     it shall have a "3c7" indicator and a related user manual for participants,
     which shall contain a description of the relevant restriction;

          (iii) DTC shall send an "Important Notice" outlining the 3(c)(7)
     restrictions applicable to the Rule 144A Global Notes to all DTC
     participants in connection with the initial offering; and

          (iv) DTC shall include the Co-Issuers in the Reference Directory which
     is distributed by DTC to its participants on the list of all issuers who
     have advised DTC that they are 3(c)(7) issuers; and

          (rr) the Co-Issuers, have confirmed that CUSIP has established a
"fixed field" attached to the CUSIP numbers for the Notes represented by Rule
144A Global Securities containing "3c7" and "144A" indicators.

          5. Representations, Warranties and Covenants of the Dealers. Each
Dealer, severally and not jointly, hereby represents and warrants to the Issuer
and the Co-Issuer as of the Closing Date, and agrees with the Issuer and the
Co-Issuer that:

          (a) it is a QIB and a Qualified Purchaser, with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes;

          (b) it understands that (i) the Notes have not been and shall not be
registered under the Securities Act, and (ii) neither the Issuer nor the
Co-Issuer are, and shall not be, registered as an "investment company" under the
Investment Company Act;

                                      -11-

<PAGE>

          (c) it shall offer and sell the Purchased Notes (or, in the case of
the Class A-1AR Notes, the Placement Agent shall place the Class A-R Notes) only
to persons (i) (A) who are Qualified Purchasers and that such Dealer reasonably
believes are QIBs, (B) who are not broker-dealers that own and invest on a
discretionary basis less than $25,000,000 in securities of unaffiliated issuers,
(C) who are not participant-directed employee plans such as 401(k) plans, (D)
who are acting for their own account or the account of others who would
otherwise qualify under this Section 5(c), (E) who are not formed for the
purpose of investing in the Senior Notes, and (F) who will hold at least the
minimum denomination or (ii) that such Dealer reasonably believes are not U.S.
Persons or U.S. residents for purposes of the Investment Company Act and that
the sale, reoffer, resale, pledge or other transfer is being made in compliance
with Regulation S; terms used in this paragraph have the meanings given to them
by Regulation S or Rule 144A, as applicable;

          (d) it has not and shall not invite the public in the Cayman Islands
to subscribe for the Notes;

          (e) it acknowledges that purchases and resales of the Notes are
restricted as described under "Transfer Restrictions" in the Offering
Memorandum;

          (f) each Dealer acknowledges that the information relating to it
furnished to the Issuer and the Co-Issuer specifically for use in the Offering
Memorandum has been prepared by such Dealer and accordingly, such Dealer only
assumes the responsibility for the accuracy, completeness or applicability of
the information it has furnished;

          (g) (i) it has not offered or sold and will not offer, place or sell
any Notes to persons in the United Kingdom prior to the expiry of the period of
six months from the Closing Date except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995 (as amended); (ii) it has only communicated or
caused to be communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the Financial Services and Markets Act 2000 (the
"FSMA") received by it in connection with the issue or sale of any Securities in
circumstances in which Section 21(1) of the FSMA does not apply to the Issuer;
and (iii) it has complied and will comply with all applicable provisions of the
FSMA with respect to anything done by it in relation to the Notes in, from or
otherwise involving the United Kingdom;

          (h) it represents and agrees that the Purchased Notes offered and sold
and the Placed Notes offered and placed in reliance on Regulation S have been
and will be offered, placed and sold only in offshore transactions. In
connection therewith, it agrees that it has not offered, placed or sold and will
not offer, place or sell the Notes in the United States or to, or for the
benefit or account of, a U.S. Person (other than a distributor), in each case,
as defined in Rule 902 under the Securities Act (i) as part of its distribution
at any time and (ii) otherwise until 40 days after the later of the commencement
of the offering of the Notes pursuant hereto and the Closing Date, other than in
accordance with Regulation S or another exemption from the registration
requirements of the Securities Act;

                                      -12-

<PAGE>

          (i) no form of general solicitation or general advertising has been or
will be used by it or any of its representatives in connection with the offer,
placement and sale of any of the Securities, including, but not limited to,
articles, notices or other communications published in any newspaper, magazine,
or similar medium or broadcast over television or radio, or any seminar or
meeting whose attendees have been invited by any general solicitation or general
advertising;

          (j) it acknowledges that the Issuer shall require an investor letter
and a tax certification (generally, in the case of U.S. federal income tax, an
Internal Revenue Service Form W-9 (or applicable successor form) in the case of
a person that is a "United States person" within the meaning of Section
7701(a)(30) of the Code or the appropriate Internal Revenue Service Form W-8 (or
applicable successor form) in the case of a person that is not a "United States
person" within the meaning of Section 7701(a)(30) of the Code) from each Dealer,
in a form satisfactory to the Issuer, each duly executed and completed; and

          (k) it acknowledges that it is its intent and that it understands it
is the intent of the Issuer that, for purposes of U.S. federal income, state and
local income and franchise tax and any other income taxes, for so long as a
direct or indirect wholly-owned subsidiary of the Arbor parent owns 100% of the
Preferred Shares and the Issuer Ordinary Shares, the Issuer will be treated as a
Qualified REIT Subsidiary and the Notes will be treated as indebtedness solely
of the Arbor Parent and the Preferred Shares will be treated as equity; each
Dealer agrees to such treatment and agrees to take no action inconsistent with
such treatment.

Terms used in this Section 5 that have meanings assigned to them in Regulation S
are used herein as so defined.

          6. Fees and Expenses. The proceeds of the offering of the Securities
shall be used to pay all expenses incurred in connection with the offering of
the Securities, including the preparation and printing of the preliminary and
final offering memorandum, the preparation, issuance and delivery of the
Purchased Notes to the Initial Purchaser, the preparation, issuance and delivery
of the Class A-1AR Notes to the initial purchasers thereof, any fees charged by
the Rating Agencies in rating the Notes and the fees of counsel to the Issuer
and Co-Issuer, the Dealers, the Initial Purchaser, the Placement Agent, the
Preferred Shares Paying Agent, the fees of the Collateral Manager, the Trustee
and all reasonable out-of-pocket expenses of the Dealers.

          7. Conditions Precedent to the Purchase of the Purchased Notes and
Placement of the Class A-1AR Notes. The obligations of the Dealers hereunder are
subject to the accuracy of the representations and warranties of each of the
Issuer and the Co-Issuer contained in Section 4 hereof or in certificates of any
of the respective officers of the Issuer or Co-Issuer delivered pursuant to the
provisions hereof, to the performance by the Issuer and the Co-Issuer of their
covenants and other obligations hereunder, and to the following further
conditions precedent:

          (a) On the Closing Date, each Dealer shall have received the opinions,
dated as of the Closing Date of Cadwalader, Wickersham & Taft LLP, special
counsel to the Co-Issuers, Richards, Layton & Finger, P.A. counsel to the
Co-Issuer and of Maples and Calder, Cayman Islands counsel to the Issuer.

                                      -13-

<PAGE>

          (b) On the Closing Date, (i) the Offering Materials, as amended or
supplemented, shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; (ii) there shall not have been, since the date hereof or since
the respective dates as of which information is given in the Offering Materials,
any material adverse change or prospective material adverse change with respect
to the Issuer, the Co-Issuer or the Assets; (iii) each of the Issuer and the
Co-Issuer shall have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied pursuant to this Agreement on or
prior to the Closing Date; and (iv) the representations and warranties of the
Issuer and Co-Issuer in Section 4 shall be accurate and true and correct as
though expressly made on and as of the Closing Date except as specifically set
forth therein.

          (c) On the Closing Date, each Dealer shall have received a certificate
of an authorized officer of ARCM, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit A.

          (d) On the Closing Date, each Dealer shall have received certificates
of authorized officers of Arbor Realty SR, Inc., Arbor Realty Funding LLC and
Arbor Realty Limited Partnership, dated as of the Closing Date, substantially in
the form attached hereto as Exhibit B-1, Exhibit B-2 and Exhibit B-3,
respectively.

          (e) On the Closing Date, each Dealer shall have received from Ernst &
Young LLP a letter, dated as of the Closing Date in form and substance
satisfactory to each Dealer, with respect to certain financial, statistical and
other information contained in the Offering Memorandum and the composition of
the Collateral Debt Securities on the Closing Date.

          (f) The Co-Issuer shall have duly authorized, executed and delivered
the Indenture, the Class A-1AR Note Purchase Agreement and this Agreement.

          (g) The Issuer shall have duly authorized, executed and delivered the
Indenture, the Class A-1AR Note Purchase Agreement, the Preferred Shares Paying
Agency Agreement, the Servicing Agreement, the Collateral Management Agreement,
each Collateral Debt Securities Purchase Agreement and each Hedge Agreement.

          (h) ARCM shall have duly authorized, executed and delivered the
Collateral Management Agreement.

          (i) Each Seller shall have duly authorized, executed and delivered the
applicable Collateral Debt Securities Purchase Agreement.

          (j) Each Hedge Counterparty shall have duly authorized, executed and
delivered the related Hedge Agreement.

          (k) Arbor Commercial Mortgage, LLC shall have duly authorized,
executed and delivered the Servicing Agreement.

                                      -14-

<PAGE>

          (l) The Notes shall have been executed by the Issuer and Co-Issuer and
authenticated by the Trustee and the conditions precedent thereto, as set forth
in the Indenture, shall have been satisfied.

          (m) The Preferred Shares shall have been issued by the Issuer and the
conditions precedent thereto, as set forth in the Preferred Shares Paying Agency
Agreement and the Governing Documents, shall have been satisfied.

          (n) Prior to the purchase of the Purchased Notes hereunder and
placement of the Class A-1AR Notes hereunder, each Dealer shall have received
the opinions, dated as of the Closing Date, of the respective counsel to the
Trustee, the Preferred Shares Paying Agent, the Collateral Manager, each Hedge
Counterparty and the Advancing Agent, each in form and substance satisfactory to
each Dealer.

          (o) Prior to the initial purchase of the Purchased Notes hereunder and
the placement of the Class A-1AR Notes, the Issuer and Co-Issuer, as applicable,
shall have obtained letters from Moody's Investors Service, Inc. ("Moody's"),
Fitch, Inc. ("Fitch") and Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies ("S&P" and, together with Moody's and Fitch, the "Rating
Agencies") that the Class A-1A Notes have been rated "Aaa" by Moody's and "AAA"
by S&P and Fitch, that the Class A-1AR Notes have been rated "Aaa" by Moody's
and "AAA" by S&P and Fitch, that the Class A-2 Notes have been rated "Aaa" by
Moody's and "AAA" by S&P and Fitch, that the Class B Notes have been rated at
least "Aa2" by Moody's and "AA" by S&P and Fitch, that the Class C Notes have
been rated at least "A1" by Moody's and "A+" by S&P and Fitch, that the Class D
Notes have been rated at least "A2" by Moody's and "A" by S&P and Fitch, that
the Class E Notes have been rated at least "A3" by Moody's and "A-" by S&P and
Fitch, that the Class F Notes have been rated at least "Baa1" by Moody's and
"BBB+" by S&P and Fitch, that the Class G Notes have been rated at least "Baa2"
by Moody's and "BBB" by Fitch, that the Class H Notes have been rated at least
"Baa3" by Moody's and "BBB-" by Fitch, and shall deliver copies of such letters
to each Dealer.

          (p) Each Dealer shall have received such further information,
certificates, documents and opinions as it may have reasonably requested.

          (q) The Co-Issuers and DTC shall have executed and delivered one or
more letters of representation with respect to the Notes each in a form
reasonably satisfactory to each Dealer.

          (r) All of the Preferred Shares shall have been purchased by ARMS
Equity on the Closing Date.

          8. Indemnification and Contribution.

          (a) Subject to the Priority of Payments set forth in Section 11.1 of
the Indenture, the Co-Issuers shall indemnify and hold harmless each Dealer and
each of its affiliates, their respective officers, directors and each person who
controls such Dealer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act (each, a "Dealer Indemnified Person") against any
losses, claims, damages, liabilities or expenses, joint or several, as the same
are incurred, to which the Dealer Indemnified Person may become subject

                                      -15-

<PAGE>

insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) (1) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in the Offering Materials
or any amendment or supplement thereto or arise out of or are based upon the
omission or alleged omission to state in the Offering Materials a material fact
necessary to make the statements therein, in the light of the circumstances
under which they are made, not misleading, other than the Dealer Information
related to such Dealer or (2) are based upon a breach by either of the
Co-Issuers of any of its representations, warranties or agreements contained in
this Agreement, and shall periodically reimburse each Dealer for any and all
legal or other expenses reasonably incurred by such Dealer and each other Dealer
Indemnified Person in connection with investigating or defending, settling,
compromising or paying any such losses, claims, damages, liabilities, expenses
or actions as such expenses are incurred; provided, however, that the foregoing
indemnity with respect to any untrue statement contained in or any statement
omitted from any Offering Materials (as the same may be amended or supplemented)
shall not inure to the benefit of any Dealer (or any Person controlling such
Dealer), if (x) such loss, liability, claim, damage or expense resulted from the
fact that any Dealer sold or placed Notes to a Person to whom there was not sent
or given, at or prior to the written confirmation of such sale or placement, as
the case may be, a copy of the Offering Memorandum, as then amended or
supplemented, (y) the Issuer shall have previously and timely furnished
sufficient copies of the Offering Memorandum, as so amended or supplemented, to
the Dealer in accordance with this Agreement and (z) the Offering Memorandum, as
so amended or supplemented, would have corrected such untrue statement or
omission.

          (b) Each Dealer, severally and not jointly, shall indemnify and hold
harmless the Issuer and the Co-Issuer, each of their respective affiliates,
their respective officers, directors, managers and each person controlling the
Issuer and Co-Issuer within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, against any losses, claims, damages, liabilities
or expenses, joint or several, as the same are incurred, to which the Issuer or
the Co-Issuer may become subject insofar as such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact
contained in the statements set forth in the Dealer Information with respect to
such Dealer or acts or omissions thereof or arise out of or are based upon the
omission or alleged omission to state in such paragraphs a material fact
necessary with respect to such Dealer or acts or omissions thereof to make the
statements in such paragraphs, in the light of the circumstances under which
they are made, not misleading. For the avoidance of doubt, neither Dealer shall
have any obligation to verify or monitor, or have any liability for, any
statements set forth in the Dealer Information that has not been provided by
such Dealer and any liability of a Dealer arising hereunder shall not affect the
rights or obligations of the other Dealer.

          (c) Promptly after receipt by an indemnified party under Section 8(a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise under such subsection except to the extent it has been materially
prejudiced by such failure. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may elect, jointly with any other

                                      -16-

<PAGE>

indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assert such legal defenses and to otherwise
participate in the defense of such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to such indemnified
party of its election so to assume the defense of such action and approval of
counsel by the indemnified party, the indemnifying party shall not be liable to
such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate counsel in
connection with the assertion of legal defenses in accordance with the proviso
to the immediately preceding sentence (it being understood, however, that the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) for the indemnified party), (ii)
the indemnifying party shall not have employed counsel satisfactory to the
indemnified party at the expense of the indemnifying party to represent the
indemnified party within a reasonable time after notice of commencement of the
action or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party; and except
that, if clause (i) or (iii) is applicable, such liability shall be only in
respect of the counsel referred to in such clause (i) or (iii).

          (d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages, liabilities
or expenses (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as incurred as a result of such losses, claims, damages,
liabilities or expenses (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Co-Issuers on the
one hand and the related Dealer on the other from the offering of the Notes. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Co-Issuers on the one hand and the related Dealer on the other in
connection with the statements or omissions or breaches of representations,
warranties or agreements which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Co-Issuers on the one hand and by the related Dealer on the other shall be in
the same proportion as the total proceeds to the Co-Issuers from the sale of
Securities bears to, as applicable, the underwriting discounts and commissions
received by Wachovia Securities and Credit Suisse, respectively. The relative
fault shall be determined by reference to, among other things, whether the
indemnified party failed to give the notice required under Section 8(c) above,
including the consequences of such failure, and whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Co-Issuers on the
one hand or the related Dealer on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement, omission or breach. The Co-

                                      -17-

<PAGE>

Issuers and each Dealer agree that it would not be just and equitable if
contribution pursuant to this Section 8(d) were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities or expenses (or actions in respect thereof) referred to
above in this Section 8(d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim (which shall be limited as
provided in Section 8(c) above if the indemnifying party has assumed the defense
of any such action in accordance with the provisions thereof). Notwithstanding
the provisions of this Section 8(d), no Dealer shall be required to contribute
any amount in excess of the amount by which the amount of the discounts and
commissions received by it or fees paid to it, as applicable, exceeds the amount
of any damages which such Dealer has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation shall be entitled to a
contribution from any person who was not guilty of such fraudulent
misrepresentation.

          9. Duration, Termination and Assignment of this Agreement.

          (a) This Agreement shall become effective as of the date first written
above and shall remain in force until terminated as provided in this Section 9.

          (b) This Agreement may be terminated by the Dealers at any time
without the payment of any penalty by either Dealer, if there is a breach of any
of the representations, warranties, covenants or agreements of the Issuer or the
Co-Issuer hereunder or if any of the conditions set forth in Section 7 hereof
have not been satisfied.

          (c) This Agreement shall terminate in the event that on or after the
date hereof, there shall have occurred any of the following: (i) a suspension or
material limitation in trading in securities generally on the New York Stock
Exchange or in trading of the securities of the Collateral Manager or any
affiliate of the Collateral Manager on any exchange or over-the-counter market;
(ii) a general moratorium on commercial banking activities declared by either
federal or New York State authorities; or (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, or other calamity or crisis, if the effect of
any such event specified in this clause (iii) in the judgment of either Dealer
makes it impracticable or inadvisable to proceed with the offering or delivery
of the Notes on the terms and in the manner contemplated by this Agreement and
in the Offering Memorandum.

          (d) The Issuer shall pay all fees and expenses in connection with the
offering, placement and sale of the Notes from amounts standing to the credit of
the Expense Account immediately following the termination of this Agreement
pursuant to Section 9(c) hereof.

          (e) This Agreement is not assignable by any party hereto; provided,
however, that either Dealer may assign this Agreement, or any of its respective
rights or obligations hereunder, in writing to any of its affiliates; provided
that the rights of the Issuer or Co-Issuer shall not be affected by such
assignment. Upon an assignment pursuant to this Section 9(e), the

                                      -18-

<PAGE>

related Dealer shall cause the assignee to assume in writing all of the
obligations and liabilities of such Dealer hereunder and shall notify the Issuer
and the Co-Issuer of such assignment.

