EXHIBIT 10.7
PAIRING AGREEMENT
THIS PAIRING AGREEMENT (this "Agreement") is made and entered into as
of July 1, 2003, by and among Arbor Realty Trust, Inc., a Maryland corporation
(the "REIT"), Arbor Commercial Mortgage, LLC, a New York limited liability
company ("ACM"), Arbor Realty LPOP, Inc., a Delaware corporation ("LP"), Arbor
Realty GPOP, Inc., a Delaware corporation ("GP"), and Arbor Realty Limited
Partnership, a Delaware limited partnership (the "OP").
WHEREAS, concurrently with the execution of this Agreement, the REIT
will file Articles Supplementary (the "Articles Supplementary") to its charter
(as supplemented by the Articles Supplementary, the "REIT Charter") with the
State Department of Assessments and Taxation of Maryland whereby the REIT will
reclassify and designate 5,000,000 shares of its Preferred Stock as shares of
Special Voting Preferred Stock, par value $0.01 per share (the "Special Voting
Stock");
WHEREAS, concurrently with the execution of this Agreement, ACM and the
OP are entering into a Contribution Agreement pursuant to which ACM will
transfer certain assets and related liabilities to the OP and, in exchange
therefor, the OP will issue to ACM (i) 3,146,724 operating partnership units of
the OP (the "Initial OP Units") and (ii) 629,345 warrants (the "ACM Warrants"),
which entitle the holders to purchase additional operating partnership units of
the OP (the "Warrant OP Units" and, together with the Initial OP Units, the
"Paired Common Units");
WHEREAS, concurrently with the issuance of the Initial OP Units, the
REIT will issue to ACM 3,146,724 shares of Special Voting Stock and, upon the
exercise of each ACM Warrant, the REIT will issue to the holder thereof a number
of shares of Special Voting Stock equal to the number of Warrant OP Units issued
by the OP in connection with the exercise of such ACM Warrant;
WHEREAS, the REIT Charter provides that the REIT shall not issue or
agree to issue any shares of Special Voting Stock unless effective provision has
been made for the simultaneous issuance by the OP of the same number of
operating partnership units of the OP, and for the pairing of such shares of
Special Voting Stock and operating partnership units;
WHEREAS, the OP and the REIT wish to enter into this Agreement for the
purpose of further effectuating the pairing of shares of Special Voting Stock
and the
Paired Common Units (the "Pairing"), including the establishment of the
terms and conditions which will govern the issuance and the transfer of the
shares of Special Voting Stock and the Paired Common Units.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual agreements contained herein, the parties hereto agree as follows:
1. Transfer of Shares. Commencing on the date hereof and continuing until
such time as this Agreement shall have been terminated in the manner
provided herein:
a. No share of Special Voting Stock shall be transferable, and no
such share shall be transferred on the stock transfer books of
the REIT, unless a simultaneous transfer is made by the same
transferor to the same transferee of the same number of Paired
Common Units.
b. No Paired Common Unit shall be transferable, and no Paired
Common Unit shall be transferred on the books of the OP,
unless a simultaneous transfer is made by the same transferor
to the same transferee of the same number of shares of Special
Voting Stock.
c. Notwithstanding anything to the contrary contained herein,
upon any acquisition by the OP, the LP, the GP or the REIT of
any Paired Common Units and any shares of Special Voting Stock
(whether pursuant to Section 8.6 of the OP Agreement or
otherwise), all restrictions on transfer set forth in this
Agreement with respect to such Paired Common Units so acquired
shall terminate, and any Paired Common Units acquired by the
OP, the LP, the GP or the REIT may be transferred without
regard to the restrictions set forth in this Agreement. The
shares of Special Voting Stock shall be redeemed and cancelled
in accordance with the terms of the Articles Supplementary.
d. In the event that any shares of Special Voting Stock are
transferred to a trust pursuant to the provisions of Section
7.2(b) of the REIT Charter, all of the Paired Common Units
paired with such shares shall be
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automatically transferred to such trust concurrently therewith
and shall be subject to all the provisions of Section 7.3 of
the REIT Charter to the same extent that the attached shares
of Special Voting Stock are so subject.
2. Issuance of Securities. Commencing on the date hereof and continuing
until such time as this Agreement shall have been terminated in the
manner provided herein:
a. The REIT shall not issue or agree to issue any shares of
Special Voting Stock to any person unless effective provision
has been made for the simultaneous issuance or transfer to the
same person of the same number of Paired Common Units and for
the pairing of such shares of Special Voting Stock and Paired
Common Units.
b. The OP shall not issue or agree to issue any Paired Common
Units to any person unless effective provision has been made
for the simultaneous issuance or transfer to the same person
of the same number of shares of Special Voting Stock and for
the pairing of such Paired Common Units and shares of Special
Voting Stock.
c. Upon the issuance by the REIT of a share of Special Voting
Stock to any person, the REIT shall contribute any cash
proceeds or other consideration received from the issuance of
such share (the "Per Share REIT Consideration") to the LP,
which, in turn, shall contribute such Per Share REIT
Consideration to the OP in exchange for one Class A Preferred
Unit of the OP (a "Preferred Unit").