          10. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or faxed and confirmed to the parties as
follows:

          If to Wachovia Capital Markets, LLC:

          Wachovia Capital Markets, LLC
          375 Park Avenue
          New York, New York 10152
          Attention: Michelle Tan
          Telephone: (212) 909-0035
          Fax: (212) 909-0047

          If to Credit Suisse Securities (USA) LLC:

          Credit Suisse Securities (USA) LLC
          11 Madison Avenue
          New York, New York 10010
          Attention: Ken Rivkin
          Telephone: (212) 538-8737
          Fax: (212) 743-4762

          If to the Issuer:

          Arbor Realty Mortgage Securities Series 2006-1, Ltd.
          c/o Maples Finance Limited
          Queensgate House
          P.O. Box 1093GT
          Queensgate House, South Church Street
          George Town, Grand Cayman, Cayman Islands
          Attention: The Directors
          Telephone: (345) 945-7099
          Fax: (345) 945-7100

          with a copy to the Collateral Manager:

          Arbor Realty Collateral Management, LLC
          333 Earle Ovington Boulevard, 9th Floor
          Uniondale, New York 11553
          Attention: Executive Vice President, Structured Securitization
          Telephone: (212) 389-6546
          Fax: (212) 389-6573

          If to the Co-Issuer:

                                      -19-

<PAGE>

          Arbor Realty Mortgage Securities Series 2006-1 LLC
          c/o Puglisi & Associates
          830 Library Avenue, Suite 204,
          Newark, Delaware 19711
          Attention: Donald J. Puglisi
          Telephone: (302) 738-6680
          Fax: (302) 738-7210

          with a copy to the Collateral Manager (as addressed above).

          Any party hereto may change the address for receipt of communications
by giving written notice to the others.

          11. Consent to Jurisdiction. Each of the parties hereto (i) agrees
that any legal suit, action or proceeding brought by any party to enforce any
rights under or with respect to this Agreement or any other document or the
transactions contemplated hereby or thereby may be instituted in any federal
court in The City of New York, State of New York, U.S.A.; provided, however,
that if a federal court in the City of New York declines jurisdiction for any
reason, any legal suit, action or proceeding brought by any party to enforce any
rights under or with respect to this Agreement or any other document or the
transactions contemplated hereby or thereby may be instituted in any state court
in the City of New York, State of New York, U.S.A., (ii) irrevocably waives to
the fullest extent permitted by law any objection which it may now or hereafter
have to the laying of venue of any such suit, action or proceeding instituted in
the City of New York, State of New York, U.S.A., (iii) irrevocably waives to the
fullest extent permitted by law any claim that and agrees not to claim or plead
in any court that any such action, suit or proceeding brought in a court in the
City of New York, State of New York, U.S.A. has been brought in an inconvenient
forum and (iv) irrevocably submits to the non-exclusive jurisdiction of any such
court in any such suit, action or proceeding or for recognition and enforcement
of any judgment in respect thereof.

          Each of the Issuer and the Co-Issuer hereby irrevocably and
unconditionally designates and appoints CT Corporation System, 111 8th Avenue,
13th Floor, New York, New York 10011, U.S.A. (and any successor entity), as its
authorized agent to receive and forward on its behalf service of any and all
process which may be served in any such suit, action or proceeding in any such
court and agrees that service of process upon CT Corporation shall be deemed in
every respect effective service of process upon it in any such suit, action or
proceeding and shall be taken and held to be valid personal service upon it.
Said designation and appointment shall be irrevocable. Nothing in this Section
11 shall affect the rights of the Dealers, their respective affiliates or any
indemnified party to serve process in any manner permitted by law. Each of the
Issuer and the Co-Issuer further agrees to take any and all action, including
the execution and filing of any and all such documents and instruments, as may
be necessary to continue such designation and appointment of CT Corporation in
full force and effect so long as the Notes are outstanding but in no event for a
period longer than five years from the date of this Agreement. Each of the
Issuer and the Co-Issuer hereby irrevocably and unconditionally authorizes and
directs CT Corporation to accept such service on their behalf. If for any reason
CT Corporation ceases to be available to act as such, each of the Issuer and the
Co-Issuer agrees

                                      -20-

<PAGE>

to designate a new agent in New York City on the terms and for the purposes of
this provision reasonably satisfactory to the Dealers.

          To the extent that either the Issuer or the Co-Issuer has or hereafter
may acquire any immunity from jurisdiction of any court (including, without
limitation, any court in the United States, the State of New York, Cayman
Islands or any political subdivision thereof) or from any legal process (whether
through service of notice, attachment prior to judgment, attachment in aid of
execution, execution or otherwise) with respect to itself or its property or
assets, this Agreement, or any other documents or actions to enforce judgments
in respect of any thereof, it hereby irrevocably waives such immunity, and any
defense based on such immunity, in respect of its obligations under the
above-referenced documents and the transactions contemplated thereby, to the
extent permitted by law.

          12. Arms-Length Transaction. Each of the Co-Issuers acknowledges and
agrees that (i) Wachovia Securities is acting solely in the capacity of an arm's
length contractual counterparty to the Issuer and the Co-Issuer with respect to
the purchase, placement and sale of the Notes pursuant to this Agreement and not
as a financial advisor or a fiduciary to, or agent of, the Issuer or the
Co-Issuer or any other person, (ii) neither Dealer is advising the Issuer, the
Co-Issuer or any other person as to any legal, tax, investment, accounting or
regulatory matters in any jurisdiction, (iii) the Issuer and the Co-Issuer shall
consult with their own advisors concerning any such matter and shall be
responsible for making their own independent investigation and appraisal of any
transactions contemplated by this Agreement, and the Dealers shall have no
responsibility or liability to the Issuer or the Co-Issuer with respect thereto,
and (iv) any review by the Dealers of the Issuer, the Co-Issuer or any
transactions contemplated by this Agreement or any other matters relating
thereto will be performed solely for the benefit of the Dealers and shall not be
on behalf of the Issuer, the Co-Issuer or any other person.

          13. Judgment Currency. If, pursuant to a judgment or order being made
or registered against either the Issuer or the Co-Issuer, any payment under or
in connection with this Agreement to the Dealers is made or satisfied in a
currency (the "Judgment Currency") other than in United States Dollars then, to
the extent that the payment (when converted into United States Dollars at the
rate of exchange on the date of payment or, if it is not practicable for the
Dealers to purchase United States Dollars with the Judgment Currency on the date
of payment, at the rate of exchange as soon thereafter as it is practicable to
do so) actually received by the Dealers falls short of the amount due under the
terms of this Agreement, the Issuer or the Co-Issuer, as applicable, shall, to
the extent permitted by law, as a separate and independent obligation, indemnify
and hold harmless the Dealers against the amount of such short fall and such
indemnity shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid. For the purpose of this Section 13, "rate of
exchange" means the rate at which the Dealers are able on the relevant date to
purchase United States Dollars with the Judgment Currency and shall take into
account any premium and other costs of exchange.

          14. Amendments to this Agreement. This Agreement may be amended by the
parties hereto only if such amendment is specifically approved in writing by the
Issuer, the Co-Issuer and the Dealers. The Co-Issuers must provide notice of any
amendment or modification of this Agreement to each Rating Agency rating the
Notes at the time of any such amendment or modification.

                                      -21-

<PAGE>

          15. Parties. This Agreement shall inure to the benefit of and be
binding upon the Dealers, the Co-Issuers and their respective successors.
Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, firm or corporation, other than the Dealers, the
Co-Issuers and their respective successors and the controlling persons and
officers and directors referred to in Section 8, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provisions herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the Dealers, the Co-Issuers, each of
their respective affiliates and their respective successors, and said
controlling persons and officers, directors and managers and their heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities shall be deemed to be a successor by
reason merely of such purchase.

          16. Governing Law. This Agreement shall be construed in accordance
with the internal laws of the State of New York, without giving effect to the
choice of law principles thereof.

          17. Counterparts. This Agreement may be simultaneously executed in
several counterparts, each of which shall be deemed to be an original, and all
such counterparts shall together constitute but one and the same agreement.

          18. Representations, Warranties and Indemnities to Survive Delivery.
The respective representations, warranties and indemnities of the Issuer, the
Co-Issuer, of their respective officers and of the Dealers set forth in or made
pursuant to, this Agreement, including any warranty relating to the payment of
expenses owed to the Dealers hereunder shall remain in full force and effect and
shall survive delivery of and payment for the Securities and any termination of
this Agreement.

          19. No Petition Agreement. Each Dealer agrees that, so long as any
Note is outstanding and for a period of one year plus one day or, if longer, the
applicable preference period then in effect after payment in full of all amounts
payable under or in respect of the Transaction Documents, it shall not institute
against or join or assist any other Person in instituting against, any of the
Issuer or the Co-Issuer any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings, or other proceedings under any federal or state
bankruptcy or similar law of any jurisdiction. This Section 19 shall survive any
termination of this Agreement.

          20. Non-Recourse Agreement. Notwithstanding any other provision of
this Agreement, all obligations of the Issuer or the Co-Issuer arising hereunder
or in connection herewith are limited in recourse to the Pledged Obligations and
to the extent the proceeds of the Pledged Obligations, when applied in
accordance with the Priority of Payments, are insufficient to meet the
obligations of the Issuer or the Co-Issuer hereunder in full, the Issuer or the
Co-Issuer, as applicable, shall have no further liability in respect of any such
outstanding obligations and any claims against the Issuer or the Co-Issuer, as
applicable, shall be extinguished and shall not thereafter revive. The Dealers
hereby agree and acknowledge that the obligations of the Co-Issuers hereunder
are solely the corporate obligations of the Co-Issuer and that no recourse shall
be had against any officer, director, employee, shareholder, limited partner or
incorporator of the

                                      -22-

<PAGE>

Co-Issuers for any amounts payable hereunder. This Section 20 shall survive any
termination of this Agreement.

          21. Taxes. The Issuer shall not be obligated to pay any additional
amounts to the holders or beneficial owners of any Note as a result of
withholding or deduction for, or on account of, any present or future taxes,
duties, assessments or governmental charges with respect to such Notes.

                                      -23-

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Purchase and Placement Agreement as of the day and year first above
written.

                                         ARBOR REALTY MORTGAGE SECURITIES SERIES
                                         2006-1, LTD., as Issuer

                                         By:  /s/  George Danforth
                                             -----------------------------------
                                         Name:  George Danforth
                                               ---------------------------------
                                         Title:  Director
                                                --------------------------------

                                         ARBOR REALTY MORTGAGE SECURITIES SERIES
                                         2006-1 LLC, as Co-Issuer

                                         By:  /s/  Guy R. Milone, Jr.
                                             -----------------------------------
                                         Name:  Guy R. Milone, Jr.
                                               ---------------------------------
                                         Title:  Authorized Signatory
                                                --------------------------------

                                         WACHOVIA CAPITAL MARKETS, LLC

                                         By:  /s/  Michelle Tan
                                             -----------------------------------
                                         Name:  Michelle Tan
                                               ---------------------------------
                                         Title:  Director
                                                --------------------------------

                                         CREDIT SUISSE SECURITIES (USA) LLC

                                         By:  /s/  Jeffrey Altabef
                                             -----------------------------------
                                         Name:  Jeffrey Altabef
                                               ---------------------------------
                                         Title:  Managing Director
                                                --------------------------------

<PAGE>

                                    EXHIBIT A

                     ARBOR REALTY COLLATERAL MANAGEMENT, LLC

                              Officer's Certificate

          The undersigned, ____________________, pursuant to Section 7(c) of
that certain Purchase and Placement Agreement dated as of December 14, 2006, by
and among Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty
Mortgage Securities Series 2006-1 LLC, Wachovia Capital Markets, LLC and Credit
Suisse Securities (USA) LLC (the "Purchase Agreement") does HEREBY CERTIFY that:

          (a) The Collateral Manager (i) is a limited liability company, duly
organized, is validly existing and is in good standing under the laws of the
State of Delaware, (ii) has full power and authority to own its assets and to
transact the business in which it is currently engaged, and (iii) is duly
qualified and is in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires, or the
performance of the Collateral Management Agreement and the Indenture would
require, such qualification, except for failures to be so qualified that would
not in the aggregate have a material adverse effect on the business, operations,
assets or financial condition of the Collateral Manager or on the ability of the
Collateral Manager to perform its obligations thereunder, or on the validity or
enforceability of, the Collateral Management Agreement and the provisions of the
Indenture applicable to the Collateral Manager; the Collateral Manager has full
power and authority to execute, deliver and perform the Collateral Management
Agreement and its obligations thereunder and the provisions of the Indenture
applicable to it; the Collateral Management Agreement has been duly authorized,
executed and delivered by it and constitutes a legal, valid and binding
agreement of the Collateral Manager, enforceable against it in accordance with
the terms thereof, except that the enforceability thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law);

          (b) Neither the Collateral Manager nor any of its Affiliates is in
violation of any Federal or state securities law or regulation promulgated
thereunder that would have a material adverse effect upon the ability of the
Collateral Manager to perform its duties under the Collateral Management
Agreement or the Indenture, and there is no charge, investigation, action, suit
or proceeding before or by any court or regulatory agency pending or, to the
best knowledge of the Collateral Manager, threatened which could reasonably be
expected to have a material adverse effect upon the ability of the Collateral
Manager to perform its duties under the Collateral Management Agreement or the
Indenture;

          (c) Neither the execution and delivery of the Collateral Management
Agreement nor the performance by the Collateral Manager of its duties thereunder
or under the Indenture conflicts with or will violate or result in a breach or
violation of any of the terms or provisions of, or constitutes a default under:
(i) the limited liability company agreement of the Collateral Manager, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note

<PAGE>

agreement or other evidence of indebtedness or other agreement, obligation,
condition, covenant or instrument to which the Collateral Manager is a party or
is bound, (iii) any law, decree, order, rule or regulation applicable to the
Collateral Manager of any court or regulatory, administrative or governmental
agency, body or authority or arbitrator having jurisdiction over the Collateral
Manager or its properties, and which would have, in the case of any of (i), (ii)
or (iii) of this subsection (c), either individually or in the aggregate, a
material adverse effect on the business, operations, assets or financial
condition of the Collateral Manager or the ability of the Collateral Manager to
perform its obligations under the Collateral Management Agreement or the
Indenture;

          (d) No consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
person is required for the performance by the Collateral Manager of its duties
under the Collateral Management Agreement and under the Indenture, except such
as have been duly made or obtained;

          (e) The Offering Memorandum, as of the date thereof (including as of
the date of any supplement thereto) and as of the Closing Date does not contain
any untrue statement of a material fact and does not omit to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;

          (f) On the Closing Date, there shall not have been, since the
respective dates as of which information is given in the Offering Materials, any
material adverse change or prospective material adverse change with respect to
the Issuer, the Co-Issuer or the pool of Assets; and

          (g) The Collateral Manager is subject to a valid exemption from
registration as a registered investment adviser under the United States
Investment Advisers Act or 1940, as amended.

     Capitalized terms not set forth herein shall have the meaning ascribed
thereto in the Indenture.

                                      -2-

<PAGE>

          IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of December, 2006.

                                         ARBOR REALTY COLLATERAL MANAGEMENT, LLC

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

<PAGE>

                                   EXHIBIT B-1

                              ARBOR REALTY SR, INC.

                              Officer's Certificate

          The undersigned, ____________________, pursuant to Section 7(c) of
that certain Purchase and Placement Agreement dated as of December 14, 2006, by
and among Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty
Mortgage Securities Series 2006-1 LLC, Wachovia Capital Markets, LLC and Credit
Suisse Securities (USA) LLC (the "Purchase Agreement") does HEREBY CERTIFY that:

          (a) Arbor Realty SR, Inc. ("Arbor Realty") (i) is a corporation, duly
incorporated, is validly existing and is in good standing under the laws of the
State of Maryland, (ii) has full power and authority to own its assets and to
transact the business in which it is currently engaged, and (iii) is duly
qualified and is in good standing under the laws of each jurisdiction where its
ownership or lease of property or the conduct of its business requires, or the
performance of the Collateral Debt Securities Purchase Agreement and the
Indenture would require, such qualification, except for failures to be so
qualified that would not in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty or on the
ability of Arbor Realty to perform its obligations thereunder, or on the
validity or enforceability of, the Collateral Debt Securities Purchase Agreement
and the provisions of the Indenture applicable to Arbor Realty; Arbor Realty has
full power and authority to execute, deliver and perform the Collateral Debt
Securities Purchase Agreement and its obligations thereunder and the provisions
of the Indenture applicable to it; the Collateral Debt Securities Purchase
Agreement has been duly authorized, executed and delivered by it and constitutes
a legal, valid and binding agreement of Arbor Realty, enforceable against it in
accordance with the terms thereof, except that the enforceability thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);

          (b) Neither Arbor Realty nor any of its Affiliates is in violation of
any Federal or state securities law or regulation promulgated thereunder that
would have a material adverse effect upon the ability of Arbor Realty to perform
its duties under the Collateral Debt Securities Purchase Agreement or the
Indenture, and there is no charge, investigation, action, suit or proceeding
before or by any court or regulatory agency pending or, to the best knowledge of
Arbor Realty, threatened which could reasonably be expected to have a material
adverse effect upon the ability of Arbor Realty to perform its duties under the
Collateral Debt Securities Purchase Agreement or the Indenture;

          (c) Neither the execution and delivery of the Collateral Debt
Securities Purchase Agreement nor the performance by Arbor Realty of its duties
thereunder or under the Indenture conflicts with or will violate or result in a
breach or violation of any of the terms or provisions of, or constitutes a
default under: (i) the articles of incorporation or by-laws of Arbor Realty,
(ii) the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement or

<PAGE>

other evidence of indebtedness or other agreement, obligation, condition,
covenant or instrument to which Arbor Realty is a party or is bound, (iii) any
law, decree, order, rule or regulation applicable to Arbor Realty of any court
or regulatory, administrative or governmental agency, body or authority or
arbitrator having jurisdiction over Arbor Realty or its properties, and which
would have, in the case of any of (i), (ii) or (iii) of this subsection (c),
either individually or in the aggregate, a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty or the
ability of Arbor Realty to perform its obligations under the Collateral Debt
Securities Purchase Agreement or the Indenture;

          (d) No consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
person is required for the performance by Arbor Realty of its duties under the
Collateral Debt Securities Purchase Agreement and under the Indenture, except
such as have been duly made or obtained; and

          (e) With respect to any information in the Offering Memorandum
regarding Arbor Realty SR, the Offering Memorandum, as of the date thereof
(including as of the date of any supplement thereto) and as of the Closing Date
does not contain any untrue statement of a material fact and does not omit to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.

          Capitalized terms not set forth herein shall have the meaning ascribed
thereto in the Indenture.

                                      -2-

<PAGE>

          IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of December, 2006.

                                         ARBOR REALTY SR, INC.

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

<PAGE>

                                   EXHIBIT B-2

                            ARBOR REALTY FUNDING LLC

                              Officer's Certificate

          The undersigned, ____________________, pursuant to Section 7(c) of
that certain Purchase and Placement Agreement dated as of December 14, 2006, by
and among Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty
Mortgage Securities Series 2006-1 LLC, Wachovia Capital Markets, LLC and Credit
Suisse Securities (USA) LLC (the "Purchase Agreement") does HEREBY CERTIFY that:

          (a) Arbor Realty Funding LLC ("Arbor Realty Funding") (i) is a limited
liability company, duly formed, is validly existing and is in good standing
under the laws of the State of Delaware, (ii) has full power and authority to
own its assets and to transact the business in which it is currently engaged,
and (iii) is duly qualified and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires, or the performance of the Collateral Debt Securities Purchase
Agreement would require, such qualification, except for failures to be so
qualified that would not in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty Funding or
on the ability of Arbor Realty Funding to perform its obligations thereunder, or
on the validity or enforceability of, the Collateral Debt Securities Purchase
Agreement; Arbor Realty Funding has full power and authority to execute, deliver
and perform the Collateral Debt Securities Purchase Agreement and its
obligations thereunder; the Collateral Debt Securities Purchase Agreement has
been duly authorized, executed and delivered by it and constitutes a legal,
valid and binding agreement of Arbor Realty Funding, enforceable against it in
accordance with the terms thereof, except that the enforceability thereof may be
subject to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights and (ii)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);

          (b) Neither Arbor Realty Funding nor any of its Affiliates is in
violation of any Federal or state securities law or regulation promulgated
thereunder that would have a material adverse effect upon the ability of Arbor
Realty Funding to perform its duties under the Collateral Debt Securities
Purchase Agreement, and there is no charge, investigation, action, suit or
proceeding before or by any court or regulatory agency pending or, to the best
knowledge of Arbor Realty Funding, threatened which could reasonably be expected
to have a material adverse effect upon the ability of Arbor Realty Funding to
perform its duties under the Collateral Debt Securities Purchase Agreement;

          (c) Neither the execution and delivery of the Collateral Debt
Securities Purchase Agreement nor the performance by Arbor Realty Funding of its
duties thereunder conflicts with or will violate or result in a breach or
violation of any of the terms or provisions of, or constitutes a default under:
(i) the limited liability company agreement of Arbor Realty Funding, (ii) the
terms of any indenture, contract, lease, mortgage, deed of trust, note agreement
or other evidence of indebtedness or other agreement, obligation, condition,
covenant or

<PAGE>

instrument to which Arbor Realty Funding is a party or is bound, (iii) any law,
decree, order, rule or regulation applicable to Arbor Realty Funding of any
court or regulatory, administrative or governmental agency, body or authority or
arbitrator having jurisdiction over Arbor Realty Funding or its properties, and
which would have, in the case of any of (i), (ii) or (iii) of this subsection
(c), either individually or in the aggregate, a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty Funding or
the ability of Arbor Realty Funding to perform its obligations under the
Collateral Debt Securities Purchase Agreement; and

          (d) No consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
person is required for the performance by Arbor Realty Funding of its duties
under the Collateral Debt Securities Purchase Agreement, except such as have
been duly made or obtained.

          Capitalized terms not set forth herein shall have the meaning ascribed
thereto in the Indenture.

                                      -2-

<PAGE>

          IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of December, 2006.

                                         ARBOR REALTY FUNDING LLC

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

<PAGE>

                                   EXHIBIT B-3

                        ARBOR REALTY LIMITED PARTNERSHIP

                              Officer's Certificate

          The undersigned, ____________________, pursuant to Section 7(c) of
that certain Purchase and Placement Agreement dated as of December 14, 2006, by
and among Arbor Realty Mortgage Securities Series 2006-1, Ltd., Arbor Realty
Mortgage Securities Series 2006-1 LLC, Wachovia Capital Markets, LLC and Credit
Suisse Securities (USA) LLC (the "Purchase Agreement") does HEREBY CERTIFY that:

          (a) Arbor Realty Limited Partnership ("Arbor Realty LP") (i) is a
limited partnership, duly formed, is validly existing and is in good standing
under the laws of the State of Delaware, (ii) has full power and authority to
own its assets and to transact the business in which it is currently engaged,
and (iii) is duly qualified and is in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires, or the performance of the Collateral Debt Securities Purchase
Agreement would require, such qualification, except for failures to be so
qualified that would not in the aggregate have a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty LP or on the
ability of Arbor Realty LP to perform its obligations thereunder, or on the
validity or enforceability of, the Collateral Debt Securities Purchase
Agreement; Arbor Realty LP has full power and authority to execute, deliver and
perform the Collateral Debt Securities Purchase Agreement and its obligations
thereunder; the Collateral Debt Securities Purchase Agreement has been duly
authorized, executed and delivered by it and constitutes a legal, valid and
binding agreement of Arbor Realty LP, enforceable against it in accordance with
the terms thereof, except that the enforceability thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and (ii) general principles of
equity (regardless of whether such enforcement is considered in a proceeding in
equity or at law);

          (b) Neither Arbor Realty LP nor any of its Affiliates is in violation
of any Federal or state securities law or regulation promulgated thereunder that
would have a material adverse effect upon the ability of Arbor Realty LP to
perform its duties under the Collateral Debt Securities Purchase Agreement, and
there is no charge, investigation, action, suit or proceeding before or by any
court or regulatory agency pending or, to the best knowledge of Arbor Realty LP,
threatened which could reasonably be expected to have a material adverse effect
upon the ability of Arbor Realty LP to perform its duties under the Collateral
Debt Securities Purchase Agreement;

          (c) Neither the execution and delivery of the Collateral Debt
Securities Purchase Agreement nor the performance by Arbor Realty LP of its
duties thereunder conflicts with or will violate or result in a breach or
violation of any of the terms or provisions of, or constitutes a default under:
(i) the limited partnership agreement of Arbor Realty LP, (ii) the terms of any
indenture, contract, lease, mortgage, deed of trust, note agreement or other
evidence

<PAGE>

of indebtedness or other agreement, obligation, condition, covenant or
instrument to which Arbor Realty LP is a party or is bound, (iii) any law,
decree, order, rule or regulation applicable to Arbor Realty LP of any court or
regulatory, administrative or governmental agency, body or authority or
arbitrator having jurisdiction over Arbor Realty LP or its properties, and which
would have, in the case of any of (i), (ii) or (iii) of this subsection (c),
either individually or in the aggregate, a material adverse effect on the
business, operations, assets or financial condition of Arbor Realty LP or the
ability of Arbor Realty LP to perform its obligations under the Collateral Debt
Securities Purchase Agreement; and

          (d) No consent, approval, authorization or order of or declaration or
filing with any government, governmental instrumentality or court or other
person is required for the performance by Arbor Realty LP of its duties under
the Collateral Debt Securities Purchase Agreement, except such as have been duly
made or obtained.

          Capitalized terms not set forth herein shall have the meaning ascribed
thereto in the Indenture.

                                      -2-

<PAGE>

          IN WITNESS WHEREOF, the undersigned has hereunto set his hand this
14th day of December, 2006.

                                         ARBOR REALTY LIMITED PARTNERSHIP

                                         By:
                                             -----------------------------------
                                         Name:
                                               ---------------------------------
                                         Title:
                                                --------------------------------

<PAGE>

                                   SCHEDULE A

<TABLE>
<CAPTION>
 PURCHASED NOTES    WACHOVIA SECURITIES   PURCHASE PRICE
-----------------   -------------------   --------------
<S>                 <C>                   <C>
Class A-1A Notes:       $230,000,000           100%
Class A-2 Notes:        $ 72,900,000           100%
Class B Notes:          $ 41,100,000           100%
Class C Notes:          $ 31,200,000           100%
Class D Notes:          $ 13,350,000           100%
Class E Notes:          $ 14,250,000           100%
Class F Notes:          $ 13,650,000           100%
Class G Notes:          $ 16,950,000           100%
Class H Notes:          $ 14,100,000           100%
</TABLE>

<TABLE>
<CAPTION>
 CLASS A-1AR NOTES   WACHOVIA SECURITIES               PURCHASE PRICE
------------------   -------------------   -------------------------------------
<S>                  <C>                   <C>
Class A-1AR Notes:    Up to $100,000,000   The initial principal balance thereof
                                           which was $0 on the Closing Date
</TABLE><PAGE>

                                                                   Exhibit 10.26

              ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1, LTD.,
                                 as the Issuer,

               ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1 LLC,
                                as the Co-Issuer,

                     WELLS FARGO BANK, NATIONAL ASSOCIATION
                            as Class A-1AR Note Agent

                                       and

                      THE CLASS A-1AR HOLDERS PARTY HERETO

                       CLASS A-1AR NOTE PURCHASE AGREEMENT

                          Dated as of December 14, 2006

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
                                    ARTICLE 1

DEFINITIONS..............................................................     2
   Section 1.01   Defined Terms..........................................     2
   Section 1.02   Terms Generally........................................     5

                                    ARTICLE 2

THE COMMITMENTS..........................................................     5
   Section 2.01   Commitments............................................     5
   Section 2.02   Advances and Class A-1AR Draws.........................     6
   Section 2.03   Requests for Class A-1AR Draws.........................     6
   Section 2.04   Funding of Class A-1AR Draws...........................     7
   Section 2.05   Termination and Reduction of Class A-1AR Commitments...     7
   Section 2.06   Advances; Prepayments..................................     8
   Section 2.07   [Reserved].............................................     8
   Section 2.08   Class A-1AR Commitment Fee.............................     8
   Section 2.09   Breakage Costs.........................................     8

                                    ARTICLE 3

REPRESENTATIONS AND WARRANTIES; COLLATERAL...............................     9
   Section 3.01   Representations and Warranties.........................     9
   Section 3.02   Several Representations and Covenants of Each Holder
                  and Each Committed Liquidity Provider..................    10

                                    ARTICLE 4

CONDITIONS...............................................................    13
   Section 4.01   Closing Date Conditions................................    13
   Section 4.02   Conditions to Advances.................................    14
   Section 4.03   Obligations Unconditional..............................    14
   Section 4.04   Class A-1AR Draws on a Mandatory Class A-1AR
                  Draw Date..............................................    14
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                                                                          <C>
                                    ARTICLE 5

THE CLASS A-1AR NOTE AGENT...............................................    15
   Section 5.01   Appointment............................................    15
   Section 5.02   Certain Duties and Responsibilities....................    15
   Section 5.03   Compensation...........................................    16
   Section 5.04   Resignation and Removal; Appointment of a Successor....    17
   Section 5.05   Acceptance of Appointment by Successor.................    18

                                    ARTICLE 6

MISCELLANEOUS............................................................    19
   Section 6.01   Notices................................................    19
   Section 6.02   Waivers; Amendments....................................    19
   Section 6.03   Successors and Assigns.................................    20
   Section 6.04   Survival...............................................    23
   Section 6.05   Counterparts; Integration; Effectiveness...............    23
   Section 6.06   Severability...........................................    23
   Section 6.07   Governing Law; Jurisdiction; Consent to Service of
                  Process; Waiver of Jury Trial Right....................    23
   Section 6.08   Benefits of Indenture and this Agreement...............    24
   Section 6.09   Headings...............................................    25
   Section 6.10   No Proceedings.........................................    25
   Section 6.11   Recourse Against Certain Parties.......................    25
   Section 6.12   Non-Petition; Non-Recourse Obligations.................    26
   Section 6.13   Term, Termination......................................    26
   Section 6.14   Disclosure.............................................    26
</TABLE>

Schedule I  Initial Holders
Schedule II Holder Representations
EXHIBIT A   Form of Assignment and Acceptance
EXHIBIT B   Form of Class A-1AR Draw Request

                                     -iii-
<PAGE>

          CLASS A-1AR NOTE PURCHASE AGREEMENT (as amended, restated,
supplemented or modified from time to time, this "Agreement") dated as of
December 14, 2006 among:

          ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1, LTD., a Cayman Islands
exempted company with limited liability (together with its successors and
assigns, the "Issuer");

          ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1 LLC, a Delaware limited
liability company (together with its successors and assigns, the "Co-Issuer" and
together with the Issuer, the "Co-Issuers");

          The HOLDERS (as such term is defined below) party hereto; and

          WELLS FARGO BANK, NATIONAL ASSOCIATION, as agent for the Holders from
time to time of the Class A-1AR Notes (together with its successors in such
capacity, the "Class A-1AR Note Agent").

          WHEREAS, the Co-Issuers will issue the U.S.$230,000,000 Class A-1A
Senior Secured Floating Rate Term Notes, Due 2042 (the "Class A-1A Notes"), up
to U.S.$100,000,000 Class A-1AR Revolving Senior Secured Floating Rate Term
Notes, Due 2042 (the "Class A-1AR Notes" and, together with the Class A-1A
Notes, the "Class A-1 Notes"), the U.S.$72,900,000 Class A-2 Second Priority
Senior Secured Floating Rate Term Notes, Due 2042 (the "Class A-2 Notes" and,
together with the Class A-1 Notes, the "Class A Notes"), the U.S.$41,100,000
Class B Third Priority Floating Rate Term Notes, Due 2042 (the "Class B Notes"),
the U.S.$31,200,000 Class C Fourth Priority Floating Rate Capitalized Interest
Term Notes, Due 2042 (the "Class C Notes"), the U.S.$13,350,000 Class D Fifth
Priority Floating Rate Capitalized Interest Term Notes, Due 2042 (the "Class D
Notes"), the U.S.$14,250,000 Class E Sixth Priority Floating Rate Capitalized
Interest Term Notes, Due 2042 (the "Class E Notes"), the U.S.$13,650,000 Class F
Seventh Priority Floating Rate Capitalized Interest Term Notes, Due 2042 (the
"Class F Notes"), the U.S.$16,950,000 Class G Eighth Priority Floating Rate
Capitalized Interest Term Notes, Due 2042 (the "Class G Notes"), and the
U.S.$14,100,000 Class H Ninth Priority Floating Rate Capitalized Interest Term
Notes, Due 2042 (the "Class H Notes" and, together with the Class A Notes, the
Class B Notes, the Class C Notes, the Class D Notes, the Class E Notes, the
Class F Notes and the Class G Notes, the "Notes");

          WHEREAS, the Issuer also will issue 52,500,000 Preferred Shares, par
value U.S.$0.0001 per share (the "Preferred Shares" and, together with the
Notes, the "Securities"), having a notional amount equal to U.S.$1.00 per share;

          WHEREAS, the Notes will be issued pursuant to an Indenture to be dated
as of the date hereof (the "Indenture"), among the Issuer, the Co-Issuer, Arbor
Realty SR, Inc., as advancing agent, and Wells Fargo Bank, National Association
("Wells Fargo"), as trustee (together with any successor permitted under the
Indenture, the "Trustee"), paying agent, calculation agent, transfer agent,
custodial securities intermediary, backup advancing agent and

<PAGE>

notes registrar, and the Preferred Shares will be issued pursuant to a preferred
shares paying agency agreement to be dated as of the date hereof (the "Preferred
Shares Paying Agency Agreement"), among the Issuer, Wells Fargo, as paying agent
and transfer agent (together with any successor permitted under the Preferred
Shares Paying Agency Agreement, the "Preferred Shares Paying Agent"), and Maples
Finance Limited, as share registrar;

          WHEREAS, the Co-Issuers, the Class A-1AR Note Agent and the Holders
from time to time of the Class A-1AR Notes issued under the Indenture wish to
evidence certain agreements relating to, among other things, the right of the
Issuer (at the direction of the Collateral Manager) to borrow, repay and
re-borrow amounts under the Class A-1AR Notes both during the Ramp-Up Period and
the Reinvestment Period, and the appointment of the Class A-1AR Note Agent as
agent for the Holders, all as provided in this Agreement and in the Indenture;
and

          WHEREAS, the Co-Issuers have, under and in accordance with the terms
of the Indenture, Granted to the Trustee, for the benefit and security of the
Secured Parties, all of the Co-Issuers' right, title and interest in, to and
under this Agreement.

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

                                    ARTICLE 1

                                   DEFINITIONS

          Section 1.01 Defined Terms.

          Terms used but not defined herein have the respective meanings
ascribed to such terms in (or incorporated by reference in) the Indenture. In
addition, as used in this Agreement, the following terms have the meanings
specified below:

          "Advances" means the advances made to the Issuer by the Holders or by
one or more Liquidity Providers hereunder, as the case may be, in respect of the
Class A-1AR Notes.

          "Assignment and Acceptance" means an assignment and acceptance entered
into by a Holder and an assignee of such Holder substantially in the form of
Exhibit A or any other form reasonably approved by the Collateral Manager and
the Class A-1AR Note Agent.

          "Break Funding Event" has the meaning specified in Section 2.09(a).

          "Class A-1AR Breakage Amount" has the meaning specified in Section
2.09(a).

          "Class A-1AR Commitment" means, in the case of any Holder, the
obligation of such Holder at any time to make Advances in an aggregate principal
amount not to exceed the

                                      -2-

<PAGE>

initial Class A-1AR Commitment of each Holder as set forth on Schedule I (in the
case of an Initial Holder) or in the Assignment and Acceptance pursuant to which
such Holder shall have assumed its Class A-1AR Commitment, as applicable, as
such obligation may be reduced or increased from time to time pursuant to
Section 2.05 or pursuant to assignments by or to such Holder pursuant to Section
6.03.

          "Class A-1AR Draw" has the meaning specified in Section 2.01.

          "Class A-1AR Draw Request" has the meaning specified in Section 2.03.

          "Class A-1AR Eligible Investments" has the meaning set forth in
Section 3.02(d).

          "Class A-1AR Note Agent Fee" means U.S.$0.

          "Class A-1AR Note Register" has the meaning specified in Section 2.06.

          "Collateral Account Termination Date" means, with respect to any
Holder that (i) has deposited cash into the Holder Subaccount pursuant to
Section 3.02(c) or (ii) has had payments deposited into the Holder Subaccount
pursuant to the last sentence of Section 3.02(c), the earliest to occur of (a)
the assignment by such Holder of all of its rights and obligations pursuant to
Section 3.02(c), (b)(x) in the case of a Holder described in clause (i) above,
the delivery by such Holder, to the Co-Issuers, the Class A-1AR Note Agent, the
Collateral Manager, the Trustee and each Rating Agency, of a certification in
writing that such Holder satisfies the Class A-1AR Ratings Criteria, such
certification to include a letter from each Rating Agency establishing such
ratings upgrade or such other evidence as shall be reasonably satisfactory to
the Trustee, the Class A-1AR Note Agent, the Collateral Manager and the
Co-Issuers and (y) in the case of a Holder described in clause (ii) above, the
delivery by such Holder of a certification in writing that such Holder has
satisfied in full all previously defaulted obligations to make Advances under
Section 2.01 and (c) the end of the Revolving Period.