3. Stock Certificates. Commencing on the date hereof and continuing until
such time as this Agreement shall have been terminated in the manner
provided herein:
a. Each certificate which is issued representing shares of
Special Voting Stock shall be printed "back-to-back" with a
certificate evidencing the
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same number of Paired Common Units and shall bear a
conspicuous legend (on the face thereof) referring to the
restrictions on transfer set forth in Section 5 of the
Articles Supplementary and this Agreement.
b. Each certificate which is issued evidencing Paired Common
Units shall be printed "back-to-back" with a certificate
representing the same number of shares of Special Voting Stock
and shall bear a conspicuous legend (on the face thereof)
referring to the restrictions on transfer set forth in this
Agreement.
4. Redemption by the OP or Acquisition by the REIT of Paired Common Units.
Commencing on the date hereof and continuing until such time as this
Agreement shall have been terminated in the manner provided herein:
a. Prior to the redemption of any shares of Special Voting Stock
pursuant to Section 8 of the Articles Supplementary (the
"Shares"):
i. The OP shall redeem a number of Preferred Units equal
to the number of Shares for $.01 in cash per
Preferred Unit pursuant to Section 4.11 of the
partnership agreement of the OP, which amount shall
be paid in its entirety in immediately available
funds to the LP (the "LP Payment").
ii. Immediately following the completion of the LP
Payment, the LP shall distribute the proceeds of such
LP Payment to the REIT in immediately available
funds, which amount shall be set aside by the REIT,
separate and apart from its other funds, to redeem
the Shares pursuant to Section 8 of the Articles
Supplementary.
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b. All shares of Special Voting Stock redeemed by the REIT
pursuant to Section 8 of the Articles Supplementary shall be
cancelled automatically and shall become authorized but
unissued shares of Special Voting Stock in accordance with the
Articles Supplementary, and all certificates representing such
shares held by the OP shall be delivered to the REIT for
cancellation promptly following the effectiveness of such
redemption.
5. Stock Dividends, Reclassifications, etc. Commencing on the date hereof
and continuing until such time as this Agreement shall have been
terminated in the manner provided herein:
a. The REIT shall not (i) declare or pay any dividend in respect
of the outstanding shares of Special Voting Stock consisting
in whole or in part of shares of Special Voting Stock, or (ii)
subdivide, combine or otherwise reclassify the outstanding
shares of Special Voting Stock.
b. The OP shall not (i) declare or pay any dividend in respect of
the outstanding Paired Common Units consisting in whole or in
part of operating partnership units paired with shares of
Special Voting Stock, or (ii) subdivide, combine or otherwise
reclassify the outstanding Paired Common Units.
6. Termination. This Agreement and the Pairing may be terminated by mutual
consent of the REIT, GP, LP and the OP.
7. Transfers. No Transfer of shares of Special Voting Stock or the Paired
Common Units paired thereto may be made to any person, unless in each
case prior to such Transfer any such transferee agrees in writing to be
bound by the terms and conditions of this Agreement pursuant to a
supplementary agreement reasonably satisfactory in form and substance
to the REIT and the OP. For purposes of this Section 7, the term
"Transfer" shall mean any direct or indirect sale, assignment,
mortgage, transfer, pledge, gift, hypothecation or other disposition or
transfer of, or any act creating a trust (voting or otherwise) with
respect to shares of Special Voting Stock or the Paired Common
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Units paired thereto.
8. No Restrictions on Issuances of Unpaired OP Units. This Agreement shall
not be deemed to impose any restrictions or limitations on the ability
of the OP to issue operating partnership units (other than the Paired
Common Units or Preferred Units) that are not paired to shares of
Special Voting Stock.
9. Amendment. This Agreement may be amended by the parties hereto by
action taken or authorized by the Board of Directors of the REIT, LP
and GP. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the REIT, LP, GP and the OP.
10. Counterparts. This Agreement may be executed in counterparts, and each
such counterpart hereof shall be deemed to be an original instrument,
but all such counterparts together shall constitute but one agreement.
11. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Maryland.
12. Entire Agreement. This Agreement contains the entire understanding and
agreement between the parties with respect to its subject matter, and
any and all conflicting or inconsistent discussions, agreements,
promises, representations and statements, if any, between the parties
or their representatives that are not incorporated in this Agreement
shall be merged into this Agreement.
13. Headings. The various section headings are inserted for the purposes of
reference only and shall not affect the meaning or interpretation of
this Agreement or any provision hereof.
14. Severability. The provisions of this Agreement shall be severable, and
any invalidity, unenforceability or illegality of any provision or
provisions of this Agreement shall not affect any other provision or
provisions of this Agreement, and each term and provision of this
Agreement shall be construed to be
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valid and enforceable to the full extent permitted by law.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf as of the date first written above.
ARBOR REALTY TRUST, INC.
By: /s/ Frederick C. Herbst
---------------------------------------------
Name: Frederick C. Herbst
Title: Chief Financial Officer, Treasurer
and Secretary
ARBOR REALTY LIMITED PARTNERSHIP
By: Arbor Realty GPOP, Inc., its general
partner
By: /s/ Frederick C. Herbst
------------------------------------
Name: Frederick C. Herbst
Title: Secretary and Treasurer
ARBOR COMMERCIAL MORTGAGE, LLC
By: /s/ Frederick C. Herbst
---------------------------------------------
Name: Frederick C. Herbst
Title: Chief Financial Officer
ARBOR REALTY LPOP, INC.
By: /s/ Frederick C. Herbst
---------------------------------------------
Name: Frederick C. Herbst
Title: Secretary and Treasurer
ARBOR REALTY GPOP, INC.
By: /s/ Frederick C. Herbst
---------------------------------------------
Name: Frederick C. Herbst
Title: Secretary and Treasurer
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