          "Committed Liquidity Provider" has the meaning specified in Section
6.03(f).

          "CP Conduit" means a limited-purpose entity established to issue
commercial paper notes, and any Holder which is a CP Conduit shall be identified
as such on the signature pages hereto, Schedule I hereto and/or any related
Assignment and Assumption Agreement, as applicable.

          "Defaulting Holder" has the meaning specified in Section 3.02(c).

          "Election Notice" has the meaning specified in Section 6.03(f).

          "Excepted Persons" has the meaning specified in Section 6.14(a).

          "Holder" means each Initial Holder and any other Person that shall
have become a Holder of a Class A-1AR Note pursuant to a transfer of Class A-1AR
Notes in accordance with Section 6.03 (including any Committed Liquidity
Provider) (other than any such Person that ceases to be a party hereto pursuant
to a transfer of all of its Class A-1AR Notes to another Person pursuant to
Section 6.03).

                                      -3-

<PAGE>

          "Indemnified Person" has the meaning specified in Section
5.03(a)(iii).

          "Initial Holder" means each initial Holder of Class A-1AR Notes listed
on Schedule I under the caption "INITIAL HOLDERS."

          "Losses" has the meaning specified in Section 5.03(a)(iii).

          "Maximum Class A-1AR Commitment" means the maximum aggregate Class
A-1AR Commitments, which shall equal U.S.$100,000,000 on the Closing Date; as
such amount may be decreased as a result of Mandatory Redemptions, Special
Amortizations or redemptions in connection with Rating Confirmation Failures as
described in Section 18.1(e) of the Indenture.

          "Notice of Prepayment" has the meaning set forth in Section 2.09(a).

          "Qualified Securitization Pledge" means, with respect to any Holder of
a Class A-1AR Note that is a CP Conduit and indicates that it will make a
Qualified Securitization Pledge on Schedule I to this Agreement (in the case of
any Initial Holder) or in the Assignment and Acceptance delivered by it with
respect to the interests of a Holder of a Class A-1AR Note, a bona fide pledge
by such Holder of its right, title and interest in and to any Class A-1AR Note
pursuant to its program collateral or security agreement with a collateral agent
to secure obligations owing by such Holder to such Holder's Liquidity Providers,
debt holders or other creditors, but only:

          (1) if such pledge would not (in the reasonable judgment of the
     Holder; provided that the Co-Issuers do not reasonably object) (A) have the
     effect of requiring the Issuer, the Co-Issuer or the pool of Assets to
     register as an "investment company" under the Investment Company Act; (B)
     adversely affect the Issuer's ability to use the exception provided for by
     Section 3(c)(7) of the Investment Company Act; (C) subject the Issuer or
     the Notes to the registration requirements of the Securities Act; (D)
     result in a non-exempt prohibited transaction under ERISA or the Code, or a
     violation of provisions of federal, state, local, non-U.S. or other laws or
     regulations that are substantively similar thereto; or (E) cause the Issuer
     to fail to maintain its status as a "qualified REIT subsidiary" (within the
     meaning of Section 856(i)(2) of the Code), or otherwise subject the Issuer
     to U.S. federal income tax on a net income basis; and

          (2) if such Holder from time to time delivers to the Co-Issuers, the
     Collateral Manager and the Trustee such information concerning such Holder,
     such collateral agent and such Liquidity Providers, debt holders or other
     creditors as the Co-Issuers or the Collateral Manager may reasonably
     request in order for the Co-Issuers to determine whether they object to the
     Holder's conclusion referred to in clause (1) above;

provided that, upon any foreclosure action in respect of any such pledge and any
related purported transfer of legal or beneficial ownership of such Class A-1AR
Note or any right, title or interest therein, any such purported transfer will
be considered to be a "transfer" of such Class A-1AR Note (or such right, title
or interest) for all purposes of the Indenture (including for purposes of
Section 2.5 of the Indenture).

                                      -4-

<PAGE>

          "Revolving Period" means the period from and including the Closing
Date to but excluding the Commitment Termination Time.

          Section 1.02 Terms Generally.

          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 and (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.

                                    ARTICLE 2

                                 THE COMMITMENTS

          Section 2.01 Commitments.

          (a) Subject to the terms and conditions set forth herein, each Holder
agrees to make Advances (the aggregate of all contemporaneous Advances by the
Holders, a "Class A-1AR Draw") to the Issuer from time to time during the
Revolving Period in an aggregate principal amount at any one time outstanding up
to but not exceeding the amount of such Holder's Class A-1AR Commitment;
provided that (i) the aggregate principal amount of all Advances of the Holders
hereunder at any one time outstanding shall in no event exceed the Maximum Class
A-1AR Commitment and (ii) the aggregate principal amount of Advances of any one
Holder hereunder at any one time outstanding shall in no event exceed such
Holder's Class A-1AR Commitment.

          (b) Notwithstanding the foregoing, but subject to the foregoing
provisos and to Section 6.03(f):

          (i) no Holder that enters into a Liquidity Facility with one or more
     Committed Liquidity Providers that is subject to Section 6.03(f) (other
     than a Holder that is maintaining a Holder Subaccount as provided in
     Section 3.02(d), and has delivered an Election Notice identifying the
     Committed Liquidity Provider, who shall be so obligated to the extent of
     funds then on deposit therein) shall be obligated to make any Advance to
     the Issuer with respect to any Class A-1AR Note, except to the extent that
     such Holder has received funds from its financing arrangements in place
     with respect to the Class A-1AR Notes (including such Liquidity Facility
     with one or more Committed Liquidity

                                      -5-

<PAGE>

     Providers) which may (consistent with such financing arrangements) be used
     to make such Advance; and

          (ii) any such Holder referred to in clause (i) above shall enforce all
     of its material rights under such Liquidity Facility from time to time to
     ensure that, to the fullest extent possible consistent with such Liquidity
     Facility, such Holder shall have funds available to make Advances hereunder
     in a timely manner.

          Within the foregoing limits and subject to the terms and conditions
set forth herein and in the Indenture, the Issuer (at the direction of the
Collateral Manager) may borrow, repay and re-borrow Advances.

          Section 2.02 Advances and Class A-1AR Draws.

          (a) Each Advance shall be made as part of a Class A-1AR Draw
consisting of Advances made by the Holders ratably in accordance with the
unfunded amounts of their respective Class A-1AR Commitments. The failure of any
Holder to make any Advance required to be made by it shall not relieve any other
Holder of its obligations hereunder; provided that the Class A-1AR Commitments
are several and no Holder shall be responsible for any other Holder's failure to
make Advances as so required. No Advance may be made if, after giving effect
thereto and to any other Class A-1AR Draw Request given and pending, the
aggregate outstanding principal amount of all Advances shall exceed the Maximum
Class A-1AR Commitment; provided that aggregate partial Advances up to and
including the Maximum Class A-1AR Commitments shall be made.

          (b) The aggregate principal amount of all Advances required to be made
in respect of any requested Class A-1AR Draw shall be at least U.S.$500,000 (and
integral multiples of U.S.$500 in excess thereof) or, if the aggregate undrawn
amount is less than such required threshold, such lesser amount.

          (c) In the case of any Class A-1AR Draw, the proceeds of such Class
A-1AR Draw shall be deposited solely (i) into the Delayed Funding Obligations
Account, to fund Delayed Funding Amounts relating to Delayed Draw Term Loans,
(ii) into the Principal Collection Account, to acquire additional Collateral
Debt Securities in accordance with the relevant provisions of the Indenture or
otherwise distributed pursuant to and in accordance with the Priority of
Payments or (iii) into the Principal Collection Account to be used in connection
with a Special Amortization. None of the proceeds of such Class A-1AR Draw shall
be used by the Issuer, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of buying or carrying any Margin Stock. No
Advance will be secured, directly or indirectly, by Margin Stock and the pool of
Assets will not include any Margin Stock.

          Section 2.03 Requests for Class A-1AR Draws.

          To request a Class A-1AR Draw on any date other than the Closing Date,
the Issuer (or the Collateral Manager on behalf of the Issuer) shall notify the
Class A-1AR Note Agent (with a copy to the Trustee) (each such notice, a "Class
A-1AR Draw Request") of such request by facsimile or electronic messaging system
not later than 11:00 a.m. (New York City time), at least three Business Days
prior to the date of the proposed Class A-1AR Draw. Each

                                      -6-

<PAGE>

such facsimile or electronic Class A-1AR Draw Request shall be irrevocable and
shall be confirmed promptly by certified mail, return receipt requested, hand
delivered or sent by overnight courier service guaranteeing next day delivery to
the Class A-1AR Note Agent (with a copy to the Trustee) of a written Class A-1AR
Draw Request in the form of Exhibit B hereto and signed by the Issuer (or the
Collateral Manager on behalf of the Issuer). Each such Class A-1AR Draw Request
shall specify the following information in compliance with Section 2.02 of this
Agreement and Section 18.1 of the Indenture:

          (a) the aggregate amount of the requested Class A-1AR Draw;

          (b) the date of such Class A-1AR Draw, which shall be a Business Day;
and

          (c) wire instructions and account information for the Class A-1AR
Draw.

          Promptly following receipt of a Class A-1AR Draw Request, on the date
of receipt of a Class A-1AR Draw Request for a Class A-1AR Draw, the Class A-1AR
Note Agent shall forward (by facsimile or electronic messaging system) to each
Holder (with a copy to the Trustee) a copy of such Class A-1AR Draw Request
substantially in the form of Exhibit B hereto and of the amount of such Holder's
pro rata Advance to be made as part of the requested Class A-1AR Draw. Any Class
A-1AR Draw Request received after 11:00 a.m. (New York City time) on any
Business Day or on a day which is not a Business Day shall be deemed to be a
Class A-1AR Draw Request received at 9:00 a.m. on the next Business Day and to
be funded on the second next Business Day by the Holders of Class A-1AR Notes.

          Section 2.04 Funding of Class A-1AR Draws.

          Subject to Sections 2.01, 3.02(d), 4.02 and 4.03, each Holder shall
make each Advance to be made by it hereunder by initiating a wire transfer in
immediately available funds by 1:00 p.m. (New York City time) on the Business
Day specified in the Class A-1AR Draw Request to the account designated by the
Issuer (or the Collateral Manager on behalf of the Issuer) for such purpose by
notice to the Holders and the Trustee.

          Section 2.05 Termination and Reduction of Class A-1AR Commitments.

          (a) The Class A-1AR Commitments shall terminate at the close of
business (New York City time) on the last day of the Revolving Period.

          (b) The aggregate amount of the Class A-1AR Commitments shall be
subject to reduction from time to time as provided in Section 11.1 and Section
18.1 of the Indenture.

          (c) Each reduction of the Class A-1AR Commitments shall be made
ratably among the Holders in accordance with the amounts of their respective
Class A-1AR Commitments. No termination or reduction of the Class A-1AR
Commitments shall be effected except as provided in Section 2.05(b) hereof, and
Section 11.1 and Section 18.1 of the Indenture.

                                      -7-

<PAGE>

          Section 2.06 Advances; Prepayments.

          (a) All Advances made by a Holder shall be evidenced by the Class
A-1AR Note of such Holder and shall be governed by and subject to this Agreement
and the Indenture. Advances may be prepaid from time to time to the extent
payments are either required or permitted to be made under the Indenture;
provided that any Class A-1AR Prepayment on a Payment Date, under Section 18.3
of the Indenture, shall be made upon not less than two Business Days notice to
the Class A-1AR Note Agent (with a copy to the Trustee and the Holders of the
Class A-1AR Notes) by Issuer Order (or by the Collateral Manager on behalf of
the Issuer) specifying the amount and date of such Class A-1AR Prepayment, and
the Class A-1AR Note Agent shall promptly notify each Holder of the contents of
such notice from the Issuer (or from the Collateral Manager). Each such notice
of a Class A-1AR Prepayment shall be irrevocable.

          (b) The Class A-1AR Note Agent hereby agrees that it shall keep a
register (the "Class A-1AR Note Register") at the office of the Class A-1AR Note
Agent and in which the Class A-1AR Note Agent shall maintain records of the
Class A-1AR Commitment of each Holder, the aggregate principal amount of
Advances from time to time outstanding in respect of each Class A-1AR Note, a
copy of each Assignment and Acceptance delivered to the Class A-1AR Note Agent
pursuant to Section 6.03(b) and a copy of each Election Notice and of each
Assignment and Acceptance delivered to the Class A-1AR Note Agent pursuant to
Section 6.03(f). On each Determination Date and at any time promptly following a
request therefor by the Collateral Manager or the Trustee, the Class A-1AR Note
Agent shall provide the Collateral Manager and the Trustee with a report
specifying the aggregate principal amount of all Advances outstanding in respect
of each Class A-1AR Note, the Class A-1AR Commitment of the related Holder (as
of such Determination Date) and the ratings of each Holder (as reported by the
Collateral Manager to the Class A-1AR Note Agent) and any related Committed
Liquidity Provider.

          (c) The aggregate principal amount of any partial voluntary Class
A-1AR Prepayment, in respect of the Class A-1AR Notes (taken as a whole), will
be at least U.S.$500,000 (and integral multiples of U.S.$500 in excess thereof)
or, if the Aggregate Outstanding Amount under the Class A-1AR Notes is less than
U.S.$500,000, such lesser amount.

          Section 2.07 [Reserved].

          Section 2.08 Class A-1AR Commitment Fee.

          The Class A-1AR Commitment Fee shall accrue and be payable by the
Issuer as provided in the Indenture.

          Section 2.09 Breakage Costs.

          (a) If the Issuer prepays any principal of any Advance other than on a
Payment Date (including as a result of an Event of Default) (each such
prepayment, a "Break Funding Event"), the Issuer, or the Collateral Manager on
behalf of the Issuer, shall give each of the Class A-1AR Note Agent and the
Trustee notice (each, a "Notice of Prepayment") of a Class

                                      -8-

<PAGE>

A-1AR Prepayment, no later than 10:00 a.m. (New York City time) at least four
Business Days before the date of such Class A-1AR Prepayment and the Class A-1AR
Note Agent, no later than 4:00 p.m. (New York City time) on the Business Day
following the date on which it receives such Notice of Prepayment (so long as
the Class A-1AR Note Agent has received such Notice of Prepayment by 10:00
a.m.), shall provide a copy of such Notice of Prepayment to each Holder and
notify each Holder of such Holder's pro rata share (calculated on the basis of
such Holder's purchase percentage) of such Class A-1AR Prepayment.

          (b) If the Issuer, or the Collateral Manager on behalf of the Issuer,
gives a Notice of Prepayment, the Issuer shall compensate each Holder, in
accordance with the Priority of Payments, for funding losses in an amount (the
"Class A-1AR Breakage Amount") equal to the excess, if any, of (i) the amount of
interest that such Holder would earn on the principal amount of such prepayment
for the period (the "Remaining Period") from (and including) the date of such
Break Funding Event to but excluding the next Payment Date if the interest rate
payable on such principal prepayment were equal to LIBOR for the then current
Interest Accrual Period for such Advance, over (ii) the amount of interest that
such Holder would have earned on such principal amount of such prepayment for
the Remaining Period if such Holder were to invest such prepayment for the
Remaining Period at LIBOR determined with respect to the Remaining Period
(assuming LIBOR is determined in accordance with the Indenture). The Class A-1AR
Note Agent shall calculate each such Class A-1AR Breakage Amount in accordance
with the foregoing provisions and such calculation shall be conclusive absent
manifest error. The Issuer shall pay, in accordance with the Priority of
Payments, such Holder the Class A-1AR Breakage Amount on the next succeeding
Payment Date.

          (c) The Issuer shall not be obligated to pay any additional amounts to
the Holder of any Class A-1AR Note or any beneficial owner of an interest in a
Class A-1AR Note as a result of any deduction for, or on account of, any present
or future taxes, duties, assessments or governmental charges with respect to
such Class A-1AR Note.

                                    ARTICLE 3

                   REPRESENTATIONS AND WARRANTIES; COLLATERAL

          Section 3.01 Representations and Warranties.

          Each of the Issuer and the Co-Issuer represents and warrants, as to
itself only, to the Holders, the Class A-1AR Note Agent and the Trustee that, as
of the date hereof:

          (a) The Issuer has been duly incorporated and is validly existing
under the laws of the Cayman Islands. The Co-Issuer has been duly formed and is
validly existing under the laws of the State of Delaware.

          (b) It has the power to execute and deliver this Agreement and the
Indenture and to perform its obligations under this Agreement and the Indenture
and has taken all necessary action to authorize such execution, delivery and
performance.

                                      -9-

<PAGE>

          (c) Such execution, delivery and performance do not violate or
conflict with any law applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other agency of government
applicable to it or any of its assets or any contractual restriction binding on
or affecting it or any of its assets.

          (d) All governmental and other consents that are required to have been
obtained by it with respect to the execution, delivery and performance of this
Agreement and the Indenture have been obtained and are in full force and effect
and all conditions of any such consents have been complied with.

          (e) Its obligations under this Agreement, the Class A-1AR Notes and
the Indenture constitute its legal, valid and binding obligations, enforceable
against it in accordance with their respective terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).

          (f) There is not pending or, to its knowledge, threatened against it,
or against any of its Affiliates, any action, suit or proceeding at law or in
equity or before any court, tribunal, government body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or the Indenture or its ability (as a matter of
law) to perform its obligations under this Agreement or the Indenture.

          (g) It is not required to register as an "investment company" under
the Investment Company Act.

          (h) It has timely filed or caused to be filed all tax returns and
reports required to have been filed and has timely paid or caused to be paid all
taxes required to have been paid by it where the failure to do so could
reasonably be expected to result, singularly or in the aggregate, in a material
adverse effect.

          (i) No Event of Default has occurred and is continuing.

          Section 3.02 Several Representations and Covenants of Each Holder and
Each Committed Liquidity Provider.

          Each Holder and each Committed Liquidity Provider severally represents
and warrants as of each date it shall acquire any interest in, or fund any
Advance (including the date that such Person shall become a party hereto
pursuant to an Assignment and Acceptance) and covenants (as to itself only and
as to no other Holder or Committed Liquidity Provider) to the Co-Issuers and the
Class A-1AR Note Agent that:

          (a) it is an entity duly organized and validly existing and (if
applicable) in good standing under the laws of the jurisdiction of its
organization; it has the organizational power to execute and deliver this
Agreement and to perform its obligations under this Agreement and has taken all
necessary organizational action to authorize such execution, delivery and
performance; such execution, delivery and performance do not violate or conflict
with any law applicable to it, any provision of its constitutional documents,
any order or judgment of any court

                                      -10-

<PAGE>

or other agency of government applicable to it or any of its assets and do not
violate or conflict with in any material respect any material contractual
restriction binding on or affecting it or any of its assets; all governmental
and other consents that are required to have been obtained by it with respect to
the execution, delivery and performance of this Agreement have been obtained and
are in full force and effect and all conditions of any such consents have been
complied with; there is not pending or, to its knowledge, threatened against it,
or against any of its Affiliates, any action, suit or proceeding at law or in
equity or before any court, tribunal, government body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or the Indenture or its ability to perform its
obligations under this Agreement or the Indenture; it has duly executed and
delivered this Agreement and its obligations under this Agreement constitute its
legal, valid and binding obligations, enforceable against it in accordance with
their respective terms (subject to applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally and
subject, as to enforceability, to equitable principles of general application
(regardless of whether enforcement is sought in a proceeding in equity or at
law));

          (b) each of the representations and warranties set forth on Schedule
II is true, correct and complete;

          (c) except in the case of any Committed Liquidity Provider which has
funded the related Holder Subaccount in an amount equal to its unfunded Class
A-1AR Commitment, it satisfies the Class A-1AR Ratings Criteria, and
acknowledges and agrees that, if it shall at any time fail to comply with the
Class A-1AR Ratings Criteria, it shall promptly (but in no event later than 5:00
p.m. on the Business Day such Holder or such Committed Liquidity Provider, as
applicable, receives notice or otherwise becomes aware thereof, or, if such
notice is received or such Holder or such Committed Liquidity Provider, as
applicable, becomes aware thereof after 5:00 p.m. (New York City time) on a
Business Day or on any day which is not a Business Day, 9:00 a.m. (New York City
time) on the Business Day following the date such Holder or such Committed
Liquidity Provider, as applicable, receives notice or otherwise becomes aware
thereof) notify the Co-Issuers, the Collateral Manager, the Rating Agencies, the
Class A-1AR Note Agent and the Trustee thereof. Each Holder or Committed
Liquidity Provider, as applicable, agrees that if it fails at any time to comply
with or satisfy the Class A-1AR Ratings Criteria, such Holder or Committed
Liquidity Provider, as applicable, shall, within five Business Days thereafter,
deposit or cause to be deposited cash in immediately available funds in an
amount equal to the undrawn amount of the related Holder's Class A-1AR
Commitment in a Holder Subaccount. Each Holder or Committed Liquidity Provider,
as applicable, acknowledges that if such Holder or Committed Liquidity Provider,
as applicable, fails to fund such Holder Subaccount in accordance with the terms
of this Section 3.02(c), (i) the Issuer (or the Collateral Manager on behalf of
the Issuer) has the right hereunder, and is required under Section 18.4 of the
Indenture, to promptly use reasonable efforts to replace such Holder and any
Committed Liquidity Provider with respect thereto (at the cost of such Holder or
Committed Liquidity Provider, as applicable) with another entity that meets the
Class A-1AR Ratings Criteria by requiring the replaced Holder and any Committed
Liquidity Provider with respect thereto to transfer all of its rights and
obligations in respect of the Class A-1AR Notes to the transferee entity in
accordance with the provisions specified in Section 6.03 and the replaced Holder
and any Committed Liquidity Provider with respect thereto agrees to cooperate
with all reasonable requests of the Issuer (or the Collateral Manager on behalf
of the Issuer) for the purpose of

                                      -11-

<PAGE>

effecting such transfer and (ii) any payments of principal of or interest on any
Class A-1AR Note held by such Holder and any payments of a Class A-1AR
Commitment Fee, that would otherwise be payable to such Holder under this
Agreement and the Indenture shall, until such Holder is replaced by another
entity that meets the Class A-1AR Ratings Criteria, be deposited into a Holder
Subaccount with respect to such Holder and such Holder Subaccount shall be
governed by the terms of the Indenture. Each Holder or Committed Liquidity
Provider, as applicable, agrees to notify the Class A-1AR Note Agent promptly
after any deposit of funds by such Holder or Committed Liquidity Provider, as
applicable, into a Holder Subaccount. Each Holder or Committed Liquidity
Provider, as applicable, further acknowledges and agrees that if at any time it
fails to fund any portion of a Class A-1AR Draw as required under Article 2 of
this Agreement (taking into account the terms of Section 6.03(f)) (any such
Holder or Committed Liquidity Provider, as applicable, a "Defaulting Holder"),
that (i) any payments of principal of or interest on any Class A-1AR Note held
by such Holder and any payments of a Class A-1AR Commitment Fee, that would
otherwise be payable to such Defaulting Holder under this Agreement and the
Indenture shall, for so long as such Defaulting Holder continues to fail to
satisfy such requirement or until such Defaulting Holder is replaced by another
entity that meets the Class A-1AR Ratings Criteria and satisfies such Defaulting
Holder's failed funding obligation, be deposited into a Holder Subaccount with
respect to such Holder as provided in Section 3.02(d)(ii) of this Agreement and
Section 18.5 of the Indenture and such Holder Subaccount shall be governed by
the terms of the Indenture and (ii) the Issuer (or the Collateral Manager on
behalf of the Issuer) has the right hereunder, and is required under Section
18.4 of the Indenture, to promptly use reasonable efforts to replace such
Defaulting Holder with another entity that meets the Class A-1AR Ratings
Criteria;

          (d) the deposit of cash to a Holder Subaccount by any Holder or
Committed Liquidity Provider, as applicable, shall not constitute a Class A-1AR
Draw by the Issuer and shall not constitute a utilization of the Class A-1AR
Commitment of such Holder, and the funds on deposit in a Holder Subaccount shall
not constitute principal outstanding under a Class A-1AR Note. Each Holder or
Committed Liquidity Provider, as applicable, that deposits cash into a Holder
Subaccount as contemplated by Section 3.02(c) or that has had payments deposited
into a Holder Subaccount pursuant to the last sentence of Section 3.02(c) agrees
that from and after the date of such deposit and until the related Collateral
Account Termination Date, (i) the obligation of such Holder or Committed
Liquidity Provider, as applicable, to fund any Class A-1AR Draw shall be
satisfied by the Collateral Manager instructing the Trustee to withdraw funds
(and the Trustee will provide prior or contemporaneous notice of any such
withdrawal to the Class A-1AR Note Agent and the Holders of the Class A-1AR
Notes) from such Holder Subaccount (provided that such Holder or Committed
Liquidity Provider, as applicable, shall remain obligated in respect of such
Class A-1AR Draw to the extent the portion of the Class A-1AR Draw applicable to
such Holder exceeds the amount on deposit in such Holder Subaccount), (ii) all
payments of principal (and, if such Holder or such Committed Liquidity Provider,
as applicable, is a Defaulting Holder, interest) with respect to such Class
A-1AR Draw (and, if such Holder or such Committed Liquidity Provider, as
applicable, is a Defaulting Holder, any Class A-1AR Commitment Fees payable to
such Holder or such Committed Liquidity Provider, as applicable) shall be made
by depositing the related funds into such Holder Subaccount and (iii) the
Collateral Manager shall have full authority to instruct the Trustee to withdraw
funds (and the Trustee will provide prior notice of any such withdrawal to the
Class A-1AR Note Agent) from such Holder Subaccount at the time of, and in
connection with, the

                                      -12-

<PAGE>

making of any such Class A-1AR Draw or any payment described in the foregoing
clauses of this Section 3.02(d) and to deposit funds (with prior or
contemporaneous notice of any such deposit to the Class A-1AR Note Agent) into
such Holder Subaccount, all in accordance with the terms of and for the purposes
set forth in this Agreement and in the Indenture. After the Collateral Account
Termination Date for any Holder and any Committed Liquidity Provider with
respect thereto (subject to the terms of Section 18.5 of the Indenture), all
funds then held in the related Holder Subaccount shall be withdrawn from such
Holder Subaccount and applied in accordance with Section 18.5 of the Indenture,
and thereafter all payments of principal and interest with respect to Advances
made by such Holder or such Committed Liquidity Provider, as applicable, shall
be paid directly to such Holder or such Committed Liquidity Provider, as
applicable, in accordance with the Indenture. The Trustee shall promptly (at the
direction of such Holder or such Committed Liquidity Provider, as applicable)
invest any amounts on deposit in any Holder Subaccount in securities which
satisfy the definition of Eligible Investments maturing on the day following the
date of acquisition thereof (collectively, the "Class A-1AR Eligible
Investments"). Investment earnings received during each Due Period in respect of
Class A-1AR Eligible Investments in a Holder Subaccount will be paid to the
applicable Holder or Committed Liquidity Provider, as applicable, on the related
Payment Date so long as it is not a Defaulting Holder at such time, and
otherwise shall be deposited into such Holder Subaccount; and

          (e) it agrees to treat each of the Co-Issuers as a disregarded entity
for U.S. Federal, state and local income tax purposes, to report all income (or
loss) in accordance with such treatment and not take any action inconsistent
with such treatment.

                                    ARTICLE 4

                                   CONDITIONS

          Section 4.01 Closing Date Conditions.

          The obligations of the Holders to make Advances shall not become
effective until the date on which the Indenture is executed and delivered and
the Notes are duly authorized, issued, authenticated and delivered thereunder.

          The purchase of any Class A-1AR Note on the Closing Date and the
obligation of the related Holder to make an Advance on the occasion of the
initial Class A-1AR Draw pursuant to Article 2 is subject to the satisfaction of
the following conditions (in addition to the conditions specified in Section
4.02):

          (a) All of the conditions precedent in Article III of the Indenture
shall have been satisfied or waived in accordance with the terms thereof.

          (b) Each of the statements referred to in Sections 4.02(b) and (c)
hereof shall be true (as if a Class A-1AR Draw shall occur on the Closing Date),
and the Class A-1AR Note Agent (with a copy to the Holders of the Class A-1AR
Notes) and the Collateral Manager shall be deemed to have certified, as of the
Closing Date, to such effect.

                                      -13-

<PAGE>

          (c) The Class A-1AR Notes shall have been duly executed by the
Co-Issuers and delivered to the Class A-1AR Note Agent for the benefit of the
Initial Holders.

          Section 4.02 Conditions to Advances.

          The obligation of each Holder to make an Advance on the occasion of
any Class A-1AR Draw pursuant to Article 2 is subject to the satisfaction or
waiver of the following conditions:

          (a) In the case of any Class A-1AR Draw (other than a Class A-1AR Draw
on the Closing Date), the Class A-1AR Note Agent, or, pending the appointment of
a successor Class A-1AR Note Agent pursuant to Section 5.04(e), the Collateral
Manager, shall have received a Class A-1AR Draw Request given in accordance with
Section 2.03.

          (b) Each of this Agreement, the Indenture and each Class A-1AR Note is
in full force and effect.

          (c) All other conditions precedent to such Class A-1AR Draw set forth
in this Agreement and the Indenture have been satisfied in all material respects
(or waived pursuant to the terms hereof or thereof).

          Except for a Class A-1AR Draw made as contemplated under Section 4.03,
each Class A-1AR Draw shall be deemed to constitute a representation and
warranty by each of the Issuer and the Co-Issuer on the date thereof as to the
applicable matters specified in Sections 4.02 (b) and (c).

          Section 4.03 Obligations Unconditional.

          Notwithstanding the failure to satisfy any of the conditions in the
foregoing Section 4.02(c), the Holders (or, if an Election Notice has been
delivered pursuant to Section 6.03(f), the Committed Liquidity Provider) shall,
subject to Section 2.01, be obligated to make Advances to the Issuer in
connection with Class A-1AR Draws to fund Delayed Funding Amounts relating to
Delayed Draw Term Loans. However, the obligation of each Holder under this
Section 4.03 shall terminate on the Commitment Termination Time following the
occurrence of any Class A-1AR Draw required at such time.

          Section 4.04 Class A-1AR Draws on a Mandatory Class A-1AR Draw Date.

          (a) Notwithstanding anything herein to the contrary, on the Mandatory
Class A-1AR Draw Date, the Issuer (or the Collateral Manager on behalf of the
Issuer) shall make a Class A-1AR Draw Request in accordance with Section 2.03
hereof in an amount equal to the Aggregate Class A-1AR Undrawn Amount as of such
date. The Trustee shall (at the direction of the Collateral Manager and on
behalf of the Issuer) upon receipt of such Class A-1AR Draw, out of the proceeds
of such Class A-1AR Draw, deposit into the Delayed Funding Obligations Account
an amount equal to the Total Unfunded Delayed Funding Amount and shall deposit
the remaining proceeds of such Class A-1AR Draw into the Principal Collection
Account where such amounts shall be applied in accordance with the Priority of
Payments as Principal Proceeds on the following Payment Date (or, if such amount
is received on a Payment Date, on such

                                      -14-

<PAGE>

Payment Date). The Class A-1AR Commitments will terminate immediately after such
Class A-1AR Draw is made and such funds are transferred to the Trustee.

          (b) No Class A-1AR Draw Request may be made after the Mandatory Class
A-1AR Draw Date.

          Section 4.05 Liquidity Facility Term; Class A-1AR Draws on Liquidity
Facility Extension Failure.

          (a) Notwithstanding anything to the contrary herein, no Holder may
enter into a Liquidity Facility for a term of less than 364-days, subject to
one-year extensions up to the Stated Maturity of the Class A-1AR Notes.

          (b) Upon any failure of the Holder to extend any related Liquidity
Facility, if any, the Issuer (or the Collateral Manager on behalf of the Issuer)
shall make a Class A-1AR Draw Request to each Holder in accordance with Section
2.03 hereof in an amount equal to such Holder's pro rata share of the Aggregate
Class A-1AR Undrawn Amount as of such date. The Trustee shall (at the direction
of the Collateral Manager and on behalf of the Issuer) deposit the proceeds of
such Class A-1AR Draw into the Delayed Funding Obligations Account.

                                    ARTICLE 5

                           THE CLASS A-1AR NOTE AGENT

          Section 5.01 Appointment.

          Each of the Holders hereby irrevocably appoints the Class A-1AR Note
Agent as its agent and authorizes the Class A-1AR Note Agent to take such
actions on its behalf and to exercise such powers as are delegated to the Class
A-1AR Note Agent by the terms hereof and of the Indenture, together with such
actions and powers as are reasonably incidental thereto.

          Section 5.02 Certain Duties and Responsibilities.

          (a) The Class A-1AR Note Agent undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Class
A-1AR Note Agent.

          (b) Upon receipt of certificates and other notices furnished to the
Class A-1AR Note Agent and conforming to the requirements of this Agreement, the
Class A-1AR Note Agent may, in the absence of gross negligence, willful
misconduct or bad faith on its part, conclusively rely as to the truth of the
statements and the correctness of the opinions expressed therein. Neither the
Class A-1AR Note Agent nor any of its affiliates, directors, officers, agents or
employees shall be liable for any action taken or not taken by it in connection
herewith (i) in the absence of its own gross negligence, willful misconduct or
bad faith with the consent or at the request of the Holders representing at
least a majority of the Class A-1AR Commitments (and to the extent required
under the Transaction Documents, the Issuer or the Collateral Manager on behalf
of the Issuer) or (ii) in the absence of its own gross negligence, willful

                                      -15-

<PAGE>

misconduct or bad faith. Neither the Class A-1AR Note Agent nor any of its
affiliates, directors, officers, agents or employees shall be responsible or
have any duty to ascertain, inquire or verify: (i) any statement, warranty or
representation made in connection with this Agreement, any of the other
Transaction Documents or any Class A-1AR Draw hereunder, (ii) the performance or
observation of any of the covenants or agreements of the Issuer or (iii) the
validity, effectiveness or genuineness of this Agreement, the Indenture or any
instrument or writing furnished in connection herewith. The Class A-1AR Note
Agent shall not incur any liability by acting in reliance upon any notice,
consent, certificate, statement or other writing (which may be a bank wire,
facsimile, electronic messaging or similar writing) reasonably believed by it to
be genuine or signed by the proper party or parties.

          (c) No provision of this Agreement shall be construed to relieve the
Class A-1AR Note Agent from liability for its own grossly negligent action, its
own grossly negligent failure to act, or its own willful misconduct, except
that:

          (i) this subsection shall not be construed to limit the effect of
     subsections (a) and (b) of this Section 5.02;

          (ii) the Class A-1AR Note Agent shall not be liable for any error of
     judgment made in good faith by an officer, director, agent or employee
     unless it shall be proven that the Class A-1AR Note Agent was grossly
     negligent in ascertaining the pertinent facts; and

          (iii) no provision of this Agreement shall require the Class A-1AR
     Note Agent to expend or risk its own funds or otherwise incur any financial
     liability in the performance of any of its duties hereunder, or in the
     exercise of any of its rights or powers contemplated hereunder, if it shall
     have reasonable grounds for believing that repayment of such funds or
     adequate indemnity against such risk or liability is not reasonably assured
     to it, unless such risk or liability relates to performance of its ordinary
     services under this Agreement.

          (d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Class A-1AR Note Agent shall be subject to the
provisions of this Section 5.02. Each Holder shall, ratably, in accordance with
its Class A-1AR Commitment (or, if the Class A-1AR Commitments have been
terminated or permanently reduced to zero, the unpaid principal amount of its
Advances) indemnify each Indemnified Person for all Losses not reimbursed by the
Issuer pursuant to Section 5.03(a)(iii); provided that no Holder shall have such
indemnity or reimbursement obligation to the extent that such Loss incurred by
the applicable Indemnified Person arises out of, or in connection with any act
or omission of any Indemnified Person constituting (x) negligence or (y) a
breach of this Agreement.

          Section 5.03 Compensation.

          (a) Subject to Section 6.12 the Issuer agrees:

                                      -16-

<PAGE>

          (i) to pay the Class A-1AR Note Agent on each Payment Date a Class
     A-1AR Note Agent Fee as a Company Administrative Expense for all services
     rendered by it hereunder;

          (ii) except as otherwise expressly provided herein, to reimburse the
     Class A-1AR Note Agent (subject to any written agreement between the Issuer
     and the Class A-1AR Note Agent) forthwith upon its request for all
     reasonable fees and expenses (including attorneys' fees) incurred or made
     by the Class A-1AR Note Agent in accordance with any provision of this
     Agreement; and

          (iii) to indemnify the Class A-1AR Note Agent and its affiliates,
     officers, directors, employees and agents (collectively, "Indemnified
     Persons"), and to hold them harmless against, any loss, liability or
     expense incurred without gross negligence, willful misconduct or bad faith
     on their part, arising out of or in connection with the exercise or
     performance of any of the Class A-1AR Note Agent's obligations or duties
     under this Agreement, including the reasonable costs and expenses of
     defending themselves against any claim or liability in connection therewith
     (collectively "Losses");

provided that (x) such amounts described in clauses (i), (ii) and (iii) above
shall be payable on each Payment Date as Company Administrative Expenses only to
the extent that funds are available for such purpose in accordance with the
Priority of Payments and (y) any such amounts that are not paid in full on any
Payment Date shall be deferred and shall be payable on a subsequent Payment Date
to the extent funds are available for such purpose in accordance with the
Priority of Payments.

          (b) The Class A-1AR Note Agent shall, subject to Section 6.12 and the
Priority of Payments, receive amounts pursuant to this Section 5.03 only to the
extent that the payment thereof will not result in an Event of Default, and the
failure to pay such amounts to the Class A-1AR Note Agent shall not, by itself,
constitute an Event of Default. The Class A-1AR Note Agent hereby agrees not to
file, cause the filing of, or join in any petition in bankruptcy against the
Issuer for the non-payment to the Class A-1AR Note Agent of any amounts provided
by this Section 5.03 until at least one year and one day, or if longer the
applicable preference period then in effect, after the payment in full of all
the Notes issued under the Indenture. The provisions of this Section 5.03(b)
shall survive any termination of this Agreement.

          Section 5.04 Resignation and Removal; Appointment of a Successor.

          (a) No resignation or removal of the Class A-1AR Note Agent and no
appointment of a successor Class A-1AR Note Agent pursuant to this Article 5
shall become effective until the appointment by the successor Class A-1AR Note
Agent under Section 5.05 becomes effective.

          (b) Subject to Section 5.04(a), the Class A-1AR Note Agent may resign
at any time by giving written notice thereof to the Co-Issuers, the Collateral
Manager, the Holders, the Trustee and each Rating Agency.

          (c) The Class A-1AR Note Agent may be removed at any time by Holders
representing at least a majority of the Class A-1AR Commitments with 60 days
prior written

                                      -17-

<PAGE>

notice delivered to the Class A-1AR Note Agent, the Trustee, the Collateral
Manager and to the Co-Issuers.

          (d) If at any time the Class A-1AR Note Agent shall become incapable
of acting or shall be adjudged as bankrupt or insolvent or a receiver or
liquidator of the Class A-1AR Note Agent or of its property shall be appointed
or any public officer shall take charge or control of the Class A-1AR Note Agent
or of all or a substantial part of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case (subject to
Section 5.04(e)), (i) the Issuer (at the direction of the Collateral Manager and
on behalf of the Issuer), by Issuer Order, shall remove the Class A-1AR Note
Agent, or (ii) any Holder may, on behalf of itself and all others similarly
situated, petition any court of competent jurisdiction for the removal of the
Class A-1AR Note Agent and the appointment of a successor Class A-1AR Note
Agent.

          (e) If the Class A-1AR Note Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Class
A-1AR Note Agent for any reason, the Issuer (at the direction of the Collateral
Manager and on behalf of the Issuer), by Issuer Order, shall promptly appoint a
successor Class A-1AR Note Agent. If the Issuer shall fail to appoint a
successor Class A-1AR Note Agent within 60 days after such resignation, removal
or incapability or the occurrence of such vacancy, a successor Class A-1AR Note
Agent may be appointed by Holders representing a majority of the Class A-1AR
Commitments at such time delivered to the Issuer and the retiring Class A-1AR
Note Agent. The successor Class A-1AR Note Agent so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Class A-1AR Note
Agent and supersede any successor Class A-1AR Note Agent proposed by the Issuer.
If no successor Class A-1AR Note Agent shall have been so appointed by the
Issuer or such Holders and shall have accepted appointment in the manner
hereinafter provided, any Holder may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the
appointment of a successor Class A-1AR Note Agent.

          (f) The Issuer shall give prompt notice of each resignation and each
removal of the Class A-1AR Note Agent and each appointment of a successor Class
A-1AR Note Agent by mailing written notice of such event by first class mail,
postage prepaid, to the Trustee, each Rating Agency, the Collateral Manager and
to the Holders as their names and addresses appear in the Class A-1AR Note
Register. Each notice shall include the name and address of the successor Class
A-1AR Note Agent. If the Issuer fails to mail such notice within 10 days after
acceptance of appointment by the successor Class A-1AR Note Agent, the successor
Class A-1AR Note Agent shall cause such notice to be given at the expense of the
Issuer.

          Section 5.05 Acceptance of Appointment by Successor.

          Every successor Class A-1AR Note Agent appointed hereunder shall
execute, acknowledge and deliver to the Co-Issuers and the retiring Class A-1AR
Note Agent an instrument accepting such appointment with immediate effect. Upon
delivery of the required instrument, the resignation or removal of the retiring
Class A-1AR Note Agent shall become effective and such successor Class A-1AR
Note Agent, without any other act, deed or conveyance, shall become vested with
all the rights, powers, duties and obligations of the retiring Class A-1AR Note
Agent; save that, upon request of the Issuer or Holders representing a

                                      -18-

<PAGE>

majority of the Class A-1AR Commitments or the successor Class A-1AR Note Agent,
such retiring Class A-1AR Note Agent shall, upon payment of its fees and
expenses then unpaid, execute and deliver an instrument transferring to such
successor Class A-1AR Note Agent all the rights, powers and trusts of the
retiring Class A-1AR Note Agent.

                                    ARTICLE 6

                                  MISCELLANEOUS

          Section 6.01 Notices.

          Except in the case of notices and other communications expressly
permitted to be given by facsimile or electronic messaging system, all notices
and other communications provided for herein (including each consent, notice,
direction or request) shall be in writing and shall be delivered by hand or
overnight courier service or sent by facsimile, as follows:

          (a) if to the Co-Issuers, the Rating Agencies, the Collateral Manager
or the Trustee, at its address or facsimile number set forth in the Indenture;

          (b) if to the Class A-1AR Note Agent, at its address or facsimile
number set forth on Schedule I or at such other address as shall be designated
by the Class A-1AR Note Agent in a notice to the Co-Issuers, each Holder, the
Trustee and the Collateral Manager; and

          (c) if to any Holder, at its address or facsimile number set forth on
Schedule I (in the case of any Initial Holder) or in the Assignment and
Acceptance delivered by it; or at such other address as shall be designated by a
Holder in a notice to the Co-Issuers, the Class A-1AR Note Agent, the Trustee
and the Collateral Manager.

          All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.

          Section 6.02 Waivers; Amendments.

          (a) No waiver of any provision of this Agreement or consent to any
departure by the Issuer herefrom shall in any event be effective unless the same
shall be permitted by Section 6.02(b), and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.

          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Manager on behalf of the Issuer and the Class
A-1AR Note Agent with the consent of Holders representing at least a majority of
the Class A-1AR Commitments except as otherwise expressly provided in Section
6.02(c); provided that no such agreement shall amend, modify or otherwise affect
the rights or duties of the Trustee or of the Collateral Manager, as applicable,
hereunder or in respect hereof without the prior written consent of the Trustee
or of the Collateral Manager, as applicable. Prior to entering into any
amendment, waiver or modification to this Agreement, the Rating Agency Condition
shall be satisfied with respect thereto. Subject to the

                                      -19-

<PAGE>

foregoing, the Collateral Manager, on behalf of the Issuer, shall give prior
written notice to each Rating Agency and the Trustee of any waiver, amendment or
modification of any provision of this Agreement.

          (c) No waiver, amendment or modification of the Indenture or any other
agreement referred to herein or therein to which the Issuer is a party (other
than this Agreement) shall affect any of the rights or obligations under this
Agreement of the parties hereto unless such waiver, amendment or modification is
effected in accordance with the applicable provisions of this Agreement and the
Indenture; provided that no such waiver, amendment or modification shall
increase the Maximum Class A-1AR Commitment, modify the interest payable
thereon, materially change the provisions of Article 18 of the Indenture, modify
the calculation of the Class A-1AR Commitment Fee or extend the term of any of
the Class A-1AR Commitments, or extend the time or waive any requirement for the
reduction or termination of any of the Class A-1AR Commitments, without the
consent of each of the Holders.

          (d) A failure or delay in exercising any right, power or privilege in
respect of this Agreement shall not be presumed to operate as a waiver, and a
single or partial exercise of any right, power or privilege shall not be
presumed to preclude any subsequent or further exercise, of that right, power or
privilege or the exercise of any other right, power or privilege.

          Section 6.03 Successors and Assigns.

          (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
transferees.

          (b) The Issuer may not assign or delegate any of its rights or
obligations under this Agreement without the prior consent of each Holder, the
Class A-1AR Note Agent, the Trustee and the Collateral Manager; provided that it
is understood and agreed that the Issuer is Granting all of its right, title and
interest in, to and under this Agreement to the Trustee for the benefit and
security of the Secured Parties. No Holder may assign or delegate any of its
rights or obligations under this Agreement or under any Class A-1AR Notes,
except that (i) any Holder may 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 Class A-1AR Commitment and the Advances at the time owing to it);
provided that, in either such case, (A) any assignment by a Holder of less than
all of a Class A-1AR Note or the related Class A-1AR Commitment shall be of the
same ratable portion of such Class A-1AR Note and the related Class A-1AR
Commitment, (B) no such assignment shall be effected unless all conditions
precedent to the transfer of the relevant Class A-1AR Note specified in the
Indenture (including such assignee's satisfaction of the Class A-1AR Ratings
Criteria) have been satisfied and such Holder shall have received the prior
written consent of the Issuer and the Collateral Manager to such assignment, and
(C) no such assignment shall be effected unless the parties to such assignment
shall have executed and delivered to the Class A-1AR Note Agent (with a copy to
the Trustee, the Collateral Manager and the Holders of the Class A-1AR Notes) a
duly completed Assignment and Acceptance and (ii) any Holder that is entitled
under a Liquidity Facility to borrow loans from, or sell all or a portion of
Class A-1AR Notes or interests therein to, Liquidity Providers may assign its
rights hereunder and under the Class A-1AR Notes and/or delegate to the related
Liquidity Providers, and such Liquidity Providers may severally agree to each
perform their ratable share (determined in accordance with

                                      -20-

<PAGE>

their respective Class A-1AR Commitments under the relevant Liquidity Facility)
of, all of the Holder's obligations hereunder or under the Class A-1AR Notes;
provided that each related Liquidity Provider which is a Committed Liquidity
Provider either executes and delivers a signature page hereto or enters into an
Assignment and Acceptance agreeing to be a Committed Liquidity Provider
hereunder. Upon acceptance and recording pursuant to Section 6.03(c), from and
after the effective date specified in each Assignment and Acceptance, the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Holder or of a Committed Liquidity Provider, as applicable, under this
Agreement, and the assigning Holder thereunder shall, to the extent of the
interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Holder's rights and obligations under
this Agreement and in respect of Class A-1AR Notes, such Holder shall cease to
be a party hereto).

          (c) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Holder and an assignee and/or delegee, the Class A-1AR
Note Agent shall accept such Assignment and Acceptance and record the
information contained therein in the Class A-1AR Note Register. No such
assignment or delegation shall be effective for purposes of this Agreement
unless it has been recorded in the Class A-1AR Note Register as provided in this
paragraph.

          (d) Any Holder may at any time Grant a security interest in all or any
portion of its rights under this Agreement to secure obligations of such Holder,
including any such Grant to a Federal Reserve Bank, and this Section 6.03 shall
not apply to any such Grant of a security interest; provided that no such Grant
of a security interest shall release a Holder from any of its obligations
hereunder or substitute any such assignee for such Holder as a party hereto.

          (e) Notwithstanding anything in Section 6.03(b) to the contrary, any
Holder may delegate its obligations hereunder in respect of any Class A-1AR Note
held by such Holder to its Liquidity Providers; provided that (i) each such
Liquidity Provider which is a Committed Liquidity Provider complies with the
Class A-1AR Ratings Criteria and either executes and delivers a signature page
hereto or enters into an Assignment and Acceptance Agreement pursuant to which
it agrees to be a Committed Liquidity Provider hereunder, (ii) such delegation
shall be effected ratably according to the respective Class A-1AR Commitments
under the Liquidity Facility of the Liquidity Providers, (iii) notwithstanding
such delegation, such Holder may, in its sole discretion, continue to perform
the obligations so delegated (and the Liquidity Providers shall have no right to
perform such obligations in the event such Holder performs such obligations) and
(iv) subject to the immediately preceding clause (iii), the rights and
obligations of the parties hereto in respect of any Advances made by such Holder
hereunder shall not be affected by such delegation. Any such delegation shall
also be subject to the several agreement of the Liquidity Providers (for the
express benefit of such Holder, the Issuer, the Class A-1AR Note Agent, the
Collateral Manager and the Trustee) to be included in their respective
Assignment and Acceptance Agreements to perform all of the obligations of such
Holder hereunder delegated to the Liquidity Providers as provided in the
foregoing sentence, with each Liquidity Provider agreeing to perform only its
ratable share of such obligations as so provided. With respect to Advances made
by the Liquidity Providers in accordance with the delegation provided above, the
Liquidity Providers shall be subrogated, severally and ratably in accordance

                                      -21-

<PAGE>

with their respective Class A-1AR Commitments under the Liquidity Facility, to
the rights of the relevant Holder against the Issuer in respect of the related
Class A-1AR Note and under the Indenture.

          (f) Notwithstanding anything in Section 2.01 or Section 6.03(b) to the
contrary, if any Holder party hereto elects to be subject to this Section
6.03(f), then such Holder (unless it is maintaining a Class A-1AR Holder
Collateral Account as provided in Section 3.02(d)) shall not be obligated to
make Advances hereunder except as provided in Section 2.01(b)(i); provided that
such Holder shall have in effect at all times (unless it is maintaining a Class
A-1AR Holder Collateral Account as provided in Section 3.02(d) for the full
amount of its unfunded Class A-1AR Commitment) a Liquidity Facility with one or
more Liquidity Providers pursuant to which such Liquidity Providers are
obligated (ratably according to their respective Class A-1AR Commitments under
the Liquidity Facility), to make loans to, or acquire interests in assets of,
such Holder in an aggregate principal amount up to the aggregate stated
principal amount at such time Outstanding of Class A-1AR Notes held by such
Holder (such a Liquidity Provider, a "Committed Liquidity Provider") and each
such Committed Liquidity Provider complies with the Class A-1AR Ratings Criteria
and has agreed (for the express benefit of such Holder, the Issuer, the Class
A-1AR Note Agent, the Collateral Manager and the Trustee) to be a Committed
Liquidity Provider and to be liable hereunder by either executing and delivering
a signature page hereto or by entering into an Assignment and Acceptance
Agreement. Notwithstanding the foregoing, such Holder may, in its sole
discretion, elect, from time to time, to fund any Advance requested by the
Issuer in respect of any Class A-1AR Note held by such Holder. With respect to
Advances made by the Liquidity Providers under the Liquidity Facility as
contemplated by this Section 6.03(f) at the request of the Issuer on behalf of
such Holder, the Liquidity Providers for such Holder shall be subrogated,
severally and ratably in accordance with their respective Class A-1AR
Commitments under the Liquidity Facility, to the rights of such Holder against
the Issuer in respect of the related Class A-1AR Notes and under the Indenture.
Any such Holder that elects to enter into a Liquidity Facility as contemplated
by and to be subject to this Section 6.03(f) shall indicate such Holder's
election by providing an original executed signature page to this Agreement (in
the case of a Committed Liquidity Provider that becomes a party hereto on the
Closing Date) or an original executed copy of each Assignment and Acceptance
Agreement, in each case, executed by its Committed Liquidity Providers to the
Issuer and the Trustee with a copy thereof to the Class A-1AR Note Agent and the
Collateral Manager (an "Election Notice").

          (g) Without limiting the effect of Section 6.03(f), for so long as a
Holder is a CP Conduit, and notwithstanding any provisions contained herein or
in the Indenture, such Holder shall not, and shall not be obligated to, make any
payments hereunder or under the Indenture (except with respect to funding Class
A-1AR Draws in full as, when and to the extent required under this Agreement
which shall not be conditioned upon this Section 6.03(g), but which shall remain
subject to any conditions precedent specified herein), unless such Holder has
received funds which may be used to make such payment and which funds are not
required to repay its commercial paper notes when due and, after giving effect
to such payment, either (i) the Holder could issue commercial paper notes to
refinance all of such Holder's outstanding commercial paper notes (assuming such
outstanding commercial paper notes matured at such time) in accordance with the
governing documents governing such Holder's commercial paper program or (ii) all
of such Holder's commercial paper notes are paid in full. Any amount which

                                      -22-

<PAGE>

the Holder does not fund pursuant to the operation of this paragraph shall not
constitute a claim (as defined in Section 101 of the Bankruptcy Code) against or
obligation of such Holder for any such insufficiency.

          Section 6.04 Survival.

          All covenants, agreements, representations and warranties made by the
Co-Issuers herein and in the certificates or other instruments delivered in
connection with or pursuant to this Agreement shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of this Agreement and the making of any Advances, regardless of any
investigation made by any such other party or on its behalf and notwithstanding
that the Trustee, the Collateral Manager, the Class A-1AR Note Agent or any
Holder may have had notice or knowledge of any incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as any Class A-1AR Note or any amount payable
under this Agreement or the Indenture in respect of any Class A-1AR Note is
outstanding and unpaid and so long as the Class A-1AR Commitments have not
expired or terminated.

          Section 6.05 Counterparts; Integration; Effectiveness.

          This Agreement may be executed in any number of counterparts (and by
different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a
single contract. This Agreement, any Liquidity Facility and the Indenture
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
4.01, this Agreement shall become effective when it shall have been executed by
the Co-Issuers, the Initial Holders party hereto and the Class A-1AR Note Agent
and when the Co-Issuers shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by facsimile or by electronic messaging
shall be effective as delivery of a manually executed counterpart of this
Agreement.

          Section 6.06 Severability.

          Any provision of this Agreement held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality and enforceability of the remaining provisions
hereof; and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.

          Section 6.07 Governing Law; Jurisdiction; Consent to Service of
Process; Waiver of Jury Trial Right.

          (a) THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH, AND THIS
AGREEMENT AND ALL MATTERS ARISING OUT OF OR RELATING IN ANY WAY WHATSOEVER TO
THIS AGREEMENT (WHETHER IN CONTRACT,

                                      -23-

<PAGE>

TORT OR OTHERWISE) SHALL BE GOVERNED BY, THE LAW OF THE STATE OF NEW YORK.

          (b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State court or, to the extent permitted by 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 law.
Subject to Section 6.12, nothing in this Agreement shall affect any right that
the Class A-1AR Note Agent or any Holder may otherwise have to bring any action
or proceeding relating to this Agreement against the Issuer or their properties
in the courts of any jurisdiction.

          (c) Each of the parties hereto hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement in any court
referred to in the first sentence of Section 6.07(b). Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.

          (d) Except as otherwise expressly provided in this Section 6.07(d),
each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 6.01. Nothing in this Agreement shall
affect the right of any party to this Agreement to serve process in any other
manner permitted by law. The Co-Issuers hereby irrevocably appoint and designate
CT Corporation System, 111 Eighth Avenue, 13th Floor, New York, New York 10011,
or any other Person having and maintaining a place of business in the State of
New York whom the Co-Issuers may from time to time hereafter designate as the
true and lawful attorney and duly authorized agent for acceptance of service of
legal process of the Co-Issuers. The Co-Issuers agree 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 law.

          (e) EACH PARTY TO THIS AGREEMENT HEREBY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN
RESPECT OF ANY PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.

          Section 6.08 Benefits of Indenture and this Agreement.

          The Co-Issuers hereby acknowledge and confirm that each
representation, warranty, covenant and agreement made pursuant to the Indenture
by it also is made herein to the

                                      -24-

<PAGE>

Trustee, all for the benefit and security of the Securityholders (including the
Holders of the Class A-1AR Notes) as provided in the Indenture.

          Nothing in this Agreement, express or implied, shall be construed to
confer upon any Person (other than the parties hereto, their respective
successors and assigns and the Holders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

          Section 6.09 Headings.

          Article and Section headings and the Table of Contents used herein are
for convenience of reference only, are not part of this Agreement and shall not
affect the construction of, or be taken into consideration in interpreting, this
Agreement.

          Section 6.10 No Proceedings.

          Each of the parties hereto hereby agrees (which agreement shall,
pursuant to the terms of this Agreement, be binding upon their respective
successors and assigns) that they shall not institute against, or join any other
Person in instituting against, any Holder which is a CP Conduit any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
proceeding under any federal or state bankruptcy or similar law, for one year
and a day (or, if longer, the applicable preference period then in effect) after
the latest maturing commercial paper note or other debt obligation issued by
such Holder is paid in full; provided that the foregoing shall not limit the
rights of the Issuer to take any such action with respect to any Liquidity
Provider to which the obligations of such Holder have been delegated in
accordance with Sections 6.03(e) and 6.03(f). The provisions of this Section
6.10 shall survive the termination of this Agreement.

          Section 6.11 Recourse Against Certain Parties.

          No recourse under or with respect to any obligation, covenant or
agreement of any Holder shall be had against any incorporator, stockholder,
affiliate, officer, member, manager, partner, employee or director of such
Holder, as such, by the enforcement of any assessment, by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that the agreements of such Holder contained in this Agreement and
all of the other agreements, instruments and documents entered into by it
pursuant hereto or in connection herewith are, in each case, solely the
corporate or limited liability company, as applicable, obligations of such
Holder, and that no personal liability whatsoever shall attach to or be incurred
by any incorporator, stockholder, affiliate, officer, member, agent,
administrative agent, manager, partner, employee or director of such Holder, as
such, or any of them, under or by reason of any of the obligations, covenants or
agreements of such Holder contained in this Agreement or in any other such
instrument, document or agreement, or which are implied therefrom, and that any
and all personal liability of every such incorporator, stockholder, affiliate,
officer, employee, member, agent, administrative agent, manager, partner or
director of such Holder for breaches by such Holder 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

                                      -25-

<PAGE>

this Agreement. The provisions of this Section 6.11 shall survive the
termination of this Agreement.

          Section 6.12 Non-Petition; Non-Recourse Obligations.

          Each Holder, Committed Liquidity Provider and the Class A-1AR Note
Agent agrees that it shall not file, cause the filing of or join any Person in a
petition in bankruptcy against the Issuer in any jurisdiction for any amounts
due hereunder until at least one year and one day, or if longer the applicable
preference period then in effect, after the payment in full of all the Notes
issued under the Indenture. The Class A-1AR Notes and all obligations of the
Issuer under this Agreement are non-recourse obligations of the Issuer. The
Class A-1AR Notes and all of the other obligations of the Issuer under this
Agreement are payable solely from the Collateral Granted by the Issuer to secure
the Notes subject to the availability of funds for such purpose in accordance
with the Priority of Payments established under the Indenture and, following
realization of the Collateral and application of the proceeds thereof in
accordance with the Indenture, any claims against the Issuer and the obligations
of the Issuer hereunder and under the Class A-1AR Notes shall be extinguished
and shall not thereafter revive. None of the security holders, stockholders,
beneficial owners, members, managers, officers, directors, employees, partners
or incorporators of the Issuer, the Collateral Manager, the Placement Agent, the
Trustee, any of their respective affiliates and any other person or entity shall
be obligated to make payments on the Notes. Consequently, the Holders of the
Notes, the Class A-1AR Note Agent and any other party to this Agreement must
rely solely on amounts received in respect of the Collateral Granted to secure
the Notes for the payment of principal thereof and interest, the Class A-1AR
Commitment Fee and all other amounts owing thereon or hereunder. The Holders and
the Class A-1AR Note Agent hereby acknowledge and agree that the Issuer's
obligations hereunder will be solely the corporate obligations of the Issuer,
and neither a Holder nor the Class A-1AR Note Agent will have recourse to any of
the directors, officers, employees, shareholders or affiliates of the Issuer
with respect to any claims, losses, damages, liabilities, indemnities or other
obligations in connection with any transaction contemplated hereby. The
provisions of this Section 6.12 shall survive the termination of this Agreement.

          Section 6.13 Term, Termination.

          This Agreement shall commence as of the date first set forth above and
shall continue in force until the earliest of (i) the Commitment Termination
Time or (ii) the termination of the Indenture in accordance with its terms.

          Section 6.14 Disclosure.

          (a) Each of the Class A-1AR Note Agent and each Holder shall maintain
and shall cause each of its employees and officers to maintain the
confidentiality of this Agreement and all information with respect to the other
parties, including all information regarding the business of the Issuer and the
Co-Issuer and their respective businesses obtained by it or them in connection
with the structuring, negotiating and execution of the transactions contemplated
herein, except that each such party and its directors, officers and employees
may (i) disclose such information to its external accountants, attorneys,
investors, potential investors, credit enhancers and the agents or advisors of
such Persons ("Excepted Persons"); provided, however, that each

                                      -26-

<PAGE>

Excepted Person shall, as a condition to any such disclosure, agree for the
benefit of the Class A-1AR Note Agent and each Holder that such information
shall be used solely in connection with such Excepted Person's evaluation of, or
relationship with, the Issuer and the Co-Issuer and its affiliates, (ii)
disclose the existence of this Agreement, but not the financial terms thereof,
(iii) disclose such information as is required by Applicable Law and (iv)
disclose this Agreement and such information in any suit, action, proceeding or
investigation (whether in law or in equity or pursuant to arbitration) involving
any of the Transaction Documents for the purpose of defending itself, reducing
its liability, or protecting or exercising any of its claims, rights, remedies,
or interests under or in connection with any of the Transaction Documents. It is
understood that the financial terms that may not be disclosed except in
compliance with this Section 6.14(a) including, without limitation, all fees and
other pricing terms, and all Events of Default and priority of payment
provisions.

          (b) Anything herein to the contrary notwithstanding, the Issuer and
the Co-Issuer hereby consent to the disclosure of any nonpublic information with
respect to it (i) to the Class A-1AR Note Agent and each Holder, (ii) by the
Holder to any prospective or actual assignee or participant of any of them or
(iii) by the Liquidity Provider or the Holder to any Rating Agency, commercial
paper dealer or provider of a surety, guaranty or credit or liquidity
enhancement to a Holder and to any officers, directors, employees, outside
accountants, advisors, and attorneys of any of the foregoing, provided each such
Person is informed of the confidential nature of such information. In addition,
the Class A-1AR Note Agent and each Holder may disclose any such nonpublic
information as required pursuant to any law, rule, regulation, direction,
request or order of any judicial, administrative or regulatory authority or
proceedings (whether or not having the force or effect of law).

          (c) Notwithstanding anything herein to the contrary, the foregoing
shall not be construed to prohibit (i) disclosure of any and all information
that is or becomes publicly known, (ii) disclosure of any and all information
(A) if required to do so by any applicable statute, law, rule or regulation, (B)
to any government agency or regulatory body having or claiming authority to
regulate or oversee any respects of the Issuer's or the Co-Issuer's business or
that of their respective affiliates, (C) pursuant to any subpoena, civil
investigative demand or similar demand or request of any court, regulatory
authority, arbitrator or arbitration to which the Issuer, the Co-Issuer, the
Collateral Manager or an affiliate or an officer, director, employer or
shareholder thereof is a party, (D) in any preliminary or final offering
circular, registration statement or contract or other document pertaining to the
transactions contemplated herein approved in advance by the Issuer or (E) to any
affiliate, independent or internal auditor, agent, employee or attorney of the
Issuer having a need to know the same, provided that the Issuer advises such
recipient of the confidential nature of the information being disclosed, or
(iii) any other disclosure authorized by the Issuer.

          (d) Each of the parties hereby covenants and agrees that so long as
any Holder that is a CP Conduit is a registered owner of Class A-1AR Notes:

          (i) except with respect to the Class A-1AR Holder Collateral Account
     and any relevant Holder Subaccount, it waives any right to set-off and to
     appropriate and apply any and all deposits and any other indebtedness at
     any time held or owing thereby

                                      -27-

<PAGE>

     to or for the credit or the account of such Holder against and on account
     of the obligations and liabilities of such Holder to such party under this
     Agreement; and

          (ii) notwithstanding anything to the contrary herein no provision of
     this Agreement adversely affecting the rights or duties of such Holder or a
     related Liquidity Provider for such Holder may be amended or waived without
     the written consent of such Holder.

                                      -28-

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective Authorized Officers as of the day and year
first above written.

                                        ARBOR REALTY MORTGAGE SECURITIES SERIES
                                           2006-1, LTD., as the Issuer

                                        By:  /s/  George Danforth
                                            ------------------------------------
                                        Name:  George Danforth
                                              ----------------------------------
                                        Title:  Director
                                               ---------------------------------

<PAGE>

                                        ARBOR REALTY MORTGAGE SECURITIES SERIES
                                           2006-1 LLC, as the Co-Issuer

                                        By:  /s/  Guy R. Milone, Jr.
                                            ------------------------------------
                                        Name:  Guy R. Milone, Jr.
                                              ----------------------------------
                                        Title:  Authorized Signatory
                                               ---------------------------------

<PAGE>

                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                           as Class A-1AR Note Agent

                                        By:  /s/  Thomas J. Varcados
                                            ------------------------------------
                                        Name:  Thomas J. Varcados
                                              ----------------------------------
                                        Title:  Vice President
                                               ---------------------------------

<PAGE>

                                        BNP PARIBAS LONDON BRANCH,
                                           as a Class A-1AR Note Holder

                                        By:  /s/ Brett Dean, Christoph Opfermann
                                            ------------------------------------
                                        Name:  Brett Dean, Christoph Opfermann
                                              ----------------------------------
                                        Title:  Authorized Signatory,
                                                Authorized Signatory
                                               ---------------------------------

<PAGE>

                                   SCHEDULE I

                                 INITIAL HOLDERS

<TABLE>
<CAPTION>
NAME OF HOLDER/CP CONDUIT   INITIAL CLASS A-1AR COMMITMENT         ADDRESS FOR NOTICES
-------------------------   ------------------------------   -------------------------------
<S>                         <C>                              <C>
BNP Paribus London Branch          U.S.$100,000,000          BNP Paribas Brokerage Services
                                                             Attn: Jay Brown or Thomas Bland
                                                             610-491-1741
                                                             555 Croton Road
                                                             King of Prussia, PA 19406
</TABLE>

The Initial Holder shall not make a Qualified Securitization Pledge

Payment Instructions:

JPMorgan Chase Bank New York (chasus33 swift)
A/C BNP Paribas London (bnpag22 swift)
A/C: 544714183
Tax ID#: 94-1677765

                             CLASS A-1AR NOTE AGENT

Address for Notices

Wells Fargo Bank, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: CDO Trust Services Group -
           Arbor Realty Mortgage Securities Series 2006-1
Facsimile No.: (410) 715-3748

                                  Schedule I-1
<PAGE>

                                   SCHEDULE II

          Pursuant to Section 3.02 of the Class A-1AR Note Purchase Agreement to
which this Schedule II is attached, each Holder (including each Assignee
thereof) and each Committed Liquidity Provider, if any (as if it were deemed to
be a Holder hereunder) hereby makes the acknowledgments, covenants,
representations and agreements set forth below solely with respect to itself:

          (i) The Holder is one of the following:

          (1) (A) a Qualified Purchaser; (B) a QIB; (C) is aware that the sale
of the Definitive Class A-1AR Notes to it is being made in reliance on the
exemption from registration provided by Rule 144A; (D) is acquiring the
Definitive Class A-1AR Notes for its own account or for one or more accounts,
each of which is a QIB who is a Qualified Purchaser, and as to each of which the
Holder exercises sole investment discretion and (E) is acquiring the Definitive
Class A-1AR Notes in a minimum principal amount of not less than U.S.$500,000
for each such account; or

          (2) (A) is not a U.S. Person; (B) is aware that the sale of the
Definitive Class A-1AR Notes to it is being made in reliance on the exemption
from registration provided by Regulation S and (C) understands that the
Definitive Class A-1AR Notes offered in reliance on Regulation S under the
Securities Act will bear the additional legend in substantially the following
form:

THIS NOTE MAY NOT BE HELD BY A PERSON THAT IS A U.S. PERSON (AS DEFINED IN
REGULATION S UNDER THE SECURITIES ACT) AT ANYTIME.

and in each case the owner has such knowledge and experience in financial and
business matters to be capable of evaluating the merits and risks of its
investment in the Definitive Class A-1AR Notes and the owner and any accounts
for which it is acting are each able to bear the economic risk of the
investment; and

          (ii) Before any interest in a Definitive Class A-1AR Note may be
offered, resold, pledged or otherwise transferred, the transferee and transferor
shall be required to provide the Trustee, with a written certification
substantially in the form of Exhibits D-1 and D-2 to the Indenture as to
compliance with the transfer restrictions and the Holder must inform a
prospective transferee of the transfer restrictions.

          (iii) The Holder understands that the Class A-1AR Notes are being
offered only in a transaction not involving any public offering in the United
States within the meaning of the Securities Act, the Class A-1AR Notes have not
been and will not be registered under the Securities Act, and, if in the future
the Holder decides to offer, resell, pledge or otherwise transfer the Class
A-1AR Notes, such Class A-1AR Notes may only be offered, resold, pledged or
otherwise transferred only in accordance with the Indenture and the applicable
legend on such Class A-1AR Notes set forth below. The Holder acknowledges that
no representation is made by the Issuer, the Co-Issuer, the Dealers or the
Placement Agent, as the case may be, as to the

                                   Schedule II-1

<PAGE>

availability of any exemption under the Securities Act or any State securities
laws for resale of the Class A-1AR Notes.

          (iv) The Holder understands that the Class A-1AR Notes have not been
approved or disapproved by the SEC or any other governmental authority or agency
or any jurisdiction and that neither the SEC nor any other governmental
authority or agency has passed upon the accuracy of the final offering
memorandum relating to the Class A-1AR Notes. The Holder further understands
that any representation to the contrary is a criminal offense.

          (v) The Holder is not purchasing the Class A-1AR Notes with a view to
the resale, distribution or other disposition thereof in violation of the
Securities Act. The Holder understands that an investment in the Class A-1AR
Notes involves certain risks, including the risk of loss of all or a substantial
part of its investment under certain circumstances. The Holder has had access to
such financial and other information concerning the Issuer, the Co-Issuer and
the Class A-1AR Notes as it deemed necessary or appropriate in order to make an
informed investment decision with respect to its purchase of the Class A-1AR
Notes, including, without limitation, an opportunity to ask questions of and
request information from the Collateral Manager, the Initial Purchaser, the
Issuer and the Co-Issuer, including without limitation, an opportunity to
request and review the Moody's Matrix, the S&P Matrix and the Fitch Matrix
incorporated by reference in the Offering Memorandum and access to such legal
and tax representation as the Holder deemed necessary or appropriate.

          (vi) In connection with the purchase of the Class A-1AR Notes (A) none
of the Issuer, the Co-Issuer, the Placement Agent, the Dealers, the Collateral
Manager or the Trustee is acting as a fiduciary or financial or investment
adviser for the Holder; (B) the Holder is not relying (for purposes of making
any investment decision or otherwise) upon any advice, counsel or
representations (whether written or oral) of the Issuer, the Co-Issuer, the
Dealers, the Placement Agent, the Collateral Manager or the Trustee other than
in a current offering memorandum for such Class A-1AR Notes and any
representations expressly set forth in a written agreement with such party; (C)
none of the Issuer, the Co-Issuer, the Dealers, the Placement Agent, the
Collateral Manager or the Trustee has given to the Holder (directly or
indirectly through any other person) any assurance, guarantee, or representation
whatsoever as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (including legal,
regulatory, tax, financial, accounting, or otherwise) of its purchase; (D) the
Holder has consulted with its own legal, regulatory, tax, business, investment,
financial, accounting and other advisers to the extent it has deemed necessary,
and it has made its own investment decisions (including decisions regarding the
suitability of any transaction pursuant to the Indenture) based upon its own
judgment and upon any advice from such advisers as it has deemed necessary and
not upon any view expressed by the Issuer, the Co-Issuer, the Dealers, the
Placement Agent, the Collateral Manager or the Trustee; (E) the Holder is
purchasing the Class A-1AR Notes with a full understanding of all of the terms,
conditions and risks thereof (economic and otherwise), and is capable of
assuming and willing to assume (financially and otherwise) these risks; (F) the
Holder is a sophisticated investor familiar with transactions similar to its
investment in the Class A-1AR Notes; and (G) the purchase of such Class A-1AR
Notes by the Holder is within its powers and authority, is permissible under
applicable laws governing such purchase, has been duly authorized by it and
otherwise complies with applicable laws.

                                 Schedule II-2

<PAGE>

          (vii) The Holder understands that the Class A-1AR Notes will bear the
applicable legend set forth below. The Holder will provide notice to each Person
to whom it proposes to transfer any interest in the Class A-1AR Notes of the
transfer restrictions set forth in Section 2.5 of the Indenture, including the
Exhibits referenced in Section 2.5 of the Indenture.

          (viii) The Class A-1AR Notes will bear a legend to the following
effect unless the Issuer and the Co-Issuer determine otherwise in compliance
with applicable law:

THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES, AND NEITHER THE ISSUER NOR THE CO-ISSUER
HAS BEEN REGISTERED UNDER THE UNITED STATES INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "INVESTMENT COMPANY ACT"). THIS NOTE MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED, EXCEPT (A)(1) TO A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A UNDER THE SECURITIES ACT (A "QIB") WHO IS
A QUALIFIED PURCHASER AS DEFINED IN SECTION 2(A)(51) OF THE INVESTMENT COMPANY
ACT (A "QUALIFIED PURCHASER") AND IS EITHER PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER WHO IS A QUALIFIED PURCHASER,
IN A PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$500,000 (AND INTEGRAL MULTIPLES OF
U.S.$500 IN EXCESS THEREOF) FOR THE PURCHASER AND FOR EACH SUCH ACCOUNT, IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT SO
LONG AS THIS NOTE IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUBJECT TO THE SATISFACTION OF CERTAIN CONDITIONS SPECIFIED IN
THE INDENTURE, OR (2) TO A NON U.S. PERSON IN AN OFFSHORE TRANSACTION IN
ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE
SECURITIES ACT IN A PRINCIPAL AMOUNT OF NOT LESS THAN U.S.$500,000 (AND INTEGRAL
MULTIPLES OF U.S.$500 IN EXCESS THEREOF), SUBJECT TO THE SATISFACTION OF CERTAIN
CONDITIONS SPECIFIED IN THE INDENTURE, AND (B) IN ACCORDANCE WITH ALL APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND ANY OTHER APPLICABLE
JURISDICTION. EACH PURCHASER OF A NOTE WILL BE REQUIRED TO MAKE THE
REPRESENTATIONS AND AGREEMENTS SET FORTH IN SECTION 2.5 OF THE INDENTURE. ANY
TRANSFER IN VIOLATION OF THE FOREGOING WILL BE OF NO FORCE AND EFFECT, WILL BE
VOID AB INITIO, AND WILL NOT OPERATE TO TRANSFER ANY RIGHTS TO THE TRANSFEREE,
NOTWITHSTANDING ANY INSTRUCTIONS TO THE CONTRARY TO THE ISSUER, THE CO-ISSUER,
AS APPLICABLE, THE TRUSTEE OR ANY INTERMEDIARY. IF AT ANY TIME, THE ISSUER AND
THE CO-ISSUER, AS APPLICABLE, DETERMINE OR ARE NOTIFIED THAT THE HOLDER OF SUCH
BENEFICIAL INTEREST IN SUCH NOTE WAS IN BREACH, AT THE TIME GIVEN, OF ANY OF THE
REPRESENTATIONS SET FORTH IN THE INDENTURE, THE TRUSTEE MAY CONSIDER THE
ACQUISITION OF THIS NOTE VOID AND REQUIRE THAT THIS NOTE BE TRANSFERRED TO A
PERSON DESIGNATED BY THE ISSUER AND THE CO-ISSUER, AS APPLICABLE.

                                 Schedule II-3

<PAGE>

          (ix) Unless a prospective Holder of a Class A-1AR Note has provided
another representation acceptable to the Trustee, the Collateral Manager, the
Issuer and the Co-Issuer, the Holder represents that either (a) it is not and is
not investing on behalf of an "employee benefit plan" (as defined in Section
3(3) of ERISA) or "plan" (as defined in Section 4975(e)(1) of the Code) that is
subject to Title I of ERISA or Section 4975 of the Code, or any other employee
benefit plan or plan which is subject to any federal, state or local law
("Similar Law") that is substantially similar to Section 406 of ERISA or Section
4975 of the Code (each a "Benefit Plan"), or an entity whose underlying assets
include plan assets of any such Benefit Plan or (B) its purchase and holding of
the Class A-1AR Notes will not constitute or result in a non-exempt prohibited
transaction under Section 406 of ERISA or Section 4975 of the Code, or, in the
case of a Benefit Plan subject to Similar Law, do not result in a non-exempt
violation of Similar Law.

          (x) The Holder will not, at any time, offer to buy or offer to sell
the Class A-1AR Notes by any form of general solicitation or advertising,
including, but not limited to, any advertisement, article, notice or other
communication published in any newspaper, magazine or similar medium or
broadcast over television or radio or at a seminar or meeting whose attendees
have been invited by general solicitations or advertising.

          (xi) The Holder is not a member of the public in the Cayman Islands,
within the meaning of Section 194 of the Cayman Islands Companies Law (2004
Revision).

          (xii) The Holder understands that the Issuer, the Co-Issuer, the
Trustee or the Paying Agent shall require certification acceptable to it (A) as
a condition to the payment of principal of and interest on (and commitment fees
in respect of) any Notes without, or at a reduced rate of, U.S. withholding or
backup withholding tax, and (B) to enable the Issuer, the Co-Issuer, the Trustee
and the Paying Agent to determine their duties and liabilities with respect to
any taxes or other charges that they may be required to pay, deduct or withhold
from payments in respect of such Notes or the Holder of such Class A-1AR Notes
under any present or future law or regulation of the Cayman Islands or the
United States or any present or future law or regulation of any political
subdivision thereof or taxing authority therein or to comply with any reporting
or other requirements under any such law or regulation. Such certification may
include U.S. federal income tax forms (such as IRS Form W-8BEN (Certification of
Foreign Status of Beneficial Owner), IRS Form W-8IMY (Certification of Foreign
Intermediary Status), IRS Form W-9 (Request for Taxpayer Identification Number
and Certification), or IRS Form W-8ECI (Certification of Foreign Person's Claim
for Exemption from Withholding on Income Effectively Connected with Conduct of a
U.S. Trade or Business) or any successors to such IRS forms). In addition, the
Issuer, the Co-Issuer, the Trustee or the Paying Agent may require certification
acceptable to it to enable the Issuer to qualify for a reduced rate of
withholding in any jurisdiction from or through which the Issuer receives
payments on its assets. Each Holder agrees to provide any certification
requested pursuant to this paragraph and to update or replace such form or
certification in accordance with its terms or its subsequent amendments.

          (xiii) The Holder acknowledges that it is its intent and that it
understands it is the intent of the Issuer that, for purposes of U.S. federal
income, state and local income and franchise tax and any other income taxes, for
so long as ARMS Equity or a direct or indirect wholly owned subsidiary of Arbor
Parent owns 100% of the Preferred Shares, the Issuer will be

                                 Schedule II-4

<PAGE>

treated as a Qualified REIT Subsidiary and the Notes will be treated as
indebtedness solely of the Arbor Parent and the Preferred Shares will be treated
as equity of the Arbor Parent; the Holder agrees to such treatment and agrees to
take no action inconsistent with such treatment.

          (xiv) The Holder, if not a "United States person" (as defined in
Section 7701(a)(30) of the Code), either: (A) is not a bank (within the meaning
of Section 881(c)(3)(A) of the Code) (and see (C) below); (B) is a bank that has
provided an IRS Form W-8ECI representing that all payments received or to be
received by it from the Issuer are effectively connected with the conduct of a
trade or business in the United States; or (C) is a bank and is, or is not a
bank (within the meaning of Section 881(c)(3)(A) of the Code) but with respect
to commitment fees is, eligible for benefits under an income tax treaty with the
United States that eliminates U.S. federal income taxation of U.S. source
interest and commitment fees not attributable to a permanent establishment in
the United States and the Issuer is treated as a fiscally transparent entity (as
defined in Treasury Regulations section 1.894-1(d)(3)(iii)) under the laws of
Holder's jurisdiction with respect to payments made on the Collateral Debt
Securities held by the Issuer.

          (xv) The Holder will, prior to any sale, pledge or other transfer by
such Holder of any Class A-1AR Note (or interest therein), obtain from the
prospective transferee, and deliver to the Trustee, a duly executed transferee
certificate addressed to each of the Trustee, the Issuer and the Collateral
Manager in the form of the relevant exhibit attached to the Indenture, and such
other certificates and other information as the Issuer, the Collateral Manager
or the Trustee may reasonably require to confirm that the proposed transfer
complies with the transfer restrictions contained in the Indenture.

          (xvi) The Holder agrees that no Class A-1AR Note may be purchased,
sold, pledged or otherwise transferred in an amount less than the minimum
denomination set forth in the Indenture. In addition, the Holder understands
that the Class A-1AR Notes will be transferable only upon registration of the
transferee in the Note Register of the Issuer following delivery to the Note
Registrar of a duly executed transfer certificate and the Definitive Class A-1AR
Note to be transferred, and any other certificates and other information
required by the Indenture.

          (xvii) The Holder is aware and agrees that no Class A-1AR Note may be
offered or sold, pledged or otherwise transferred except (i)(A) to a transferee
that the Holder reasonably believes is a QIB, purchasing for its account, to
which notice is given that the resale, pledge or other transfer is being made in
reliance on the exemption from the registration requirements of the Securities
Act provided by Rule 144A or another person the sale to which is exempt under
the Securities Act, (B) to a transferee that is a Qualified Purchaser, and (C)
if such transfer is made in accordance with any applicable securities laws of
any state of the United States and any other relevant jurisdiction, (ii)(A) to a
transferee that is acquiring such interest in an offshore transaction in
accordance with Rule 904 of Regulation S, (B) to a transferee that is not a U.S.
resident (within the meaning of the Investment Company Act) unless such
transferee is a Qualified Purchaser, (C) such transfer is made in compliance
with the other requirements set forth in the Indenture and (D) if such transfer
is made in accordance with any applicable securities laws of any state of the
United States and any other jurisdiction or (iii) if such transfer

                                 Schedule II-5

<PAGE>

would have the effect of requiring the Issuer or the Collateral to register as
an "investment company" under the Investment Company Act.

          (xviii)The Holder understands that there is no market for the Class
A-1AR Notes and that no assurances can be given as to the liquidity of any
trading market for the Class A-1AR Notes and that it is unlikely that a trading
market for the Class A-1AR Notes will develop. The Holder further understands
that, although the Dealers may from time to time make a market in the Class
A-1AR Notes, the Dealers are not under any obligation to do so and, following
the commencement of any market-making, may discontinue the same at any time.
Accordingly, the Holder must be prepared to hold the Class A-1AR Notes until the
Stated Maturity.

          (ix) The Holder agrees that (i) any sale, pledge or other transfer of
a Class A-1AR Note made in violation of the transfer restrictions contained in
the Indenture, or made based upon any false or inaccurate representation made by
the Holder or a transferee to the Issuer, the Trustee or the Note Registrar,
will be void and of no force or effect and (ii) none of the Issuer, the Trustee
and the Note Registrar has any obligation to recognize any sale, pledge or other
transfer of a Class A-1AR Note made in violation of any such transfer
restriction or made based upon any such false or inaccurate representation.

          (xx) The Holder approves and consents to any direct trades between the
Issuer and the Collateral Manager and/or its affiliates that is permitted under
the terms of the Indenture and the Collateral Management Agreement.

          (xxi) The Holder acknowledges that the Issuer, the Trustee, the Note
Registrar, the Collateral Manager, the Dealers and others will rely upon the
truth and accuracy of the foregoing acknowledgments, representations and
agreements and agrees that, if any of the acknowledgments, representations or
warranties made or deemed to have been made by it in connection with its
purchase of the Class A-1AR Notes are no longer accurate, the Holder will
promptly notify the Issuer, the Trustee, Note Registrar, the Collateral Manager
and the Dealers.

          (xxii) The Holder is a Qualified Purchaser for purposes of Section
3(c)(7) of the Investment Company Act and is not a Flow-Through Investment
Vehicle (other than a Qualifying Investment Vehicle). The Holder, to the extent
it is a private investment company formed before April 30, 1996, has received
the necessary consent from its beneficial owners and the Holder agrees that it
will not hold such Class A-1AR Notes for the benefit of any other person and
will be the sole beneficial owner thereof for all purposes and that it will not
sell participation interests in the Class A-1AR Notes or enter into any other
arrangement pursuant to which any other person will be entitled to a beneficial
interest in the distributions on the Class A-1AR Notes. The Holder understands
and agrees that any purported transfer of the Class A-1AR Notes to a Holder that
does not comply with the requirements of this paragraph will be null and void ab
initio.

          (xxiii) The Holder understands that the Indenture permits the Issuer
and the Co-Issuer to require any Holder a Class A-1AR Note who is determined not
to have been a Qualified Purchaser at the time of acquisition of such Class
A-1AR Note to sell such interest to a person

                                 Schedule II-6

<PAGE>

that is both a Qualified Institutional Buyer and Qualified Purchaser in a
transaction meeting the requirements of Rule 144A.

                                 Schedule II-7

<PAGE>

                                    EXHIBIT A

                            ASSIGNMENT AND ACCEPTANCE

          Reference is made to the Class A-1AR Note Purchase Agreement, dated as
of December 14, 2006 (as modified and supplemented and in effect from time to
time, the "Class A-1AR Note Purchase Agreement"), among ARBOR REALTY MORTGAGE
SECURITIES SERIES 2006-1, LTD., a Cayman Islands exempted company with limited
liability (the "Issuer"), ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1 LLC, a
Delaware limited liability company (the "Co-Issuer" and together with the
Issuer, the "Co-Issuers"), the Holders party thereto and WELLS FARGO BANK,
NATIONAL ASSOCIATION, as Class A-1AR Note Agent (the "Class A-1AR Note Agent"),
relating to the Class A-1AR Notes issued under the Indenture, dated as of
December 14, 2006 (as modified and supplemented and in effect from time to time,
the "Indenture"), entered into by the Co-Issuers, Arbor Realty SR, Inc., as
advancing agent and Wells Fargo Bank, National Association, as trustee ("Wells
Fargo"), as trustee (together with any successor permitted under the Indenture,
the "Trustee"), paying agent, calculation agent, transfer agent, custodial
securities intermediary, backup advancing agent and notes registrar. Terms used
but not defined herein have the respective meanings given to such terms in (or
incorporated by reference in) the Class A-1AR Note Purchase Agreement and in the
Indenture.

          The Assignor named on the signature pages hereof (the "Assignor")
hereby sells and assigns to the Assignee named on the signature pages hereof
(the "Assignee"), and the Assignee hereby purchases and assumes from the
Assignor, effective as of the Assignment Date set forth below, the interests set
forth below (the "Assigned Interest") in the Assignor's rights and obligations
under the Class A-1AR Note Purchase Agreement, including, without limitation,
the interests set forth below in the Class A-1AR Notes held by (and the related
Class A-1AR Commitment of and outstanding principal amount of Advances held by)
the Assignor on the Assignment Date. The Assignee hereby acknowledges receipt of
a copy of the Class A-1AR Note Purchase Agreement and the Indenture. From and
after the Assignment Date (A) the Assignee shall be a party to and be bound by
the provisions of the Class A-1AR Note Purchase Agreement and, to the extent of
the Assigned Interest, have the rights and obligations of a Holder thereunder
and (B) the Assignor shall, to the extent of the Assigned Interest, relinquish
its rights and be released from its obligations under the Class A-1AR Note
Purchase Agreement. The Assignor hereby represents and warrants to the Assignee
that, as of the Assignment Date, the Assignor (1) owns the Assigned Interest
free and clear of any lien or other encumbrance and (2) is not aware of any
Default or Event of Default under the Indenture. The Assignee hereby makes to
the Assignor, the Co-Issuers, the Collateral Manager, the Trustee and the Class
A-1AR Note Agent all of the representations and warranties set forth in Section
3.02 of the Class A-1AR Note Purchase Agreement (including those made by
reference to Schedule II thereof).

          Each of the parties hereby covenants and agrees that so long as [_] is
the registered owner of the Class A-1AR Notes:

          (1) except with respect to the Class A-1AR Holder Account, it waives
     any right to set-off and to appropriate and apply any and all deposits and
     any other

<PAGE>

     indebtedness at any time held or owing thereby to or for the credit or the
     account of [_] against and on account of the obligations and liabilities of
     [_] to such party under this Agreement; and

          (2) notwithstanding anything to the contrary herein no provision of
     this Agreement adversely affecting the rights or duties of [_] or a
     Liquidity Provider for [_] may be amended or waived without the written
     consent of [_].

          This Assignment and Acceptance shall be governed by and construed in
accordance with the law of the State of [_].

Legal Name of Assignor: _____________________
Legal Name of Assignee: _____________________
Assignee's Address for Notices: _____________________
Fax No.: _____________________
Details of electronic messaging system: _____________________
Payment Instructions: _____________________
Federal Taxpayer ID No. of Assignee: _____________________
Effective Date of Assignment ("Assignment Date"): _____________________

<TABLE>
<CAPTION>
                          AMOUNT ASSIGNED   AMOUNT RETAINED
                          ---------------   ---------------
<S>                       <C>               <C>
Class A-1AR Commitment:      U.S.$[_]          U.S.$[_]

Outstanding Principal

Amount of Advances:          U.S.$[_]          U.S.$[_]
</TABLE>

The Assignee [shall/shall not] make a Qualified Securitization Pledge

[[Name of Holder] elects to be subject to Section 6.03(f) of the Note Purchase
Agreement]

The terms set forth above are hereby agreed to:

[Name of Assignor], as Assignor

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

                                  Exhibit A-2

<PAGE>

[Name of Assignee], as Assignee

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

[_], as Committed Liquidity Provider with regard to

[_], as Class A-1AR Note Holder

By:
    ---------------------------------
Name:
      -------------------------------
Title:
       ------------------------------

                                  Exhibit A-3

<PAGE>

                                    EXHIBIT B

                        FORM OF CLASS A-1AR DRAW REQUEST
                                   (Advances)

                                     [Date]

Wells Fargo Bank, National Association
9062 Old Annapolis Road
Columbia, Maryland 21045
Attention: CDO Trust Services, Arbor Realty Mortgage Securities Series 2006-1

     Re: Class A-1AR Note Purchase Agreement dated as of December 14, 2006.

Ladies and Gentlemen:

          This Class A-1AR Draw Request is delivered to you pursuant to Sections
2.03 of that certain Class A-1AR Note Purchase Agreement, dated as of December
14, 2006 (as modified and supplemented and in effect from time to time, the
"Class A-1AR Note Purchase Agreement"), among ARBOR REALTY MORTGAGE SECURITIES
SERIES 2006-1, LTD., a Cayman Islands exempted company with limited liability
(the "Issuer"), ARBOR REALTY MORTGAGE SECURITIES SERIES 2006-1 LLC, a Delaware
limited liability company (the "Co-Issuer" and together with the Issuer, the
"Co-Issuers"), the Holders party thereto and WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Class A-1AR Note Agent (the "Class A-1AR Note Agent").
Capitalized terms used but not defined herein shall have the respective meanings
given to such terms in (or incorporated by reference in) the Class A-1AR Note
Purchase Agreement and the Indenture.

1.   The Issuer hereby requests a Class A-1AR Draw in the principal amount of
     $_____________.

2.   The Issuer hereby requests that the Advances be made on and as of
     _____________.

3.   The amount of the Class A-1AR Draw shall be wired to the following account:
     _____________.

4.   All of the conditions applicable to the Advance requested herein as set
     forth in the Class A-1AR Note Purchase Agreement have been satisfied as of
     the date hereof.

<PAGE>

          IN WITNESS WHEREOF, the undersigned have executed this Class A-1AR
Draw Request this ___ day of [_], 20[__].

                                        ARBOR REALTY MORTGAGE SECURITIES SERIES
                                           2006-1, LTD., as the Issuer

                                        By:
                                            ------------------------------------
                                        Name:
                                              ----------------------------------
                                        Title:
                                               ---------------------------------

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